Sunday, 31 May 2009

Unilever to acquire a consumer goods company

After acquiring Buavita and Gogo from PT Ultrajaya Milk Industry & Trading Company Tbk., PT Unilever Indonesia Tbk. now plans to acquire a consumer goods company. Unilever Indonesia’s President Director, Maurits D. Lalisang said on Wednesday that the company can make the acquisition this year, although he cannot yet say the name of the company and the product that will be acquired. Corporate Secretary, Franky Jamin, said that the company has no problem with an acquisition since the company’s cash stands at Rp 1 trillion per March 2009.
Source: PA Asia - Public Affairs and CSR from Investor Daily, 22 May, p.10

Industries dismayed by gas deficiency

National manufacturing industries face are uncertain about the state of natural gas supply for the next six years, due to depleting existing volumes and ever increasing demand. Based on the result of mapping and inventory of the Industrial Ministry, by 2015 the national manufacturing industries need at least 2,585 mmscfd (38.75% increase compared to 2008). It is estimated that domestic gas producers will only be able to supply 60-70% out of the total gas consumption in 2015.
Source: PA Asia - Public Affairs and CSR from Bisnis Indonesia, 22 May, p.i2

Foreign convenience store will continue to grow

The Indonesian Retail Merchants Association (Aprindo) predicted the number of foreign convenience store in Indonesia will continue to grow, following their rapid expansion in Asia. Pudjianto, Vice Chairman of Aprindo said these global small-scale modern retailers are expanding their business in new markets in Asia, such as Indonesia, China, India and Vietnam. However Pudjianto said that local retailers will also continue to grow.
Source: PA Asia - Public Affairs and CSR from Bisnis Indonesia, 25 May, p.m3

Indonesia to have green building rating tool

Indonesia will soon have a green building rating tool, a voluntary environmental rating system that evaluates the environmental design and construction of buildings, amid growing concern about urban environmental degradation. The rating tool, which is called Greenship, is in the pipeline as a follow-up to the establishment of the Green Building Council of Indonesia (GBCI) last year. The Greenship rating is targetted to be launched by the end of 2009.
Source: PA Asia - Public Affairs and CSR from The Jakarta Post, 25 May, p.19

Draft Government Regulations on Mineral and Coal are entering the final stage

The four Draft Government Regulations (RPPs) on mineral and coal are entering the final stage of discussion with national mining stakeholders and the Indonesian Chamber of Commerce and Industry. The four RPPs are: RPP on Mining Areas, RPP on Mineral and Coal Business Activities which also regulate about domestic market obligation (DMO), RPP on Mining Development and Supervision, and RPP on Reclamation and Post-Mining. The government is also in the process of preparing one Ministerial Regulation on Mining Services.
Source: PA Asia - Public Affairs and CSR from Bisnis Indonesia, 26 May, p.i4

Thursday, 21 May 2009

Milk basic price will be determined

The government is planning to issue a policy on fresh milk consumption and determine the basic price of domestic fresh milk as part of the efforts to prevent the decline of selling price below the production cost. Previously, dairy farmers complained about the price reduction applied by milk processing industries (IPS). Currently, almost 90% of the national fresh milk production is sold to the IPS, which is consisted of PT Nestle, PT Frisian Flag, PT Ultra Jaya, PT Sari Husada and PT Indomilk-Indolacto.
Source: PA Asia - Public Affairs and CSR from Bisnis Indonesia, 19 May, p.i6

BEI to require mining companies to have minimum mineral reserves

The Indonesia Stock Exchange (BEI) is preparing a rule that will require mining companies wishing to be publicly listed to have mineral reserves enough for production over a minimum period of seven years. "The rule is aimed at giving investors a reference before deciding to invest in stocks in the sector. There must be a reference so that investors will not be like buying a pig in a poke," BEI president director Erry Firmansyah said here on Monday. The draft rule for listing in the BEI also contains listing and relisting fee which is set at Rp1 million per Rp1 billion of capitalization with a minimal fee amount of Rp25 million and maximum fee amount of Rp250 million. The current regulation sets the minimal amount of fee at Rp10 million and the maximum amount of fee at Rp150 million.The annual cost of listing meanwhile will be set at Rp500,000 per Rp1 billion of current paid-up capital with a minimum cost of Rp20 million and maximum cost of Rp200 million. Currently the minimum cost is Rp5 million while the maximum cost is Rp100 million.

