View Point: Mining investors encounter legal landmines

Another bombshell in the hydrocarbon industry: The Jakarta Corruption Court this week jailed three executives from Chevron Pacific Indonesia, the largest oil producer in the country, in a controversial case that should have been handled as a civil case.

Reports said the debacle faced by PetroChina after 14 of the 140 oil and gas wells in its Jabung concession were sealed off by Tanjung Jabung Timur regency administration in Jambi province on May 24 remained unresolved despite intervention by SKKMigas, the upstream oil regulatory body.

SKKMigas, which represents the central government in dealing with all oil mining contractors, seems unable to deal with the local administration even though its unilateral act of sealing off the wells was a blatant breach of the law.

There seemed to have not been any sense of urgency at all in resolving the problem even though the closure of the wells caused an estimated daily output loss of 435 barrels of oil and 11.01 million standard cubic feet of natural gas.

Based on the 2001 oil and gas law, companies prospecting and developing hydrocarbon resources are treated simply as contractors even though they are fully responsible for putting up all the investment and bear all the risks in the mining venture. Fixed assets procured for the concession and the oil and gas wells developed within the block belong to the state (central government), not regional administrations.

No wonder a production-sharing contractor is required to get SKKMigas’ approval for its annual spending/investment program. Yet more mind-boggling were the points of disagreement between PetroChina and the Tanjung Jabung administration.

The local administration demanded Rp 50 million (US$5,000) per well as an annual licensing fee. This means PetroChina is required to pay about US$700,000 in well licensing fees alone each year. This kind of recurring fee is by no means known in the production-sharing contract (PSC).

The Tanjung Jabung administration also demanded that PetroChina implemented more corporate-social responsibility (CSR) programs. The fact is spending for CSR projects must also be approved by SKKMigas; otherwise that expenditure cannot be reimbursed through the cost-recovery scheme.

Several other oil companies such as ExxonMobil, Mubadala Petroleum of the United Arab Emirates and Inpex had also encountered problems in their operations due to protests from local people or regulatory (licensing) problems with local administrations.

Other oil mining contractors are likely to encounter such a hostile business climate if the central government does not act firmly to rein in misguided, renegade regional administrations that abuse regional autonomy.

Even though oil mining firms operate under the concept of PSC with the central government (through SKKMigas), mining contractors have still to obtain dozens of permits from the local administration.

Latest data from SKKMigas shows an oil mining contractor requires 32 kinds of permit for exploratory drilling, 25 for production development and seven for production operations from the central government and regional administrations.

Needless to say, the business climate for oil prospecting in the country has been much less attractive than in other countries in the region, as evidenced by the sharp decline in oil output to 830,000 barrels per day (bpd) today from as high as 1.2 million bpd a few years ago.

But not only is the hydrocarbon sector affected. Many foreign companies operating in general mining such as coal, copper and gold have encountered imbroglio.

That is quite unfortunate because mining, besides fisheries and plantations, should be one of the most promising resource-based ventures in Indonesia, thanks to the country’s major reserves in oil and natural gas, copper, gold, nickel, coal, tin, silver, diamonds and base metals.

 Legal and regulatory certainty is vital, especially for mining investment, because the business is capital and technology intensive, highly risky, has a long payback period and operates mostly in remote areas where basic infrastructure is inadequate.

But it is legal and regulatory uncertainty that has increasingly become a big issue, especially after the devolving of licensing authority for mining concessions, except for oil and natural gas, to regional administrations.

Mining companies also often encounter unreasonable demand from the local people as their oil mining operations generate a sharp rise in local expectations and become a magnet to migrants looking for jobs.

The central government is keen to develop the vast natural resources — vital to keep the economy growing — but often faces determined, and often violent, protests from local communities or rent-seeking measures from local administrations.

At stake are tens of billions of dollars. It is a pity that rather than generating peace and prosperity, the presence of mineral and oil wealth in the regions, which have been poor, often leads to political conflict or corruption.

Many analysts call this anomaly a resource curse. Political noise about foreign mining operations would most likely rise in the run up to the legislative and presidential elections next year. But hopefully, all parties will refrain from destructive acts.

