Bali to welcome inaugural film fest

Trisha Sertori, Contributor, Denpasar

Bohemians, artists, actors and filmmakers have been making their way to Bali's limpid seas and sands for almost 100 years, seduced by the island, its people and their way of life; the sway of coconut trees echoing the sway of women's sarongs, heads piled high with offerings to Hindu Gods; or young men with their dancers' bodies scampering up those same swaying trees to gather the yellow fruit with its cooling liquid and sweet white meat.

That was the new world discovered by artist Walter Spies and his film director partner, F.W. Murnau of the 1924 classic Nosferatu.

They would soon be joined by Woolworth heiress Barbara Hutton, English playwright Noel Coward, silver screen comic genius Charlie Chaplin -- once quoted s quipping "if it comes to the worst we'll go to Bali" -- to be followed in later years by those kings of the road films, Bob Hope and Bing Crosby, and their queen, the voluptuous Dorothy Lamore.

Not much has changed over the past decades, except celebrities now wing their way first class to Bali, rather than steaming their way to the "Island of the Gods" on ships complete with ballrooms as their predecessors did.

Today it is actress Sigourney Weaver of the recently released Infamous, Aliens and Gorillas in the Mist fame, the hound dog-faced comedian Bill Murray of countless films including Lost in Translation who, among others, head to Bali for a bit tropical R and R.

One anecdote says that Murray literally found himself lost in translation after hiring a motorcycle and heading for Bali's central mountains -- to become utterly lost in a village rich in high Balinese, but short on English.

And it is this new breed of Bali-loving celebrities who may act as the centerpiece of the inaugural Bali Taksu Film Festival and Awards to be held later this year, under the auspices of the Bali Film Centre (BFC) and Bali-based publisher Saritaksu Editions.

According to BFC director Deborah Gabinetti, the first Bali Taksu Film Festival and Awards is slated for Oct. 25-28 with dozens of high-profile actors, directors and producers of blockbuster films and documentaries on the guest list.

"What we want to do is invite people who have long supported the country through thick and thin, such as Sigourney Weaver, Richard Curtis, Ed Norton Jr., Oscar-winning screenwriter of Dangerous Liaisons Christopher Hampton, Susan Sarandon, Richard Gere, award-winning film-score composer Richard Horowitz, Bill Murray and actor-director Robert Redford, who occasionally travels to Bali to paint," said Gabinetti.

"Through the film festival we want to recognize them for their continued support and also introduce the many film locations of Indonesia. It's a working and awards festival," she said.

Gabinetti has recently traveled to film location trade shows in Hong Kong and Santa Monica, California, wearing her BFC hat and promoting Indonesia to the international filmmaking fraternity as a country of prime film locations.

Setting itself apart from other festivals around the world, Saritaksu Editions' Sarita Newson says the Bali Taksu Film Festival will select the winning films from festivals such as Sundance, Cannes, Tribeca, Hong Kong, Busan and Venice for screening.

"This will not be a film judging festival, but rather taking the best of the year's films from around the world. That concept has not been done anywhere else; that idea of presenting the best films that have already been selected by audiences around the world," said Newson.

Current plans for the festival include a celebrity golf championship and three days of film screenings and entertainment, followed by what Gabinetti and Newson say will be the real meat of the exercise: the introduction of potential film locations to production houses with the bucks to back their films.

Heading up the festival committee are honorary chairman and former culture and tourism minister Joop Ave, alongside his honorary co-chair, Indonesian actress Melati Rima.

Newson says the project is already receiving strong government support for the festival, but that strong funding will define its success.

"What we really need to make the festival the success it will be is financial sponsorship," she said.

"We know a festival of this nature will bring a volume of dollars to Bali and the rest of Indonesia, but for now we need investment to make that a reality."

source.. JakartaPost
Posted by, Thursday, April 19, 2007 2:02 AM | 55 comments |

The joy of blogging

Lutfi Makarim

Welcome to the first article in new series, IT&U. Here, I will try to explain how various enhancements in technology have really enriched our lives today.

With the creation of websites like MySpace, YouTube and blogging, the content of the Internet has gone to ordinary people like us, not website creators.