The cost of listing is set at Rp25 million and no differentiation is made on primary and secondary listing. Currently the cost is Rp15 million for primary listing and Rp10 for secondary listing.BEI`s director of listing Eddy Sugito meanwhile said the rise in the minimum and maximum cost of initial listing and annual cost was reasonable.He said the cost of initial listing and annual cost had never been raised for the past 10 years. "The authorities have never raised the costs since 10 years ago," he said.

Robusta coffee output likely to decline this year

Robusta coffee production in Indonesia will decrease 1.7 percent after a prolonged rainy season, the US Department of Agriculture’s Foreign Agriculture Service said.

Robusta output will fall to 5.8 million 60-kilogram bags in the marketing year that began on April 1, the agency said on Tuesday in a report, with Arabica steady at 1 million bags. Indonesia is the third-largest producer of Robusta coffee.

“Continuous rain after February onwards will affect the growth of coffee cherries and can damage young cherries,” according to the report by Aji K. Bromokusumo, adding that rain had persisted into May.

However Indonesia’s coffee exports are projected to rise 2.2 percent to 4.7 million bags because of interest in specialty varieties, Bromokusumo said.
Source: JakartaGlobe, 20 May, page B.

Wednesday, 20 May 2009

Denmark Probed on B-to-B Collaboration in Drinking Water Projects in Indoensia

The very limited drinking water services facilities in Indonesia which nation-wise was only 24% of necessity, posted a vast market opportunity for Denmark to sell water pumps [to tap water from natural resources until drinkable] as well as water treatment systems.
The Danish Ambassador for Indonesia, Borge Peterson disclosed the point especially for Business News at the press conference after the Indonesian Danish Water Days 2009 in Jakarta Tuesday [12/5].
However, the use of sophisticated technology for clean water processing or water treatment required high financing. This was a challenge in itself, to think that the application of such expensive system would in the end increase price of drinking water. On the other hand the purchasing power of most people were still low, and so was the funding capacity of the Government therefore, a further discussion on the application of such high-technology in Indonesia, was still necessary to decide whether the collaboration would be exercised on the basis of business to business [B to B] or Government to Government [G to G].
Through Indonesian -Danish water day 2009, Indonesia-Denmark cooperation plan would be focused on actual challenges and existing possibilities which might be solved by bilateral cooperation. In this case Denmark would offer solutions by advanced technology and transfer of knowledge in the management of clean water distribution, energy efficiency in water supplies system, rehabilitation of pipelines, quality management, general water resources tapping, and waste water treatment.

Jakarta Still the Biggest Contributor of Non Oil-Gas Foreign Reserves

The global economic crisis had eroded the national non oil-gas export performance. Evidently through Quarter I of 2009, the total national non oil-gas export showed a significant downturn the decline was triggered by among others decline of consumers demand in traditional export destinations like America and Japan which recently showed weakening of purchasing power.
The Central Board of Statistics [BPS] reported that the national non oil-gas exports by March 2009 was posted at USD 8.54 billion or up by 20.64% against February 2009 which was USD 6.78 billion. However, the accumulative figure through January-March 2009 showed a downturn of 32.13% compared to same period the year before, i.e. from USD 43.13 billion to only USD 25.69 billion. In 2008 the non-oil exports was USD 136.76 billion or up by 19.86% compared to 2007 i.e. USD 109.60 billion.
BPS Statistic Board also reported that through 2008 Jakarta was still the biggest contributor of foreign reserves at USD 43.64 billion or 31.91% of total non-oil exports Jakarta’s export value in 2008 was up buy 13.91% compared to 2007 which was 37.57 billion. The next 5 biggest contributor of export after Jakarta were Riau USD 20.50 [14.99%], East Java USD 14.62 billion, North Sumatra USD 12.17 billion [8.90%] and East Kalimantan USD 8.64 billion [6.32%].
Meanwhile, through 2008 Japan was the main destination country of non oil-gas export at the total value of USD 13.80 billion [10.09%], followed by the USA UAD 12.53 billion [9.16%] Singapore USD 10.10 billion [7.39%], China USD 7.79 billion [5.70%] and India USD 7.06 billion [5.16%]. In the past few years, India’s economy was growing at high speed, hence being in the big five position as importer of made in Indonesia products, side-pushing Malaysia which now was in the 6th position importing at the value of USD 5.98 billion.