If mining is shut down the economic benefits will be wiped out. Indonesia’s reputation as a world-class exporter of various minerals will disappear. The enormous pool of talent and skills developed in the mining industry over the past five decades could be destroyed.

But as experiences around the world have shown, one essential precondition for overcoming the resource curse is a reasonable level of social unity and public trust.

The writer is a senior editor at The Jakarta Post.

Vincent Lingga, Jakarta | Opinion | Sun, July 21 2013, 10:25 AM

The week in review: Fasting
amid price rises

The Jakarta Post | Editorial | Sun, July 14 2013, 11:00 AM

Hundreds of millions of Muslims began the annual fasting month earlier this week requiring them to refrain from consuming food and beverages from dawn until sunset.

The small disagreement over when the lunar-based fasting month begins — members of Islamic organization Muhammadiyah started fasting on Tuesday, one day earlier than the beginning of Ramadhan as declared by the government and most other Islamic organizations — will not mar the virtues of the holy month.

However, unlike last year, this year’s fasting month will surely be much harder for the majority of Muslims because of the unusually high increases in the prices of most basic commodities and services as the impact of the recent fuel-price rise takes its toll.

Indonesia, which has the world’s largest Muslim population, usually sees prices rise immediately prior to and during Ramadhan and Idul Fitri but the recent fuel-price increase has pushed the inflationary pressures much further.

While the fasting month requires Muslims to refrain from indulgence in bodily desires, the government appealed to suppliers and retailers not to excessively raise prices to offset the costlier fuel so as not to increase the burdens on the people during the fasting month and upcoming Idul Fitri celebrations.

Meanwhile, State Intelligence Agency (BIN) chief Marciano Norman called on mass organizations not to conduct illegal raids on people and places they deem as acting immorally in order to maintain social harmony and peace.

But Muslim hard-liners, affiliated with the Islam Defenders Front (FPI), have vowed to raid “sinful” bars amid rising intolerance. FPI leaders were quoted by newspapers as asserting that they will take firm action against the sale of alcohol, strip shows and prostitution and would send members to spy on sinful activities, pointing out that they would not hesitate to conduct their own raids if the police failed to uphold the law and maintain public order properly.

But Jakarta’s public order agency (Satpol PP) urged hard-liners to refrain from taking the law into their own hands, promising to conduct sweeps of Jakarta, targeting the 1,800 establishments subject to Ramadhan regulations. 

Almost 900 bars, nightclubs, massage parlors, pachinko parlors and pool halls have said they will remain closed for the entire month.

Without much fanfare, the House of Representatives enacted on Tuesday three pieces of legislation on the protection and empowerment of farmers and cattle breeders, the eradication of illegal logging and deforestation and aerospace management.

The most significant of the new laws is the one which will require the government to provide agricultural insurance for farmers to cover losses caused by crop failure due to natural disasters, pests, outbreaks of infectious plant disease or severe weather. 

The law will also protect local farmers from excessive foreign competition by restricting farm commodity imports whenever local supplies are adequate to meet domestic demand and limiting imports only through specific seaports.

The specific entry gateway ports for imports will be located far from the major producing areas of the imported commodities and will be equipped with quarantine facilities.

Regional development banks are required by the law to set up departments specializing in extending microloans to 
farmers and cattle breeders. 

The law also obliges the central government to set up a commodity fund to support the building of buffer stocks of particular commodities in a concerted bid to protect farmers from excessive price volatility.

In addition to the financial empowerment, the law also aims to give Indonesia’s estimated 41 million farmers greater political voice and lobbying power by increasing government support for farmers’ associations and cooperatives. .

The new law on the prevention and eradication of deforestation was billed as the most comprehensive legislation against all kinds of forest-related crimes. 

The House and government claimed that the new law would provide stronger legal foundations for law enforcers to cope with forestry crimes, and a deterrent effect to prevent new crimes. However, a coalition of environmental organizations and anticorruption activists has opposed the legislation, saying they will soon file for a judicial review of the law at the Constitutional Court.

Most obviously missing from the new law, according to green campaigners, are provisions on forest fires and slash-and-burn practices of the type that caused more than two weeks of heavy haze in Riau, Singapore and Malaysia last month. 

