Research opportunity in Indonesia

Research Project Maastricht is a non-profit organization related to Maastricht University, The Netherlands. Since 1989 we have been annually conducting research for companies in an upcoming market. This year, fifteen carefully selected students will travel to Indonesia from December 2008 until May 2009. The tailored research RPM can provide your company with is very diverse varying from, for example, an analysis of the market to an assessment of investment possibilities. Are you interested in the opportunities Indonesia has to offer your company? Contact us on 0031-43-3883931 or send an email to contact@researchproject.nl. For more information on Research Project Maastricht please visit http://www.researchproject.nl/

Ministry of Cooperative and SMEs to facilitate SMEs entering modern market

Ministry of Cooperative and SMEs facilitates the packaged food products from SMEs to penetrate the giant retail network in Indonesia. The assistant of Deputy Partnership and Business networking from the Ministry of Cooperative and SMEs, Herustiati, said that the two giant retailers, Carrefour and Alfamart, agree with the offer from the ministry to market the products that comply with the quality and packaging standards.

Government to restrict new factories outside estates

The government is preparing a draft regulation banning construction of new factories including expansion units outside industrial estates, Asia Pulse reported. The draft regulation is expected to be signed by President Susilo Bambang Yudhoyono before the end of this year, said Edy Putra Irawady, a deputy at the Office of the Coordinating Minister for Economic Affairs. The draft regulation will allow exceptions for certain factories which have to use certain basic materials and operate in certain locations such as cement factories, the newspaper Bisnis Indonesia said. Violation of the regulation will face administrative sanctions such as suspension or revocation of business license. The regulation is aimed mainly at simplification in the management and processing of industrial waste and for efficiency in supply of energy and provision of supporting facilities.

Government eyes water transportation system

The government is inviting the private sector to assist it in developing an integrated system of river and railway-based transportation systems across the archipelago. We aim to develop a river transportation system by connecting rivers to rivers, rivers to a port, etc.," Dedy Supriadi Priatna, a deputy at the National Development Planning Agency (Bappenas), said Wednesday in a seminar. "The government also plans to develop and manage an integrated system of land transportation and railway-based transportation and combine both systems with a river transportation system."
The water infrastructure development projects form parts of the 2005-2009 national infrastructure program which requires a massive US$65 billion in investment -- although none of the funds have been allocated to waterway projects.

Four airport railink projects offered to investors

The government offers four airport raillink projects to local and foreign investors. Directorate General Railway of the Ministry of Transportation, Wendy Aritenang, said that for the initial step, the tender for the airport train project in Jakarta was officially opened was opened for the Soekarno-Hatta Airport Railink. In addition to the Soekarno-Hatta Airport Railink project, they will also offer the Kualanamu Airport Railink (North Sumatra), Minangkabau Airport Railink (West Sumatra) and Juanda Airport Railink (Surabaya). "We are giving opportunities to all stakeholders," Wendy said. (Bisnis Indonesia, Aug 22, p. M4)

Riau Investment Forum offers 50 projects

The government of Riau province offers 50 investment projects to the local and foreign investors in the Trade and Investment Forum in Pekanbaru. The administrator of Secretary Riau government, Herliyan Saleh, said that these projects consist of 9 investment projects, 11 prospective projects, and 30 potential projects, among other in the field of infrastructure, tourism, industrial area, agriculture, and processing industry.

Cacao export from South Sulawesi increased 44%

In the first semester of 2008, cacao export from South Sulawesi reached US$161.03 million. There was a 44% increase in comparison with the value for the same period in 2007. The Central Bureau Statistic (BPS) of South Sulawesi reported that cacao export in June has reached US$51.61 million exceeding the export in May 2007 of US$ 38.27 million.

Holland company to buy fish from Indonesia

Holland fish-processing company Esro Food Product is going to import fisheries products from Indonesia from three major fish-producing provinces, Jakarta, East Java, and South Sulawesi, starting from September. For a start, Esro will import at least 3 containers of shrimp and kakap fish from Jakarta, while further calculating imports from East Java and South Sulawesi. This was revealed by Director of Foreign Marketing at the Department of Marine Affairs and Fisheries Saut P. Hutagalung yesterday in response to the more open European market following the European Union Commission's decision to loosen quality requirements for Indonesian fisheries.