President to Open CTI Meeting

President Susilo B. Yudhoyono was scheduled to open the Corral Triangle Initiative [CTI] in Manado on May 15 and chair the meeting, further to attend the World Ocean Conference [WOC] on May 13 to May 14, 2009.
President Susilo and his Team would be in Manado on May 13 to May 14, 2009, this was disclosed by Dino Patty Djalal in a statement obtained by Business News by E-mail [11-15].
The two international meetings in Manado was a new phase in Indonesia’s Maritime Diplomacy which so far had been reputable as an archipelago state and pioneer in international oceanic and maritime law. In these two conventions Indonesia was looking forward to important breakthroughs in many issues related to people’s welfare, environment, climate change, and maritime cooperations.
President Susilo was also scheduled to hold a press conference after a range of meeting of the CTI was over.
The CTI Summit would be attended by 6 head of states, i.e. President Susilo B. Yudhoyono as host, President of the Filipina Philippines Gloria Macapagal-Arroyo, President of Timor Leste Jose Ramos Horta, Prime Minister of Papua New Guinea Hon. Grand Chief Sir Michael Somare, Prime Minister of the Solomon Islands Hon. Dr. Derek Sikua and Prime Minister of Malaysia Dato Seri Mohd Najib bin Haji Tun Abdul Razak.
WOC was the initiative of the Indonesian Government aimed at fostering international collaboration in the maritime sector particularly within the contest of anticipating global climate change – hence the theme of the WOC Meeting in Manado was “Ocean Impact to Climte Change and Rule of Ocean to Climate Change”.
The conceptual background of this WOC meeting was that the sea played an important role in the climate platform of the world. But the present climate trend posed a serious threat to maritime life and the communities of the surrounding areas. Therefore, WOC was expected to come up with a shared commitment in the management of marine resources, which was today being discussed and formulated into “Manado Ocean Declaration” which was to be followed up with an action plan and its sound implementation.
President Susilo B Yudhoyono had from the very beginning pioneered this CTI process when the president urged the insertion of a special paragraph in the APEC Declaration in Sydney [September 2007]. This CTI initiative was based on the fact that the coral zones in the CTI region [Indonesia, Malaysia, the Philippines, Timor Leste, PNG, Solomon Islands] treasured a tremendous wealth of bio-maritime resources which was often called “Amazon of the Seas” and therefore must be protected, especially to consider that this regions concerned the life of 120 millions of people in the related regions including Indonesia.
Since the APEC Declaration, the constructive process of CTI initiative was well underway, which reached its peak at the first CTI Summit in Manado this week.
The initiative of President Susilo was supported by 5 nations, namely: the Philippines, Malaysia, Timor Leste, Papua New Guinea, and Solomon Islands, who unanimously agreed to step up sustained efforts of protection of the bio-maritime diversity within the Coral Triangle [CT] Zone which encompassed the exclusive economic zones of six states including Indonesia. At the CTI convention in Manado on May 15, 2009, a commitment was expected in the form of Leaders’ Declaration which included among others adoption of the CTI Regional Plan of Action [RPoA] which would scheme up a Seascape Program, ecosystem-based fishery management, marine area protection, climate change adaptation, and minimizing the species of sea-biotics that were threatened by extinction, from the list of the International Union for the Conservation of Nature [IUCN].

Transportations, Warehousing, and Communications Sectors are The Most Attractive to Foreign Investors

The Investment Coordinating Board [BKPM] reported that realization of foreign [PMA] and domestic [PMDN] investments in the past four years [2005-2008] was in fluctuative trend. Realization of domestic investments in 2005 reached Rp. 30.72 trillions, decreased to Rp. 20.65 trillions in 2006. In 2007, the value increased to Rp. 38.88 trillions, but it decreased to Rp. 20.36 trillions in 2008.
And, foreign investment realization was also fluctuative where in 2005 it reached USD 8.91 billions, decreased to USD 5.99 billions in 2006. In 2007, foreign investment realization rose to USD 10.31 billions and it continued to increase to USD 14.87 billions. Latest report released by the Investment Coordinating Board stated that foreign investment realization in January-April 2009 reached USD 1.4 billions and domestic investment realization Rp. 1.51 trillions.