The coalition of NGOs asserted that the new law seemed to be completely decoupled from prevailing forestry-related laws and regulations and did not make clear distinction between indigenous and state forests.

The environmentalists claimed the new law instead added to the confusion of overlapping and conflicting regulations regarding forestry issues.

The House saw the enactment of the law on aerospace management as an important move to strengthen the government control of satellites which are essential for data gathering, including those on taxpayers and tax objects.

View Point: Better regulation and protection for financial consumers

Vincent Lingga, Jakarta | Opinion | Sun, May 19 2013, 11:29 AM

Paper Edition | Page: 5

The seemingly endless string of financial scandals involving the sale of fraudulent investment products which has caused many small investors to lose their life savings has prompted the Financial Services Authority (OJK) to strengthen the mechanism of its financial consumer protection.

The latest cases of financial fraud using commodity (gold) trading as the underlying transaction seem to have jolted the OJK to realize how inadequate has been the regulatory framework and inter-ministerial coordination for financial consumer protection, while the average financial literacy of the rising middle class consumers remains very low.

Supervision coordination is indeed most imperative. The OJK oversees only investment and financial service products that it has licensed and has nothing to do with products linked to commodity trading.

Commodity trading, including the futures exchange, lies within the jurisdiction of the Ministry of Trade and with Bapeppti (the Commodity Futures Trading Regulatory Agency).

The problem though is that it is often extremely difficult, especially for uninitiated investors, to distinguish between investments linked to commodity trading and financial products.

The OJK, through its financial customer care (FCC), has stepped up a campaign to educate financial consumers and retail investors and has designed a new way for investment products to be sold in a concerted bid to drive shoddy and aggressive merchants out of the financial service industry.

It has set up a task force consisting of all law-enforcement agencies and various ministries to deal with bogus investment and fraudulent financial products.

In the year to date, OJK Chairman Muliaman Hadad said, the FCC received complaints about the sale of fraudulent investment products by 29 companies, all linked to gold and futures foreign exchange trading.

Last year, the number of complaints raised by financial service customers increased by more than 25 percent to almost 854,000.

In late 2008, hundreds of retail investors who bought Lehman Brothers structured investment products through Citibank Indonesia lost millions of dollars when the US investment bank went bankrupt.

But Citibank, in a good gesture to maintain its customer trust, last December reimbursed the Lehman note buyers with 70 percent of their original investment made in 2007 by buying back the Lehman notes at 70 cents to the dollar.

Hundreds of other retail investors got “burned” when the investment products issued by PT Antaboga Delta Sekuritas through Bank Century (now Bank Mutiara) turned out to be fraudulent.

Even the American government immediately set up a politically independent consumer financial protection agency after the 2008 global financial crisis, triggered by the Lehman Brothers bankruptcy, which caused millions of mortgage borrowers and retail investors to suffer big losses.

The OJK should indeed lead the protection of financial consumers because it will soon take over the oversight of the whole financial service industry and capital market, including banks.

The combination of poor financial consumer protection — caused by incompetent financial service oversight — and low financial literacy of most bank customers and retail investors has made it possible for Ponzi-scheme investments to operate for several years before being detected by regulatory agencies.

Rather than simply ensuring that consumers are provided with complete and accurate information, the OJK should also closely monitor companies to make sure that the right kinds of products are offered to the right kinds of people.

This activist approach is especially needed now when the risk of mis-selling and poor consumer choices is especially high.

With deposit interest rates at historic lows, many investors and savers who are searching for higher returns are turning to complex, poorly understood products, while banks and brokers are under heavy pressure to find new sources of revenue.

Many surveys have found that investors cannot be counted on to make rational choices and often make complex decisions contrary to their own interests because of their aversion to losses, so regulators should ban the sale of potentially harmful products.

Investors or financial product consumers in general are not always rational. Faced with complex decisions or too much information, they often default or they hide behind credit agencies.

Financial institutions therefore should be required to provide customers with simple, user-friendly product information, including “warnings” (risks) on complex investments.

Equally important is that bank tellers and other employees, except those in the wealth management department, should be barred from selling investment products or pushing customers toward representatives selling them.