EU lifts trade barriers for Indonesian fisheries products

The EU Commission eventually lifts the trade barriers for fishery export from Indonesia by easing the national fishery export guidance that freeing the condition of histamine test and lead. The directive 2008/660/EC was issued on July 31, 2008 after the commission was sure about improvements in the quality control and monitoring of Indonesian fisheries products exported to the EU.
The EU Commission has loosened test requirements for Indonesian fisheries products. Previously, the EU upped the requirements through the Commission Directive (CD) 326/2006 (2006/326/EC) dated March 21, 2006. The new directive frees Indonesian aquaculture and fisheries products from histamine and heavy metal tests. However, the EU maintains heavy metal test for Indonesian catch fish. The test requirements previously delivered a fatal blow to Indonesia's fisheries export since exporters had to spend more money on 400-700 samples per container. The requirement also increased the waiting time for Indonesian fisheries products entering the EU ports to two weeks and upped container cost to 1,500 euros-2,000 euros per day. Following the trade barrier lift, the UE states it recognizes and appreciates efforts made by the Indonesian authorities to improve their monitoring and control processes.

Indonesia largest potato producer in SE Asia

Indonesia is the largest potato-producing nation in Southeast Asia with an annual production of 1.1 million tons, a minister said. "Indonesia is the largest potato-producing country in Southeast Asia. The prospects for potato production in the world market are quite good because it supports the global food security," Agriculture Minister Anton Apriyantono said when opening the 2008 National Potato Week in Lembang district, West Java..The event is one of the efforts to support the activities of the UN which has declared 2008 "The Year of Potato" to strengthen the global food security following a drop in the global production of foodstuffs including cereals.The condition has prompted the UN to launch worldwide campaigns to increase the role of potato as a foodstuff besides rice, corn and wheat.

Government challenged to control inflation in 2009

The Indonesian Chamber of Commerce and Industry (Kadin) said that the government`s major challenge in 2009 was to take inflation under control owing to the fact that oil and commodity prices in the world market are still difficult to predict until the beginning of 2009."If the government is unable to control inflation, the purchasing power of the middle will also drop. At present, domestic demand is still relatively good because the middle class has been able to maintain the level of its purchasing power," Bambang Soesatyo, chairman of Kadin`s permanent committee for monetary and fiscal affairs, said here on Tuesday.

ILO: Indonesia`s 2008 economy shows sound improvement

Indonesia`s economy has been growing positively but the labour market has not yet developed significantly, according to a report of the International Labour Organization (ILO) on Labour and Social Trends in Indonesia 2008.While the unemployment rate has fallen to 9.1 percent followed by a rise in involuntary underemployment, such as that the share of those "fully employed" is actually bellow the level in 2002, the report said adding that looking ahead, it forecast unemployment to fall to 7.0 per cent by 2009.

Central Sulawesi offers their best commodities

Central Sulawesi province will be presenting their best commodities in plantation and agriculture sectors to potential local and foreign investors at the Sulawesi Expo 2008 from August 21 - 24 at the Jakarta International Expo, Kemayoran, Jakarta Pusat. Head of Agriculture, Plantation, and Livestock Service of Central Sulawasi, Kabul, said that they will expose their best products such as cacao, crude palm oil, coconut, rice, corn, and onion in order to attract the investment.

Tin exports jump 95% from Bangka Belitung province

Bangka Belitung Province's tin exports in April 2008 jumped 95.3% to $167.1 million from the same period last year, Asia Pulse reported. Tin exports to Singapore climbed 104.95% to $152.7 million in April from $74.5 million a month earlier, Head of the Bangka Belitung Provincial Office of the Central Bureau of Statistics (BPS) Syafril Said said. "Cumulatively, tin exports in the January-April 2008 period climbed 388.88% to $776.8 million from $158.9 million in the same period last year," he said. Bangka Belitung is one of the main tin-producing provinces.

Businesses begin weekend shifts to save power

More than 300 manufacturers have complied with the government's new energy-saving regulations on weekend work since July 31, with state power firm PT PLN expecting the figure to pass 3,000 by mid-August, The Jakarta Post reported. The regulation, which requires manufacturers to shift up to two working days a month to the weekend, will also incorporate requirements for hotels and malls to use their own power generators for 10 hours per week, an official said. PLN director for Java and Bali, Murtaqi Syamsuddin, said 302 manufacturers made changes to their working days from July 31, as scheduled by the government. The changes had saved 95 megawatts of power on the first day of the new system, and 112 MW the following day. "The amount of power saved (on July 31 and August 1) was lower than our target, but we are optimistic this will continue to increase," Syamsuddin said. PLN aims to save between 150 and 180 MW of power per day through implementation of the decree. The regulation, which was issued in the form of a joint decree signed by five ministers, is designed to reduce the power load during peak hours. Companies that operate 24 hours a day or seven days a week are exempt from the regulation. Murtaqi said PLN had 6,800 manufacturing companies among its clients in Java and Bali, but only 3,052 of these met the criteria set by the decree. PLN's ideal power reserve in Java and Bali is 40% of 16,500 MW, the total power consumption in the region during peak hours.