The BKPM reported that transportations, warehousing, and communications sectors were the most attractive to foreign investors with total investment realization at USD 8.53 billions, followed by metal, machineries, and electronics at USD 1.28 billions; motor vehicles and other transportations at USD 0.76 billions; chemicals and pharmaceuticals at USD 0.63 billions; and trade, repairs, and others at USD 0.58 billions.
While, domestic investors were mostly interestedly in food industry with a total investment realization at Rp. 8.19 trillions, followed by metal, machineries, and electronics at Rp. 2.38 trillions; paper and printing industries at Rp. 1.80 trillions; food plants and plantations at Rp. 1.18 trillions; and constructions at Rp. 881 billions.
For 2009, the Investment Coordinating Board sets target of investment realization to increase 10%-11% from that in 2008. This target was quite realistic considering sluggishness of global economy that it affects investment performance. Besides such external factor, investment performance is also affected by internal factor where year 2009 was assumed as a political year because in this year general election is held so investors take a careful attitude while observing the political development in Indonesia.

Socialize Consumption of Minyakita

Minister of Trade, Mari Elka Pangestu, continued socialization of low-cost cooking oil Minyakita in Jakarta under corporate social awareness program with prices at Rp. 7.000/liter, in adjustment to the average increase of prices of cheap cooking oil that has reached Rp. 9.000/liter.
In the same opportunity, 500 liters of Minyakita were under partnership between government and national oil producers sold in Johar Baru market, Central Jakarta. Sales of Minyakita in Jakarta were done intensively (once a week) and would continue until June 2009. this activity would continue until October 2009, and Minyakita would be sold commercially.
Commercial prices of Minyakita will be left to market meaning that the prices will be above prices of cheap cooking oil but below prices of branded cooking oil.
In daily tender of local CPO held in AKPB PT PN on May 11, the prices formed were Rp. 8.910/kg (FOB Medan/Belawan and Dumai) or increased from prices in the tender held on May 8 which were at Rp. 8.834/kg (FOB Belawan/Dumai).

Regarding Increase of Prices of CPO The Government was Asked to Think More Comprehensively

The Indonesian Crude Palm Oil Council [DMSI] asked the government to think more comprehensively about increase of prices of CPO recently.

Max Remajaya, a member of management of DMSI, told Business News that the government should be more focused on poor families as targets compared to reducing the burdens of businessmen by giving Value Added Tax Borne By Government (TDP) facility for cooking oil.
Prices of CPO in Rotterdam (FOB) presently at USD 750/ton or USD 650/ton (which one is deemed more stable?). If prices increase, it is not necessary for the government to do intervention, because based on macro economic assumption, it means following market economy.
“USD 650/ton is good for industries. But can it improve welfare of the society or does it bring looses to the society because the prices they have to pay are higher?”

USD 750/ton is higher so that automatically the government must do intervention. With prices at USD 750/ton, companies will reap a USD 100/ton profit. And, this amount can be given as subsidy for the poor and can also be allocated for biofuel consumption.

“With consumption of CPO at 5 million tons a year plus demand for biofuel at around 1 million tons, total domestic demand reaches 6 million tons. If government subsidy is averagely around Rp. 3.000/liter x 6 million tons; with this amount, the government is no longer necessary to pay subsidy because, based on calculations, there will be a time when 1 liter of rice a month can be obtained free providing that government gets revenue from corporate taxes and export duty on export of CPO”.