There is even a word for it: Web 2.0, which implies that the Internet has really changed from the old version, where it was controlled and maintained by insiders and the Web was only for geeks and nerds.

Nowadays, almost anyone can create a blog or a MySpace account.

In this article, I'd like to concentrate on blogging. These days, it seems really uncool if you do not have a blog.

First, I'd like to explain what blogging really is.

According to Wikipedia, a blog is, "A website that contains dated text entries in reverse chronological order (most recent first) about a particular topic."

What does that mean for the rest of us? Think of blogging as a diary, but instead of a printed article, it is posted on the Internet and made in such a way that almost everyone has access to it, as long as you know the address.

So, who creates these blogs that we see flooding the internet?

The more appropriate question is who is NOT making a blog these days: From American soldiers stationed in Iraq to bored teenagers in LA, everyone is having a say on any topics imaginable, from the mundane to the serious.

If you are new to blogging, there are many websites that provide easily understood instructions for creating your own blog address. They can be made in a matter of minutes or a day.

A very famous and informative website for creating blogs is blogspot ( If you are just starting, go there for a step-by-step tutorial and also many blogs on almost any topic imaginable.

In closing, I would like to make this article reader-based, so feedback and information are welcome.

Do you have a blog or website that you would like to share? Contact me at

See you next time!

Lutfi Makarim is screenwriter who has skills in bringing a unique style of contemporary western and eastern perspective in storytelling.

Source: JakartaPost
Posted by, Monday, March 19, 2007 7:59 PM | 1 comments |

When enemies become allies, forests and inhabitants benefit

Erik Meijaard, Jakarta

When people talk about forest conservation in Indonesia, their discussion is based on a simple equation: forests plus logging equals devastation and the loss of biodiversity. The timber companies have long been considered the number one enemy of the conservation movement, and for good reason. But is it in our best interests for that to continue?

Granted, no one can deny that the timber industry's activities have led to massive forest degradation and loss, and in many places this continues. Biodiversity suffers whenever forests are cleared. The species found in grasslands and plantations are in no way comparable to those found in primary or lightly disturbed rain forest.

In general, timber concessions rarely follow the plethora of forest management guidelines prescribed in government laws and regulations. Logging opens up forests, attracting other operators that illegally harvest even more timber, in turn leaving forests vulnerable to fire. The legacy of decades of "bad" logging in Kalimantan and Sumatra has left, in many places, a degraded landscape. But not all areas were logged heavily, and "good" forest still remains in timber concessions to this day.

The most relevant way to judge logging is to ask firstly, how drastically logging changes forests; and secondly, how it affects wildlife. Recent work shows that well-managed forestry concessions can actually benefit wildlife conservation tremendously. Sustainably managed production forests, for example, can provide and maintain valuable habitat for many species that would otherwise disappear if the forest was lost altogether. The key issue is effective management.

The truth is that without some form of recognized management, whether it be by local communities or large enterprises, most of the accessible forests in Kalimantan and Sumatra will be claimed by someone. The timber will be removed illegally and the forest slowly converted to either agriculture or plantations or, worse, burned and then left as barren grassland. And it appears that it makes little difference whether these forests have protected status or not. In fact, in some parts of Kalimantan, forests disappear more rapidly from within the protected areas than outside of them.

But how do you ensure that forestry concessions are well managed? One mechanism is to encourage independent forest certification. Four natural forest concessions in Indonesia have obtained forest management certificates from the internationally recognized Forest Stewardship Council (FSC) -- three of them within the last year alone: PT Diamond Raya Timber, PT Erna Djuliawati, PT Sumalindo Lestari Jaya Unit II and PT Intracawood Manufacturing.

But getting certified is a multi-year process that requires significant management improvements. Concessionaires must improve management systems, adopt low-impact logging techniques, prove that their timber is both legally harvested and that it can be traced back to its source. They also must have credible environmental management systems in place, including setting aside or specifically managing forests that have high conservation values.

Such values are based on their importance for species and landscape conservation, water management, and socio-cultural needs. The concession has the obligation to ensure that these values are maintained, and annual independent monitoring should ensure that this obligation is met.