The OJK or its FCC should conduct a nation-wide campaign to educate financial service customers to improve their financial literacy or their understanding of financial products and their ability and confidence to appreciate financial risks and opportunities, to make informed choices.

The core principle of this campaign is also a cornerstone of economic theory: Well-informed consumers make for vigorous competition and efficient markets.

This idea should be embodied in the design of the new regulatory and protection framework for financial consumers, focusing on improving the information that consumers get from banks and other financial institutions, so that they can do the same kind of comparison shopping as that for other consumer products.

In a complex and opaque industry such as finance, a strong regulator is essential to make sure that market participants are telling the truth. A strong supervisory body is crucial if people are going to have the confidence to invest.

The writer is senior editor at The Jakarta Post.

RI commodities and infrastructure magnet for equipment suppliers

The Jakarta Post | Business | Tue, April 23 2013, 2:02 PM

Paper Edition | Page: 14

As the world’s 16th largest economy with an annual growth of more than 6 percent, Indonesia is predicted to become the third largest market for heavy equipment in Asia after China and India. It was simply the right decision for Bauma 2013 in Munich, the world’s largest heavy equipment fair, which ended Sunday, to make Indonesia its official partner country. Volvo Construction Equipment, one of the largest among the 3,300 exhibitors at the international fair, invited a group of journalists from Indonesia, including Vincent Linggafrom The Jakarta Post, to observe the massive display of power machines. Below is his report.

Indonesia took center stage at Bauma 2013 with a full-day conference where senior officials from the public works, transport, mining and finance ministries, along with the investment coordinating board briefed potential investors and international suppliers on the bright outlook of the heavy equipment market in Indonesia.

Back in February, Indonesia was, for the first time, selected as the guest country at the annual international trade fair in Basel, Switzerland.

In early March President Susilo Bambang Yudhoyono, accompanied by German Chancellor Angela Merkel, raised Indonesia’s global profile at the five-day Internationale Tourismus Borse (ITB) in Berlin, where it was also the official partner country.

But Indonesia’s “bing-bang” participation at Bauma 2013, the world’s largest heavy equipment fair, should top its string of global stage appearances.

Despite the mining and plantation sectors — which at the outset ignited the boom in the heavy equipment market — currently being in their down-cycle period, machine suppliers consider this a temporary phenomenon.

International suppliers remain upbeat about the future of the market, especially as demand from the construction sector had started heating up after the launch of the economic growth acceleration master plan, which needs more than US$460 billion investment in infrastructure alone within the next 10 years.

All major manufacturers of heavy equipment from the world, notably Europe, the United States, Japan, South Korea and China, displayed their machines within the 555,000-square-meter exhibition site.

But the Brussels-based Volvo Construction Equipment, the world’s third largest supplier, appeared to be the star among the exhibitors because last year alone the company released 60 new pieces of equipment, all employing new technology that makes the machines more fuel-efficient, more reliable and more environmentally friendly.

As Indonesia launched its 15-year master plan for the acceleration and expansion of Indonesian economic development (MP3EI) last year, which will require more than $460 billion in infrastructure development alone, Bauma 2013 was certainly the right place for public works officials to assess the latest technology available for the industry.

It is no wonder that Public Works Minister Djoko Kirmanto headed a large delegation to the exhibition. Besides delivering a speech as part of the Indonesian Day conference, Kirmanto also inspected displays at the huge fair.

 Volvo, which operates construction equipment manufacturing plants around the world, demonstrated for Kirmanto and his delegation the capability and performance of their equipment.

“I am impressed with the performance of your equipment,” Kirmanto told Volvo executive vice president Eberhard Wedekind.

Kirmanto also spontaneously asked Hediyanto Husaini, the director general for the construction development agency, to facilitate meetings between contractors in Indonesia and Volvo.

Danang Parikesit, special assistant to the minister, projected in a speech at the conference that Indonesian’s demand for heavy equipment for mining, plantation and construction, would increase from about 42,000 units last year to 50,500 this year.

The annual sales growth of more than 40 percent steadily booked over the past five years by publicly-traded PT Intraco Penta, the main distributor of Volvo heavy equipment, demonstrated the dynamic of the Indonesian market.