The Journey of National Budget Plan 2009

The National Budget Plan 2009 as per April 30 reached Rp. 11.203 trillion, caused by deficit financing which already reached Rp. 58.163 trillion or 114.16% and state’ spending which was still low. This was disclosed by Director General of Treasury Herry Purnomo, Friday [8/5] as per April 2009 domestic income reached Rp. 234,621 trillion or 23.82% of National Budget 2009.
Income of domestic tax as per April 30, 2009 reached Rp. 191.178 trillion or 27.42% of National Budget target which consisted of Received from income tax Rp. 117.561 or 32.89% of National Budget 2009 income from Value Added Tax Rp. 52.560 or 21.07% of National Budget 2009 and income from customers tax Rp. 18.068 trillion or 36.51% of National Budget 2009.“Income from International Trading Taxation Rp. 6.076 trillion or 21.23% of National Budget 2009 and Non-tax state income Rp. 37.366 trillion or 14.43% of National Budget 2009. Meanwhile, up to April 30, 2009 reached Rp. 223.511 trillion or 21.55% of National Target 2009. Consisting of Central Government spending Rp. 127.555 trillion or 17.18% of National Budget Employees expenses Rp. 41.58 trillion or 28.97% of National Budget Goods purchases Rp. 11.752 trillion or 15% of National Budget Capital spending Rp. 10.992 trillion or 11.72% of National Budget 2009.

ASEAN Considers Regional Mass-Production of Anti-Swine Flu Vaccine

Senior officials of the ASEAN states declared that ASEAN was considering to develop and regionally mass-produce anti Swine Flu virus in times when nations took to preventive measures on pandemic infections which might arise in time to time.

This was disclosed by participants of the Senior Official Meeting preceding the meeting of ASEAN health ministers on Swine Flu in Bangkok Thailand on May 7 and 8 where they also declared the need to upgrade research capabilities in the ASEAN region.
“Vaccine was one of the main instrument for facing dangers of Pandemic, and there is a potential of vaccine capacity in the ASEAN + 3 region” this was disclosed by Boonywangvirot Bokong, Permanent Secretary of the Ministry of Health in Thailand, in a statement to Business News by E-Mail [7/5].

He underlined that there was a great potential for collaboration in developing and producing Vaccine to overcome Pandemic for HSNI [avian influenza] or what was now known as Influenza A [H1N1].

This might also improve the collaboration mechanism, apart from the expansion aspect also to share the effort of medicine procurement to ensure that every one in the ASEAN + 3 region could have access to medication on time and efficiently.

Up till now, many ASEAN states also planned to increase their stock of medicines like antivirals in anticipating the possibility of Pandemic in this region.

They also recommended the need for better cooperation among ASEAN + 3 nations particularly in observation and exchange of information as well as capacity of diagnostic laboratory and control over diseases which might spread across countries including screening over tourists coming from infected regions.

Formerly, officials joined video conferences with the World Health Organization, the US Centre for Disease Control and Prevention, and the World Bank on update of influenza pandemic to update information on Influenza A [H1N1].

The officials also prepared a joint Communiqué of the Ministers on Influenza A [H1N1] which would be adopted by them on May 8, 2009.

The H1N1 Virus had spread to 24 states including Asia, i.e. South Korea, where one case was unveiled recently. The virus, which formerly were unable to live in tropical zones, had undergone adaptation process in the tropical zones, this was evident with the spread out of the disease to a number of tropical countries, like Costa Rica.

Swine Flu resulted from Virus Influenza sub-type A with H1N1 variant, mostly carried by animals especially pigs but may transmit to Humans.

SBI Auction Offer Reached 124.22% Above Target

Bank Indonesia Certificate [SBI] was still being sought after by investors who were in excess of fresh fund. The lowering of BI Rate Benchmark from 7.50% to become 7.25% since Tuesday [May 5, 2009] showed that it did not discourage the capital owners to buy. Bank Indonesia which tend to run tight bias money policy in the said auction, surprisingly lowered the indicative target from Rp. 30.30 trillion [April 22, 2009] to merely Rp. 20.60 trillion. It turned out that the total incoming offer/demand had reached Rp. 25.59 trillion or 124.22% of target. But the amount contracted or approved by Bank Indonesia was only Rp. 17.42 trillion or around 68.07% of the total offer of Rp. 25.59 trillion or around 84.56% of the indicative target.Business News source in Bank Indonesia explained that the great enthusiasm of local and international investors for SBI was because the bond was short-termed, liquid, safe, and surely more advantageous compared to SIBOR or LIBOR one month [US dollar] the interest of which was around 0.42%-0.43% per annum. After the legislative election [April 9, 2009] the investors confidence in Indonesia’s economy was growing. The inflow of international fund to Indonesia’s money market remained steady and was predicted to increase provided that the running of the next presidential election 2009 would run just as smoothly and safety. The foreign reserves managed by Bank Indonesia continued to increase from USD 54,840.17 million [March 31, 2009] to become 56.565.91 million [April 30, 2009].