The question, for anyone who knows the industry, is why concessions would voluntarily invest significant sums of money in trying to achieve certification when there is little incentive for them to do so -- and more disincentives than you could possibly imagine.

But keep in mind that under current business conditions, concessionaires deal with social conflict, security problems, power struggles between different levels of government, conflicting laws and regulations, illegal logging and other forms of encroachment, overlapping land use issues, weak law enforcement, extortion, and of course, not forgetting the ever-present KKN (corruption, collusion and nepotism) on the side.

As a result, the cost of doing business is now higher than ever before. And it is not just the big players that are being squeezed; local communities are also feeling the pinch. One FSC certified community forest in Sulawesi, for example, has had to pay over Rp 50,000 (US$5.55) per cubic meter just to obtain transport documents for wood grown on their own land.

Still, one thing is clear. Those companies that have gone down the certification path have done their math. They know how much they invested, but they also know that once they have cleared the certification hurdle, an entirely new market awaits them.

Companies on the front end of the certification wave can expect to receive a significant premium price on their certified timber. In Malaysia, certified logs are sold at forest edge auctions to international buyers at US$275 per cubic meter, or almost three times the normal market price. Additional tangible financial benefits also exist such as increases in share price. For example, PT. Sumalindo Lestari Jaya Tbk saw a 300 percent increase in its share value one year following certification of its unit II concession in East Kalimantan. The increase in share price can be attributed in part to the credibility the FSC certificate has conferred to the company.

Implementing widespread forest certification processes will require changes at the government level, however.

So far, forest and wildlife conservation appears limited to protected area management, at least according to the government.

Managing the currently protected areas of Indonesia is unlikely to be enough to maintain viable forest and ecosystem services; the total protected area is simply too small. And adding more protected areas to the management tasks of the already overstretched nature conservation department will not lead to more effective management either. Local community and private sector management of forests outside the official protected area system is therefore crucial to the future success of wildlife conservation in Indonesia.

The time has never been better to work with government to drive change, but it must happen now. Recent certification successes in Kalimantan posted by by PT Sumalindo Lestari Jaya, PT Erna Djuliawati and PT Intracawood Manufacturing and collaborative management between PT Sumalindo Lestari Jaya Unit IV together with local communities and local government show that these approaches can provide an answer to the problem of Indonesia's disappearing forests and wildlife.

Within such a new conservation framework, sustainable production forestry can provide the required infrastructure, funding, personnel, and long-term commitment for effective management.

The writer works as senior forest ecologist at The Nature Conservancy. He can be reached at

source. Jakarta Post
Posted by, Thursday, February 22, 2007 6:35 PM | 49 comments |

Don't rely too much on TV ratings to verify program's selling pover

Adwin Wibisono, Jakarta

The validity of TV ratings is a debatable topic. Much discontent has arisen over ratings reports and their affect on the quality of programs, producers, audiences and advertisers. Concerns on the matter range from questioning industry standards to suggesting the need for a new ratings provider.

The problem has two causes: the unequal spread of exposure to and familiarity with ratings data and the knowledge gap (due to this unfamiliarity) among the different stakeholders in the media.

It should be easy for media industry players, advertising and media agencies, programming and marketing staff at TV stations and to an extent the advertisers themselves, to understand ratings. These practitioners are the immediate users as the use ratings to design media plans and program schedules worth billions of rupiah.

The complications start when other stakeholders use the same data but from different perspectives.

Station owners, compared to their programming and marketing divisions, hardly have time for extensive analyses of ratings data and mostly take a couple of figures from the entire study to measure up against competitive TV stations. The weekly TV audience share and list of top programs become a display of performance. This contradicts the original objective of TV ratings data, to be an indicator of audience patterns in order to measure a business' success.

In a stark contrast, advertising agencies and advertisers, who buy advertising time on TV stations, rarely take notice of the overall audience share of particular TV stations. They focus on the proportion of their target audiences' viewing patterns using figures such as program audience share or target audience rating indexes, rather than mere program ratings.

The selection of programs in a media plan is quite impervious to overall station audience share or high-rating programs per se; that is why stations like Global TV or Metro TV continue to attract advertisers, regardless of their small audience shares and average program ratings.