Indonesia to propose limitation on foodstuffs for energy at the UN’s general meeting

Indonesia will propose a limitation on the use of foodstuffs for energy sources at the United Nations’ general meeting in September. This limitation is aimed at anticipating the food crisis and Indonesia will urge the UN to put the issue of food crisis on priority. Foreign Affairs Minister Hassan Wirajuda said that a limitation of a maximum of 30 percent of total food production to be used for energy making could be tolerated. “Morally, it would be contradictory to use food for energy while people are hungry,” said Wirajuda in Bandung yesterday (6/8). Indonesia will also propose increased investment in the agricultural sector in line with the surplus enjoyed by oil-exporting due to the fuel price hike.

Government opens tender for 2009 subsidized fuel distribution

The government has opened a tender to procure and distribute subsidized fuel in 2009, Tubagus Haryono, head of the downstream oil and gas regulator BPH Migas, said,quoted by Thomson Financial. Haryono said his office has sent invitations to 27 companies to take part in the tender, including Pertamina, Malaysia's Petronas, Royal Dutch Shell, AKR, Medco Sarana Kalibaru and Barito Energy. BPH Migas will pick the winner after assessing the tender participants' readiness in terms of, among other criteria, their distribution network, fuel storage facilities and financial capability.Over the past three years, state-run oil and gas company PT Pertamina, as mandated by the government, has been distributing subsidized fuel given a lack of readiness on the part of private companies. Pertamina ended its monopoly of the distribution of subsidized fuel as a public service obligation (PSO) at the end of 2005. The government still subsidizes about 60% of nationwide fuel consumption.

Amended income tax law

The following amendments in the Income Tax Law have recently been approved by the House of Representatives Special Committee on Taxation. The New Income Tax Law is expected to be ratified in August 2008 and to take effect starting January 2009.
1. Corporate taxpayers:
a. Tax rates
♦ For ordinary companies
- Corporate income tax will be reduced to 28% in 2009, and to 25% in 2010.
- A reduced rate of 50% from the normal rate in the case of businesses with gross turnovers
of Rp. 4.8 billion or less for Small Medium Enterprise
♦ For listed companies
- A 5% reduction off the normal tax rate will be granted, subject to the requirement that at
least 40% of their shares are held by the public.

b. Holding companies
♦ Passive holding companies can enjoy exemption from withholding Tax on dividend.

c. Deductible expenses
♦ Costs arising from the provision of infrastructure, educational facilities, and
donations/contributions to sport, the victims of natural disasters, and scholarships will be
allowed as deductible expenses.

2. Individual taxpayers
a. Tax rates
♦ On dividend - 10% and final in nature.
♦ On income tax - 30% max. for taxable income of more than Rp 500 million.
♦ The 10% tax layer has been eliminated.
♦ For individual taxpayers that use calculation norms, the ceiling will be increased from Rp 1.8
billion per year to less than Rp 4.8billion per year.
♦ For non-NPWP individual taxpayers, a higher rate shall be applied, with the following
mechanism:
- 20% higher than normal rate for personal income tax, and
- 100% higher for article 22 and article 23 income tax.

b. Exemption
♦ The tax-free allowance for individual taxpayers will be increased to Rp 15,840,000 per year.
♦ Individual taxpayers with NPWP will be exempt from paying departure tax (“fiskal”) starting
2009, and such obligation will be abolished in 2011.

3. Others
• The income on interest and discounts on bonds received or obtained by mutual fund companies
are now subject to income tax.

The draft amendment to the Income Tax Law is considered to be more pro-business and pro- taxpayers because many incentives are provided. There have been claims from the Directorate General of Taxation that these incentives will reduce tax revenue of up to Rupiah 40 billion, but in fact, that it is only based on statistical calculation. Looking at the country’s current dynamic economic condition, the potential loss from the tax incentives given in the new income tax law will be covered by the gradual increase in income brought about by the improvement in the economy.
Based on dynamic calculation, the potential income from tax will be bigger because compliance will increase due to the lower tax rates. For instance, the tax on dividend payments will be reduced from 20% to a maximum of 10%. Those who earn dividends and previously have never reported will now feel free to report because there will be no more benefit to hide it. Besides, the tax office will find out about it during the tax audit and this will create more problems for them.

West Java to build design centre for small enterprises

The regional government in West Java will build a design center for small- and medium-size enterprises (IKM). Head of the training program at the Industry and Trade Department for West Java, Hani Yuhani, Bandung, Thursday (31/7), said the first phase of the design center will cover three industries. They are the shoe industry in Cibaduyut, Bandung; the rattan-based furniture industry in Cirebon; and the ceramic industry in Plered, Purwakarta. Hani explained the design center will be adapted from the unit of technical service at the Industry and Trade department. The unit has stopped operating since regional autonomy applied. “While the unit is actually a place for people to gain information, it connects the Industry and Trade Department with the community,” she said.