PT PN XI Launched Sugar Quality-Improvement Campaign

After heavy invasion of rafinanted sugar on the domestic sugar market for many years, the consumers perception of the quality of sugar was changing. Today the consumers preference drifted to the kind of sugar that was white and sparkling, with large and dry granules. In respon se to the changing consumers preference, PT Perkebunan Nusantara XI [PT PN XI sugar mills] starting from production period 2009 planned to launch a sugar quality improvement campaign. Adig Suwandi, Corporate Secretary PT PN XI disclosed to Business News Friday [8/5].

So far, the quality of sugar produced by PT PN tend to improve. But the sugar producer which managed 16 factories in East Java set a quality standard of sugar as specified in ICUMSA color max 200 IU, size of crystal granules 1.2 mm and moisture level 0.05%. Whilst rafinated sugar used as raw materials for food and beverages ICUMSA was set up at 50 IU, size of crystal granules 0,8 mm and moisture 0.05%. The lesser the INCUMSA the better the color which was sparkling white.
The sugar products of PT PN as sugar mill products of 2008 which market the best ICUMSA was obtained from the Kanigoro sugar mill in Madiun [140 IU] whilst the highest INCUMSA was from Redjosari Mill in Magetan [256 IU]. Besides PT PN XI also focused on producing dry sugar which do not easily roll up. Quality improvement of sugar was not just exercised in the mill by replacement of aged machines and equipments are precondition to quality upgrading, but also in nursery and cultivation of sugarcane plantations.

Bio compost did not only improve the physics of soil for better water retention, but also in creased the phosphate content to be absorbed by plant. The low phosphate absorption by plant had its effect on the processing of sugarcane essence, so it was often necessary to add phosphate acid to ease the process.

In addition to that, to improve the quality of sugar, PT PN also changed the process from sulphate to carbonating at the Semboro Jember sugar mill. This factory was chosen because of the availability of equipments and also because of the low investment value. Through change of process, it was expected tha the quality of sugar be equal to rafinated sugar, so at the right time soon PT PN would be more ready to embark on the market to fulfill industrial needs.After the Semboro sugar mill, the change of processing technique would also be exercised at the Djatiroto sugar mill, in Lumajang, and to be followed by other factories. The program of sugar quality improvement also included stepping up milling capacity.

Surabaya-Jakarta Container Transportation Service to be Carried by Train

Inter-provincial container transportation service such as between Surabaya-Jakarta and return, would in time to come not just be served by sea transportation but also by train. The transportation company which had been appointed to carry out the task was PT Berlin Jasa Terminal Indonesia [BJTI] based in Surabaya.

PT BJTI as subsidiary company of PT Pelabuhan Indonesia III at Tg Perak Harbour Surabaya which served freight forwarding services, had set up joint cooperation with PT Kereta Api to render container transportation services from East Java to Jakarta or other provinces by using railway transportation. The initial service had been carried out by a chain of carrier trains on May 2, 2009, transporting thereby 40 boxes of containers measuring 20 feet from Surabaya to Jakarta in an overnight trip. The journey started from Prapat Kurung Kalimas station in Surabaya, arriving at the station at Jalan Pasoso at Tg Priok the next day.

Rachmat Satria, President Director of PT BJTI stated that the transportation of containers in every alternative days from Jakarta as well as from Surabaya. If all went well, the frequency would be increased to daily operations, operating two chains of carriers each day. In the premiere I service, the tariff imposed by PT BJTI harbour to harbour [Tg Perak-Tg Priok] was decided at Rp. 1.25 million per box measuring 20 ft [fully packed] which was cheaper compared to transporting by truck or waterways. Transportation by truck might cost Rp. 3 million with the risk of late deliveries due to irregularities on the way.

The advantage of containers transportation by train was, beside being faster was also safer and well secured from highway criminals, this was not to mention the advantage of punctuality, connectivity and synchronization with the shipping schedule at Tg priok harbour Jakarta.