Today's dominant view tends to (mis)lead program providers to believe that high ratings are the only verification of a program's selling power, resulting in program evaluations reduced to being based on ratings amongst a general population rather than to a designated target audience, its qualitative content or appeal to certain groups of consumers to sidestep. This leaves TV ratings to take the blame when they deliver bad news.

On the other side of the industry, advertising agencies and their clients are quite oblivious to this situation. Their use of ratings data in relation to a particular program goes beyond program ratings. They look into various elements, including whether the program has a significantly higher rating index (not the TV ratings figures) towards the advertiser's target audience compared to the general population; how much viewership drops during commercial breaks; or whether placing an ad in the program would increase a campaign's advertising reach and/or frequency.

This is just a half of the decision process. Other factors include financial deals with the station and the qualitative judgment on the program's content -- why viewers tune in and whether placing an ad would support the advertiser's brand image.

Therefore a program's failure to attract advertising can be attributed to several reasons aside from ratings: its content may not suit the advertiser's target audience or the program is simply not being marketed well to the advertising agency.

The TV Audience Measurement (TAM) survey is designed specifically for professionals in the media industry, i.e. media planners in advertising and media agencies and the programming and marketing departments in TV stations; and never intended for the general public. Neither is it designed to judge a program's quality, a station's business performance, nor discover why people watch certain programs.

Unfamiliar or inexperienced use of TV ratings data may lead to inaccurate assumptions, such as an over-reliance on ratings as a prerequisite for program quality or -- even worse -- that poor programming or sales are attributable to faulty methodology on the side of the TAM provider.

The media industry -- as in any other industry -- also has its standards; any research agency undertaking a TAM survey must abide to the Global Guidelines for Television Audience Measurement, the standard manual adhered by the world's media and advertising research associations. The current provider of TAM in Indonesia is AGB Nielsen, which in accordance to the manual has recently undergone a research audit.

AGB Nielsen is not the only company qualified to provide TAM. The issue lies with the standards. TV ratings from AGB Nielsen are considered the industry currency. Besides, having two TAM operators covering the same area may confuse the industry as to which figures are to be used as standard.

An alternative survey conducted outside the current covered areas, therefore, will compliment the current TAM survey covering 10 cities. Some countries, like China, have two TAM providers due to their geographic size, while others use different providers between local and national or urban and rural coverage areas.

An alternative study should be designed to uncover qualitative viewer information, for example, reasons for choosing programs or how viewers feel when watching programs or commercials; thus providing the industry with a much needed qualitative perspective to compliment TV ratings' existing quantitative data.

The market remains open for competition. The only entry barrier is the lack of the infrastructure, hardware, software, trained personnel and expertise needed to cover at least 10 major areas around the country on a continuous basis. The industry should also be ready for the cost of adapting a new set of industry standards.

The writer is a former senior research executive at AC Nielsen and now works as the director of media strategies and analysis at DDB Indonesia.

Source- Jakarta Post
Posted by, Monday, February 19, 2007 6:00 PM | 2 comments |

New Billy Tjong boutique adds spark to Kemang

Kathy Petite, Contributor, Jakarta

Like an irresistible magnet that pulls visitors to come again and again, South Jakarta's elite Kemang area retains an irresistible charm. And the seemingly endless emergence of new spots in the area inevitably tickles the curiosity.

The latest is a brand-new wedding boutique that opened on Monday The opening was delayed by four days due to the recent flood that affected road access and shut down electricity in Kemang -- but as it turned out, the Billy Tjong wedding boutique was launched just ahead of Valentine's Day.

Billy Tjong is one of Indonesia's talented young fashion designers, and his upmarket boutique is located in Kemang Square, which also houses a Starbucks.

Adopting a modern minimalist look, the boutique possesses a light airy atmosphere with its off-white paint and high ceilings. Its comfortable fitting room provides more than enough space for a bride-to-be to try on a voluminous wedding dress -- and to emerge to comments from her sisters, mother and perhaps a future in-law. And against the neutral colors of its simple and sleek furniture, the dresses on display stand out even more.

But if you think that you will only find nothing but wedding dresses here, you would be wrong.

Targeting upper middle- to upper-class consumers, the Billy Tjong boutique offers more than dresses for women to wear on the best day of their lives.