IPB to develop soy bean seed development center

The Faculty of Agriculture at the Bogor Institute of Agriculture (IPB) is developing a center for seeding soy beans outside Java. This will mean that farmers from outside Java will have easier access to quality soy bean seeds. “There is a long distribution channel that reduces the soy seed quality,” said IPB researcher, Didi Sopandhie, in a national workshop about Soy Beans at Brawijaya University, Malang,East Java, on Saturday (26/7) last week. IPB is working together with the Soy Bean Consortium, which was set up by the Agricultural Department, to develop two programs in two regencies in Lampung. Each program will have 100 hectare of land for seeding soy beans.

Belawan will implement NSW in December

Belawan harbor in Medan is scheduled to implement the National Single Window (NSW) system at the end of this year in order to anticipate the integrated customs system in South East Asia which will be implemented in 2009. The administrator of Belawan Port, Jimmy Abubakar Nikijuluw, said that after Tanjung Priok, Jakarta and Tanjung Perak, Surabaya, the NSW will be implemented in Belawan, Medan.

Fuel price impact to inflation ended

Statistic Central Bureau (BPS) recorded that there are no more impact of the fuel price hike to the inflation rate following the decreasing of monthly inflation rate in July 2008. The head of BPS, Rusman Heriawan, said that the inflation rate is mostly caused by the increasing of food price following the supply shock. Month-to-month inflation in July 2008 reached 1.37% while the year-on-year inflation has reached 11.9%.

New power plants to be built in South Sumatra

A consortium of state and private companies will build two steam-powered electricity generating plants, at Banjarsari power plant (2x100 megawatts) in Lahat and at Central Bangko power plant (4x600 megawatts) in Muara Enim. These two new power plants are to provide additional electricity supply in Sumatra. Director of PT Bukit Asam, Sukrisno, explained that the Banjarsari power plant is being built by the PT Bukit Pembangkit Innovative consortium.

Nusa Tenggara Barat needs extra generator up to 60 MW

Nusa Tenggara Barat needs extra electricity generator with the capacity of 60 MW to avoid the electricity blackout and to meet the demand of new customers. Manager of PLN in Mataram, Wasito Adi, said that PLN Mataram will receive electricity generator as part of the National Programme of 12.000 MW in order to speed up the supply of geothermal electricity. (Bisnis Indonesia, July 24, p. M8)

Tanjung Perak harbor will implement NSW in December

Tanjung Perak harbor in Surabaya is scheduled to implement the National Single Window (NSW) system at the end of this year. After Tanjung Priok, NSW system is hoped to implement in Tanjung Perak at December 2008, said the head of implementation of NSW, Susiwijono Mugiharso. Prior to Tanjung Perak, the NSW system will be implemented in Tanjung Emas harbor in Semarang in August.
(Bisnis Indonesia, July 25, p. M5)

OECD urges Indonesia to lift growth

Indonesia has been urged by the Organisation for Economic Co-operation and Development to overhaul its labour laws, remove foreign investment restrictions and cut its subsidy bill by linking increases in domestic fuel prices to world energy markets. The country’s central bank was also advised to act “resolutely” and “preemptively” to raise rates and combat inflation, which hit a 21-month high of more than 11 per cent in June.
The recommendations were made in the OECD’s first comprehensive study of the Indonesian economy, which it expects to grow by more than 6 per cent this year. The report was released on Thursday.
http://www.ft.com/cms/s/0/aac90fb8-592c-11dd-a093-000077b07658.html

To have a brief look on the OECD’s survey result, ” Economic Assessment of Indonesia 2008”, please visit:
http://www.oecd.org/document/57/0,3343,en_2649_33733_410147131_1_1_1,00.html

Government’s commitment to boost up investment is still low

Up to now most of the regions in Indonesian have not shown improvement in the economic management performance. Among the obstacles are the physical infrastructure management, access to the area and licenses that still become the problems of investment climate.
This is the result of survey which was carried out by the Regional Autonomy Implementation Observer Committee (KPPOD), USAID, and The Asia Foundation in 2007 with 12.187 business people in 243 regions in 15 provinces as respondents.
http://cetak.kompas.com/read/xml/2008/07/22/0222140/komitmen.pemerintah.
dorong.investasi.minim

Business people are not ready to transfer working days

“We asked that this be delayed until the end of August as there are still many unfinished problems in the provinces¨, said Indonesian Chamber of Commerce and Industry (KADIN) chairman, Mohamad S. Hidayat, yesterday (22/7). Hidayat went on to say that up to now, business people still have not received any official letter from the Manpower Minister regarding the schedule transfer. According to him, such a letter would serve as a guideline when negotiating with workers. “If there is no letter, the workers will insist even harder on making Saturdays and Sundays as holidays, thus allowing overtime¨, said Hidayat. (http://www.tempointeraktif.com/)