ADB’s 42nd Annual Meeting

Asian Development Bank [ADB] and Export-Import Bank of China [China Eximbank] agreed on funding USD 3 billion which was accessible for the need of projects in developing states. This fund would be used in 3 years, starting from June 2009. The agreement had been signed by Vice President, Knowledge Management and Sustainable Development ADB Ursula Schaefer Preuss, and Vice President of China Eximbank Li Jun.

This agreement was built upon the Memorandum of Understanding signed by both sides on March 2006, with the objective of easing Governments or the private sector in accessing funds, especially for infra-structure projects. ADB estimated Asia would need USD 4.7 trillion between 2006-2015, if this region were to build its potentials. “The condition of sanitation and transportation are presently very inadequate in many Asian states. A huge sum of fund was needed to over come such if we were to eradicate poverty in the region”, stated Schaefer Preuss, Tuesday [5/5].

By agreement with China Exim bank it was confirmed that funds were to be systematically pipelined to projects which need financing, whereby to consolidate this Asian region to face global economic slowdown. ADB and China Exim bank would conduct annual meetings to harmonize procedures of fund liquidating.

The Board of Governors of ADB had agreed to strengthen ADB’ paid up capital by threefold from USD 55 billion to become USD 165 billion. This would serve as a base for increasing lending target for member states.

ADB had approved loan for Indonesia amounting to USD 2 billion, which would be used for building of infra-structures, social safety net, anti-fiscal stimulus.

Paid up Capital
The Indonesian Government would began to pay up basic capital for ADB next year which would be done by stages over five years. Anggito Abimanyu, Head of Fiscal Policy of the Department of Finance, stated that the fund agreed to be paid as Indonesia’s contribution for ADB’s paid up capital would be taken from National Budget of 2010.

The allocation would be adjusted to the indicative limit of budget fund in National Budget 2010 to be further forwarded to the Parliament for approval.

This fund would not be included in the National Budget [APBN-P] 2009, but in National Budget 2010 instead and be included in the decided indicative limit. Indonesia was listed as 6th biggest shareholder after Japan, USA, China, India, and Australia, holding 5.43% of share and 4.65% vote.

Minimum Standard of Service Fulfilled, some Toll Road Sections to Adjust Tariff by August

Some toll road sections would have tariff adjustments by next August. This was based on Government Regulation PP no. 15 year 2005 [BN no 7217 page 118-148 etc] on toll roads. For that purpose the Government was now making evaluations and auditing of those road sections, among others the Tangerang-Merak toll road. Head of the Toll Road Management [BPJI] Nurdin Manurung, disclosed this matter last week in Banding.

In order to implement the tariff adjustment the related investors were obliged to step up their services in the said sectors whereby to meet the requirements of the Minimum Standard of Service [SPM]. This implied that the new tariff would only be effective if the related sections had fulfilled the SPM.

According to Nurdin, there were still some toll road sections the SPM standard of which were low and needed improvement, such as the sections of Cipularang, Surabaya-Gresik, Pondok Aren-Serpong, Tangerang-Merek, and Makasar Toll.

Responding to the issue, the President Director of PT Marga Mandala Sakti Wiwik D. Santoso stated that to meet the SPM quality standard he now was in the process of repairing damaged roads in some sections of Tangerang – Merek toll road. In addition to that he was also actively building fences and asphalt covering on the sections of Cikupa – Balaraja Tangerang extending for 72 km long this very year.

Meanwhile the Director of Operations of PT Jasa Marga [Persero] Tbk Adityawarman promised to fulfill the SPM quality standard set by the BPJT, among others by improving surface flatness, safety, and drivers security as well as building environmentally friendly rest areas.
Upgrading of toll roads were also exercised by PT Citra Marga Nushapala Persada [CMNP] Tbk, on the section of Cawang – Tanjung Priok and Waru – Juanda. Hudaya Ariyanto, Director of Operations of CMNP, also promised to add more CCTV which were useful to monitor traffic activities. By the aid of this system it was expected that all control over all activities and occurrence on the road could be centralized.