In addition to his collection of wedding gowns and kebaya -- traditional women's blouses -- customers will also find a range of evening dresses, ball gowns, cocktail dresses and a small menswear collection.

Some of these pieces were presented by top Indonesian models in a fashion show on opening day, and Tjong captivated his audience with his creativity in exploring new ideas and his boldness in leaping out of the ordinary and predictable. Dazzled eyes and sighs of fascination filled the air as the models swayed elegantly down a runway set up in front of the boutique.

Should it be the red-hot evening dress? The irresistible cocktail dress in jet black, or the chic white adorable babydoll bridal gown? Picking the most stunning piece was no easy task, as they each had their own charm.

But what appeared most memorable was the cute little surprise during the finale -- a gorgeous white puff-skirt bridal gown that reached slightly above the knee, revealing the beautiful legs of the "bride". A bit unconventional, perhaps, but the dress turned out to be an elegant full-length gown when the puff-skirt was let down by the "groom".

As Billy said himself. "I think it's fun to be out of the box sometimes instead of using the same old pattern and style, which leads to a monotonous look. Instead, I love trying or combining new or different elements in my bridal gowns and other dresses."

Renowned fashion designer Ichwan Toha, who attended Monday's opening, related his impressions eagerly: "What I've just seen tonight is a reflection of Billy's personality, who has a remarkable eye for detail and a cool, funky taste."

With five years' experience under his belt, along with a number of prestigious national and international fashion awards, Tjong is strengthening his presence in the Indonesian fashion world.

He was a finalist of the Mercedez Benz Asia Fashion Awards (MBAFA) for two consecutive years, and won the famous Lomba Perancang Mode (LPM) 2005 by leading women's magazine Femina with his delightful pirate-themed creations.

And he is still on a roll, frequently appearing on the fashion spread of several leading magazines. Tjong has been asked a number of times to take part the L'Oreal Colour Trophy Hair Show.

Tjong's hands can't stop sketching designs, and he also takes pre-wedding photographs to fulfill his passion for art.

Supported by L'oreal, Christian Tortu flowers and Indah Nam jewelry, Billy Tjong's notable boutique is a dynamic addition to the colorful hustle and bustle of Kemang.

Billy Tjong Boutique Kemang Square, 1 fl, Nos. 7-8 Kemang Raya, South Jakarta Phone: (021) 7198101, 71794705

Source: Jakarta Post
Posted by, 12:34 AM | 0 comments |

Time to end blame game and start solving problem

Carolyn Baytion-Sunaryo, Jakarta

After the epic 2007 flooding of Jakarta, everyone blamed one another for the devastation. Those affected by the flood blamed the government. The government, in turn, blamed Jakartans for throwing garbage in the rivers and blocking the drainage system. Even worse, government officials blamed each other; no one took responsibility.

How the problem of flooding is addressed reflects on how we work, be it the government, business organizations or schools. Among other things, it reflects a weakness it planning. We draft plans and then never go back to them. If indeed this big flood happens every five years, shouldn't everyone be prepared?

Perhaps no-one can be completely ready for a disaster of this scale. But if leaders prepared their subordinates to act, the subordinates would know what to do. In situations like flooding, when communications may be cut off, those responsible for delivering the much-needed food and medicines and those running temporary shelters should already be at their posts, ready, when needs arise.

In the process of urbanization, floods can't be completely avoided, but the devastation caused by flood waters can be minimized. We need to be prepared for such emergencies. For that, we need effective leaders.

What does it take to be an effective leader? According to Peter Drucker, an effective leader asks, "How can I contribute to my organization?" Effectiveness in handling a disaster like a flood means having enough personnel attending to the victims and delivering supplies.

The truly effective people are perhaps not the ones who appear on television. Instead they are busy cooking or working in shelters far away from the television cameras. One kind of effective leader is quite active in the smallest unit in the Indonesian government, the neighborhood unit or RT. The RT and neighborhood community (RW) organizations are actually very effective. In bad times like the recent flooding, these RT and RW officials already know what to do. But in places like Kampung Melayu and Kelapa Gading, the RT/RW officials themselves are among the refugees, so the system does not work well anymore. That is where the military, government ministries, and the office of the mayor or governor come in.