Parikesit estimated the value of construction contracts in the country to increase to $40.3 billion this year.

“Indonesia is a very important market for us and we remain upbeat about the market despite the current down-cycle,” noted Volvo CE president Pat Olney, pointing out that the emerging economies such as China, India, Indonesia and Latin America already accounted for more than 50 percent of Volvo equipment sales.

Olney’s optimism has strong foundations because much of the new investment projects approved by the Investment Coordinating Board over the past five years were for mining, tree plantations, property and infrastructure development projects such as toll-roads, bridges, seaports and airports.

Olney said that when it comes to mining, highway construction and maintenance Volvo CE offers an extensive product portfolio.

“We also keep ourselves updated of ideas from our customers and include their suggestions in our research to produce better machinery,” said Anders Larsson, Volvo CE executive vice president for research and technology.

Certainly, Volvo will have to compete fiercely with other major equipment suppliers as Caterpillar from the United States and Komatsu from Japan.

Petrus Halim, president of Intraco Penta (INTA), which has distributed Volvo equipment since the early 1980s, concurred, saying “it is not simply selling a machine but enlightening customers of the right economic concept of heavy equipment”.

The right investment concept is imperative because the prices of heavy equipment can range from tens of thousands to over a million dollars per unit, Halim said.

“We offer a total solution to our customers — not only in terms of operational reliability and operational life. We also tailor the schedule and method of payment to the cash-flow prospects of our customers,”
Halim added.

In addition, Intraco Penta operates about 40 branches around the country that serve as service and maintenance centers and depots for Volvo machinery spare parts.

“We reach out to our customers even in the remote areas, such as Kalimantan and Sulawesi, and go ‘all out’ to minimize the downtime of the heavy equipment we sell,” Halim said.

“Take for example, a coal mining firm that intends to buy our equipment but has difficulties in marketing their coal competitively. We can help this company to sell its coal because one of our subsidiaries is an independent power producer in Batam,” added Intraco’s finance director Fred Manibog.

VIEW POINT: Our banks: Grossly inefficient, yet highly profitable

Do you know that our banks are among the most inefficient yet the most profitable in the ASEAN region?

Perusing the financial reports of the publicly-traded banks, one would see banks in Indonesia enjoying an average net interest margin of 5.53 percent or nearly twice that of their peers in other ASEAN countries.

What is strange is that their cost to income ratio stood at almost 80 percent as of January, compared to 40 to 60 percent in neighboring ASEAN countries, indicating operational inefficiency.

But how could such an anomaly have occurred, while the market is crowded with more than 120 city-based banks, not to mention hundreds of secondary banks in the rural areas? Oligopoly, says the government anti-monopoly watchdog (KPPU).

The KPPU told a hearing with the House of Representatives on Wednesday it had found strong indications of oligopolistic practices in the banking industry whereby the top 10 largest banks control almost 80 percent of the market, leaving the other 110 banks with the remaining 20 percent. 

Further analysis reveals that the five largest banks, of which four are state owned, control more than 60 percent of the banking market.

It was this oligopoly that had enabled the largest banks to control lending rates and keep their net interest margin — the difference between the lending rates banks charge to borrowers and the interest paid by banks to depositors — unusually high, according to KPPU chairman Nawir Messi.

The five largest banks, as the market leaders, control the deposit market and set the trends in lending rates, but the other 115 banks, due to their negligible market share and their small deposit base cannot do much to challenge the market leaders.

So the mid- and small-sized banks simply follow the leaders.

Leaders of the banks association (Perbanas), who also attended the hearing with the House, certainly rejected the observations of the KPPU, blaming the high lending rates in Indonesia on high inflation (5 percent a year), the vast areas across the world’s largest archipelago that have to be served with branches or ATM networks and high business risks.

The central bank’s benchmark interest rate currently stands at a historic low of 5.75 percent, but data at Bank Indonesia (BI) shows that the average interest rates for working capital, investment and consumer credit currently stand at 11.5 percent, 11.3 percent and 14.3 percent, respectively.