Another example of an effective leader is the owner of Pesan Delivery. The Jakarta Post published an interview on Feb. 7 with a company delivery man who was bringing food to executives in Dukuh Atas despite the flooding and the snarled traffic. The owner responded quickly to an opportunity to deliver food to people in need and had employees who were willing to take the risk of traveling through the stricken capital.

The press, I think, has effective leaders. They delivered the news people wanted. These reporters were right there in the flood waters with the victims. They understand very well how people felt. Maybe they or their relatives were affected by the flood. But they still went on and did what they could so that the rest of us would know what was happening.

Being effective in a company or a university or a country is not just the concern of the director, the dean or the president. Everyone can contribute something, from the lowest employee up to the highest-ranking official, as long as that person considers what he or she can do to make things better.

Leaders and their constituents in organizations need to be effective because organizations exist to serve a purpose. The PLN must provide electricity; PAM Jaya, clean water; Telkom has to keep telephone lines and Internet working; schools have to educate the young, the country's future leaders; the Ministry of Social Affairs needs to provide temporary shelters, food and clean water to refugees in times of natural calamities; and the city government needs to provide public transportation, among others.

If these organizations do not function, then the people they aim to serve can't be productive enough to pay their bills and their taxes, threatening the existence of the organizations themselves.

So, let's stop this finger-pointing and get back to work. By sincerely asking, "What can I contribute to the organization I lead or work for?" each of us will begin to understand what needs to be done and address these needs one at a time. There will be a ripple effect causing other organizations to do the same.

Hypermarkets, supermarkets, mini-markets, restaurants and eateries, schools and offices all opened and kept on operating as soon as they could. The press has already done its part. Artists, political parties, business organizations, government officials (the ones doing something, not just talking) have been working. They may have ulterior motives, but the fact that they have acted and alleviated a little of the people's suffering is better than nothing at all.

The writer is the general manager of GS FAME Institute of Business, Jakarta. She can be reached at

Source: Jakarta Post
Posted by, Tuesday, February 13, 2007 6:15 PM | 1 comments |

Challenges and potential of domestic gas market

Montty Girianna, Jakarta

If we ask ourselves about where our country's energy future lies, the likely answer is in natural gas. It can generate electricity, fuel vehicles, cool homes and places of business and be used as a raw material in a number of fertilizer products.

Gas is also a substitute for oil. Oil resources, once thought plentiful, are being depleted and won't last forever. With Indonesia's oil resources being drained the country recently became a net oil importer. Oil, once thought cheap is becoming expensive, as witnessed when world oil prices skyrocketed last year.

The impact is crystal clear. Subsidies for oil products, which induce further reliance on imports, have become a tremendous burden to the state's budget. This may further strain the nation's economic and political strength on the world stage.

Our gas market has recently evolved. Although Indonesia's natural gas reserves are among the highest in the world, its domestic gas consumption is among the lowest. Many obstacles exist that prevent the rapid development and expanded utilization of gas in the nation's market. These include its energy pricing policy, gas development and investment in upstream and downstream infrastructure.

Oil products, which may be substituted by gas, are cheaper than natural gas products. At the same time, the price of natural gas was itself below its true economic value. This resulted in the development of the gas market being hindered by its producers. Natural gas was thus not able to penetrate the energy market owing to domestic fuel prices, which were substantially lower. We most definitely need to rationalize overall energy prices.

More than 90 percent of the country's oil and gas is produced in the private sector, chiefly by international oil companies. Investment is almost completely governed by production-sharing contracts (PSCs). Most of the fiscal and non-fiscal PSC terms are in line with international practice. However, many existing contracts still do not have provisions for gas exploration and as a result there is no predictable basis for forecasting the value to producers of domestic markets. We need to resolve such issues that hinder the development of gas markets.

Also, we have to face the reality that great distances exist between most of our gas reserves and gas demand centers. We do not have a sufficient upstream and downstream gas network (infrastructure for the transmission and distribution of gas). Only 1,000 kilometers of transmission piping and 3,000 km of distribution piping currently serve six cities in the country -- an impediment than could further limit our domestic gas growth. We also have problems with our regulatory framework and have insufficient funds to develop adequate infrastructure for gas distribution.