These rates are charged only on the prime customers. The interest burdens could exceed 30 percent for high-risk borrowers such as credit card holders and small- and medium-scale businesses.

Another glaring shortcoming is the fact that only about 4 percent of banks’ third-party funds are placed in the interbank market, while only the 10 largest banks enjoy excess liquidity.

This not only causes oligopoly in the market but also forces the other 110 banks to compete fiercely for deposits, offering depositors rates higher than the 5.5 interest ceiling set by the Deposit Insurance Corporation (DIC), thereby further contributing to raising interest rates.

BI deputy governor Halim Alamsyah has confirmed that competition to raise deposits has been so fierce lately that several banks have been luring depositors with interest rates higher than the ceiling of 5.5 percent set by the DIC, putting depositors at risk of losing their money.

The Deposit Insurance Law stipulates that any bank with savings or time deposit accounts offering interest rates higher than the maximum rate set by DIC would not be refunded if the bank went bust.

Extremely high lending rates, acutely inadequate infrastructure and grossly inefficient logistics systems have become a big disadvantage for businesses in Indonesia. 

The interest costs Indonesian businesses have to pay are twice as high as those charged on their counterparts in Malaysia, Thailand, Singapore and China. These high capital costs have deterred new investments because new businesses have to generate unusually high returns.

It is simply unfair and economically unwise to allow commercial banks to continue to enjoy net interest rate margins of 5 to 6 percent while a large chunk of their funds have been ploughed into the financial market. The government, if necessary, should pressure state banks, which still account for around 40 percent of the industry’s total assets, to act as the trend setters, leading credit expansion at reasonably low rates to the government-selected priority sectors.

Seen from their multiplier impact on the economy, it is much better for the state banks to significantly expand lending to the real sector at relatively low credit interest rates, rather than booking high profits but at the expense of economic growth. 

The government therefore should inject more competition into the banking industry by allowing mergers between mid-size banks to build up strong competitors to the five largest banks.

One way of doing this is by approving the planned merger between Singapore’s Bank DBS and Bank Danamon and the planned acquisition by Bank of Tokyo-Mitsubishi UFJ, the largest bank in Japan, of Bank Tabungan Pensiunan Nasional to build strong contenders to the top five players.

However, only jawboning banks to lower lending rates may compromise the quality of their risk management.

It is also imperative for the government to reduce the persistently high business risks by accelerating reform measures in the civil service, taxation, customs and legal sectors. Adverse business condition would expose businesses to high risks of debt default.

It would be better for banks’ credit risk management if BI kept improving the capacity of its credit bureau to provide lenders with more reliable, comprehensive information on debtors. 

The writer is senior editor at The Jakarta Post.

Vincent Lingga | Opinion | Sun, March 17 2013, 9:47 AM Paper Edition | Page: 5

Singapore national eye center looks to closer ties with Indonesia

The Jakarta Post Body and Soul Wed, March 06 2013, 1:25 PM Paper Edition Page: 22

An eyeful: Doctor Donald Tan (left) operates on a patient at Singapore National Eye Center. The center is eyeing closer ties with Indonesia. (Courtesy of Singapore National Eye Center)
The Singapore National Eye Centre (SNEC) last week invited journalists from Indonesia, including Vincent Lingga from The Jakarta Post, for a two day visit and briefing from its renowned ophthalmologists. His report:

We happened to bump into Winawati Sutisna from Jakarta who was on a visit to the International Patient Service department at the SNEC to consult with an ophthalmologist about treatment for her 10-year old daughter’s strabismus, or squint-eye.
“I learnt from an ophthalmologist in Jakarta that the SNEC is the best place in the region to treat my daughter’s problem,” Winawati said.

She paid S$90 (US$72.30) for a consultation which she said was not much more than the fees charged by a senior ophthalmologist at a modern private eye hospital in Jakarta.
Winawati is just one of the tens of thousands of Indonesians seeking quality healthcare or simply having health checkups at government or private hospitals in Singapore.

The latest data from the health ministry shows that last year around 18,000 visitors from Indonesia went to Singapore for medical attention. That’s almost 50 percent of the total number of foreigners who travel to there for health services.

The Indonesian government has been trying to encourage private investment in healthcare, allowing foreigners to hold up to 100 percent equity in private hospitals in the hope that an increased foreign presence will motivate state hospitals to improve their services.

Despite this expansion, Indonesians who can afford it prefer to go abroad. They are the major contributors to medical tourism in neighboring countries, notably Singapore and Malaysia
According to the Mayapada Health Care group, Indonesians spend more than US$750 million annually to travel to Singapore, Malaysia or Australia for medical purposes.

As the most modern, well-equipped specialist in eye care in the region, the SNEC has become increasingly popular for Indonesians from cities other than Jakarta, which do not have modern eye hospitals.

Since its opening in 1990, the center has steadily expanded and now covers nine subspecialties: in cataract and comprehensive ophthalmology; corneal and external eye disease; glaucoma; immunology and vitreo-; neuro-ophthalmology; ocular inflammation; oculoplastic and aesthetic eyeplastic; paediatric ophthalmology and strabismus; and refractive surgery.

Last year alone, the SNEC managed 275,000 outpatient visits, 20,000 surgeries and more than 13,000 laser procedures.
Doctor Ho Ching Lin, head of the glaucoma department at the SNEC, said as the local and regional referral center for secondary and tertiary management of glaucoma, her department manages more than 40,000 glaucoma attendances annually.

“About 2,000 of them are visitors from Southeast Asia, including Indonesia,” Ho added.
SNEC Medical Director Donald Tan, however, did not see the increasing popularity of his center as a zero-sum game with eye care hospitals or clinics in Indonesia.

“The SNEC complements eye hospitals in Indonesia. We are actively involved in clinical trials and research into the causes and treatment of major eye conditions such as myopia and glaucoma.
“Thousands of ophthalmologists from the region, including Indonesia, have participated in SNEC courses and meetings, which are organized annually,” added Tan, who last year was elected as first non-American president of the US-based Cornea Society.

“I myself and several senior ophthalmologists from the SNEC have visited Indonesia often for lectures or conferences with Indonesian eye specialists. We also cooperate with several eye hospitals in Indonesia like the Jakarta Eye Center and the National Eye Center in Cicendo, Bandung,” Tan said.
SNEC ophthalmologists and eye specialists from the region regularly exchange views and best practices through the annual meetings of the Asian Association of Eye Hospitals.

The best competitive advantage of SNEC has is the Singapore Eye Research Institute (SERI), one of the largest eye and vision research institutes in the Asia Pacific region in terms of staff numbers, grant income, research initiatives and innovations and inventions.

SERI director Wong Tien Yin said the multi-ethnic composition of the Singapore population is really an advantage because therapies and diagnoses that have been developed in the West may not be directly
applicable to Asia.
“Its ability to test diagnostics and therapeutics with patients of three major ethnic groups positions makes SERI the eye laboratory for the whole Asian market,” Wong added

Research at SERI, which is attached to the SNEC complex, has helped the SNEC develop and apply new eye care services, for example, Lasik, a wonders of modern medicine and technology to improve vision and do away with spectacles or contact lenses.

Cataract extraction and intraocular lens implantation is the most common operation performed at the SNEC with more than 10,000 cataract procedures each year, by a team of over 55 full time ophthalmology specialists.

“Those who plan to have laser vision correction can now look forward to a new technique beyond LASIK, with the introduction of SNEC ReLEx,” said Cordelia Chan, head of the refractive surgery service.

Chan explained that unlike conventional LASIK which destroys the inner corneal tissues, the new procedure does not create a flap in the cornea and uses only one laser for the entire process, thereby resulting in a much stronger eye and less immediate postoperative discomfort and tearing.

Tan and his team have developed and patented a new technique for cornea transplants, which used to require at least 20 stitches and a recovery of six months. The new technique, called DMEK, already used worldwide, minimizes invasive corneal transplantation, thereby reducing damage to the new cornea’s cell.
An increasing number of middleclass and high-income Indonesians, especially those in the resource-rich provinces with direct flights to Singapore, look for quality healthcare in the city state, well known as providing the best healthcare center in Southeast Asia.