The nature of our gas industry has recently changed. Domestically, the reduction of fuel subsidies has eased fluctuating fuel prices, making natural gas more competitive as an energy alternative. Growing energy needs in Java and Bali will spur demand for domestic gas. We need more electricity, (approximately another 20,000 MW), to maintain society until 2015. A great deal of this demand will be satisfied by natural gas.

Today, gas consumption in Java accounts for less than 20 percent of Indonesia's domestic demand (close to 1,200 million cubic feet per day [MMSCFD]), which is slightly less than the outer islands where there is a concentration of industrial and fertilizer plants. In the future this figure will increase by between 6,000 MMSCFD and 7,000 MMSCFD and account for half of national total demand. These forecasts will bring definite opportunities to natural gas producers in the domestic market, even in light of the diversification of the international liquid natural gas (LNG) market.

New international producers of natural gas are challenging our leadership in the global LNG market. Our position, in which we supply almost 26 percent of the world's LNG, is in danger, and revenue derived from gas exports -- about 10 percent if our total export revenue -- is also under serious threat.

Japan is currently our largest export market with a commitment to approximately 18.5 million ton of LNG per year. This is followed by Korea, which has a 5 million ton per year commitment, and Taiwan, which has a 3.5 million ton commitment per year. A large number of gas contracts will end in 2010, leaving approximately 9.5 million tons of LNG per year available for sale. This equates to around 50 percent of our current gas exports to Japan.

The development of natural gas has contributed considerably to our macroeconomic stability. Our economy has been improving since 2002. After periods of fluctuation our foreign exchange reserve now registers a steady increase. From approximately US$29.4 billion in 2000, our reserve dropped to $27.5 billion in 2003. It then reached $36.3 billion in 2004. In the first quarter of 2005 it decreased to about $30.3 billion.

Besides foreign exchange rates, our reserve fluctuates depending on the volume and value of exports and imports. One of the sources of our reserve is the value of oil and gas exports. Such natural resource-based exports constitute a significant portion of the national current account. In 2005, such exports contributed approximately 22 to 25 percent.

Our energy prices have been rationalized and the domestic gas market is being restructured. Full removal of oil subsidies, however, will require more time and the substitution of domestic gas for imported fuels will contribute to resolving fuel price distortions. Promoting gas use and implementing a rational gas pricing policy must be further enhanced. This should become a central part of the nation's strategy to reduce its reliance on oil products and phase out subsidies.

Issues corresponding to contracts that have no provisions for gas exploration must be immediately resolved. For existing contracts, any change in terms and conditions must be mutually agreed upon. With respect to new contracts, one must rely on the oil and gas laws and other regulations aimed at creating a competitive environment that provides producers with direct access to consumers.

A greater government role is needed in promoting investment in high-risk, large-scale upstream gas projects, such as export-oriented gas pipelines and LNG facilities. The government must help reduce risks by intensifying dialogue and developing relevant inter-governmental agreements. These agreements must overcome the overarching legal jurisdictions that regulate activities and contracts. In addition, the government must commit to implementing prudent and transparent revenue management frameworks to avoid mismanaged revenue from gas production.

The government has neither the financial or technical capabilities to ensure the successful exploration and production of viable gas reserves. The development of upstream and downstream networks is capital intensive. Investors, both domestic and international, will have to contribute a growing share of investment for upstream and downstream networks. Their participation must be encouraged, not only because private sectors can provide capital, but also because they can enhance efficiency and innovation.

Lastly, it must be in the government's interests to fashion strategies that promote the creation of regional gas markets through LNG and export-oriented pipelines. Careful thought must be given to ensure this is not in conflict with the fulfillment of the domestic demand for gas. The endorsement of dedicated gas developments for export should be carefully assessed in order to ensure that the ultimate aim of increasing and strengthening our foreign exchange reserves is maintained.

The writer is the director for energy, mineral resources and mining at the National Development Planning Agency (BAPPENAS). The views expressed here are his own.

Source: Jakarta Post
Posted by, Monday, January 22, 2007 7:47 PM | 26 comments |