APEC Summit will speed up economic integration

Vincent Lingga, Singapore Opinion Tue, February 26 2013, 9:01 AM  Paper Edition Page: 6

Economic and technical cooperation (Ecotech) and connectivity were predictably the most vigorously debated topics during the two-day conference of the Pacific Economic Cooperation Council (PECC) that ended here on Saturday.

The first Pacific community seminar was held in September 1980 in Canberra, Australia, on the initiative of Masayoshi Ohira and Malcolm Fraser, then prime ministers of Japan and Australia. PECC is a unique organization which embraces and respects diversity. The group actively pursues and promotes a sense of common purpose in a peaceful and prosperous Pacific community based on diversity. PECC has consistently advocated strategies which will help regional economies to reduce the wide gulf in standards of living between members.

PECC has demonstrated a sustained commitment to open regionalism. It works to reduce obstructions to the economic integration of Pacific economies, without trying to divert economic activity away from other economies outside the region.

Leaders of the Asia-Pacific Economic Cooperation (APEC) agreed at their 1994 summit in Bogor to launch what has since become known as the Bogor goals: free, open trade and investment in the region by 2020. Ecotech was set as the third pillar of the agreement, to ensure the goals were politically acceptable in developing members.
Ecotech programs provide APEC’s developing economies with technical assistance to gear them up for free, open trade and investment with the more developed members.

Almost 18 years after the roadmap for Ecotech was drawn up in Osaka, Japan, in 1995 and strengthened at the 1996 summit in Manila, most developing members are disillusioned over the very slow pace of Ecotech activities. They complain about an acute lack of focus and accuse the developed economies of too much emphasis on trade and investment liberalization.

Indonesia’s Tourism and Creative Economy Minister Mari Elka Pangestu warned participants at the conference on Saturday that Ecotech programs in capacity building should be stepped up.
The rationale, according to Jusuf Wanandi, cochair of the conference, is that since the levels of development in the 21 members are not equal, it is impossible to enforce the same rules and timetables with equanimity for all members.

PECC, which was set up in 1980, is a tripartite partnership of senior individuals from business and industry, government, academic and other intellectual circles from more than 23 countries in the Asia Pacific.

Thousands of Ecotech projects have been launched to gather and share information, for training and development of best practices. Ecotech projects, however, are thinly spread out across many areas, lack cohesion and often overlap with similar bilateral activities.

Given the non-binding nature of APEC and in view of the limited funding available, APEC needs to redesign these projects and develop models of best practices in capacity building. Members need to focus on areas which will provide the greatest contribution to economic integration.

One area which caught the attention of conference participants is small and medium enterprises (SMEs). In some APEC countries SMEs account for 90 percent of all businesses and employ as much as 60 percent of the workforce but generate only about 30 percent of exports.
Governments need to improve the business environments to help SME networking and develop strong export-driven companies.

Teng Theng Dar, the director of Business Compass Consultancy in Singapore, wants closer cooperation between SME development centers and higher learning institutions as one of the most effective ways of transferring business competence to SMEs.

The APEC ministerial meeting on SME development in Bali in September in the run up to the Bali summit in October should review capacity-building Ecotech programs and focus them on the business environment and networking.

Improved connectivity was set by an APEC meeting in Jakarta last month as one of the three top priorities, along with free trade and sustainable growth, and became a key theme of discussions at the PECC conference.

But while developing the basic infrastructure for physical connectivity is challenging enough, especially in Indonesia, physical infrastructure is not enough to guarantee economic integration.
Minister Mari, citing the bitter experiences of African countries, noted that regulatory reform, or what she termed as “behind-the-border” rules such as customs clearance and port capacity, is equally important.

ASEAN countries have experienced how non-tariff barriers to trade, notably in the areas of technical standards and customs services, have hindered progress toward economic integration.
Free trade is not only a matter of cutting or removing tariffs. Different standards and assessment practices; different product registration and labeling rules; duplicate testing for quality certification, all increases costs.

As is a regional transit system that requires repeated export, import and transshipment of goods at national borders.
The bulk of the work in developing institutional connectivity lies in regulatory reform which is the domain of governments, not Ecotech programs.

The writer is senior editor of The Jakarta Post.