America willing to Cooperate with ASEAN Plus Three to Overcome Swine Flu

America expressed willingness to collaborate with ASEAN in handling outspread of the Swine Flu.
The act was deemed necessary after the Swine Flu virus infected many countries i.e. Mexico, the USA, Asia Pacific, and other states causing 110 deaths.

The USA, standing at the forefront and having most effective defense mechanism was willing to share with ASEAN and East Asia expertise and experience in troubleshooting this menace to mankind all over the world.

This was disclosed by Sudin Pitsawan, Secretary of ASEAN after having a video conference with US Secretary Department of Health and Human Service Kathleen Sebelius this week end. Sudin’s statement was disclosed to Business News through ASEAN Secretariat by E-Mail on May 4, 2009. The video conference with Siberiu was expected to update the information of current situation on Swine Flu for effective response.The meeting which included health ministers of ASEAN+3 : China, Japan, South Korea, would take place on May 8, 2009 in Bangkok. Swine Flu already had its economic impact of several delay of cancellation of flights. The Flu also had reduced the number of traveling tourists especially in infected regions. Preventions in airports as gateways were most costly.

Businessmen Should Consume Local Products while Working on A Strategy to Survive in Crisis

President Director of Maspion Group, Alim Markus, said that it was a big mistake if local businessmen did not consume local products.

Increase of Consumption of Local Products was stimulated by Presidential Instruction on Increase of Consumption of Local Products and Regulation of Minister of Trade on Supervision over Five Import Products. He said that his company consumes mostly local components and raw materials.
Businessmen must find a strategy to solve problems in order to satisfy the customers. Problems could happen in price, quality, and after-sales service. Therefore, he named his company MASPION or Mangajak Anda Selalu Percaya Industri Olahan Nasional (Asking You to Always Trust Local Products).

A majority of the products of his company were sold to the local market. Therefore, amid the present global crisis, his company recruited 250 new employees in October 2008 – April 2009.
On his company’s sales, Alim commented that in first quarter of 2009, sales increased 25%. He added that his company was preparing construction of four LPG tanks with a capacity of 10,000 kilograms in the framework of conversion of oil to gas.

“The total investment value was USD 30 millions. This amount is obtained from the company’s equity and from Bank Mandiri”, he said. His company also planned to produce electric-saving lights considering that demand for this kind of products continued to increase. “Formerly, Maspion produced electricity-saving lights, but it did not last for long. Now, production of electricity-saving lights will be put back into operation due to high demand”.

Deputy General Chairman of Indonesian Chamber of Commerce and Industry, Gunadi Sindhuwinata, said that national independence can be achieved by empowering businessmen to consume local products. One of the attempts way by re-branding of local products. The reason was, according to him, competition was not due only to products, but also due to flow of humans from one country to another. So, what we must pay attention is how to reduce flow of import to Indonesia, and whether we are able to compete.

Positive Reports Become More Convincing

Alexia Quadrani, JP Morgan Analyst, on Tuesday [5/5] sent Business News result of JP Morgan’s latest analysis regarding perception of Global Manufacturing Index that showed a quite significant improvement. “In the last few days, JP Morgan receives many reports from real sectors all over the world which stated that there had been an increase in manufacture performance. Productivity had surely entered a positive trend, and it seems that this trend is a quite convincing line. There is almost no more distortion signs detected in the recovery process. There was once feared to be a pseudo recovery, but with such a pattern, JP Morgan concluded that the world, or at least main countries, have entered recovery ere”.

If formerly Purchasing Managers Index [PMI] was not carefully considered, at present, almost all countries needed the latest PMI data in order to perform an analysis on the necessary attempt or maneuver, adjusting to the general trend. “Manufacture performance was certainly far from the performance standard that occurred since mid 2003. The graphic moved quite stably in less than the last five years and it fell sharply to the bottom. Based on the above graphic, it can be concluded that the bottom line had been touched around end of 2008 until early 2009. What is quite surprising is the graphic formed a V-shape. While, in fact, almost a majority of observers guessed it would from a U-shape.

According to Alexia, with a V-shaped graphic, the world can take a little relaxed breath because in early part of second half of 2009, recovery process would enter into a quite “clear” area before the world could recover in mid 2010.

India, which once showed a slow recovery trend, in the past few weeks showed a quite rapid recovery signs. “China was the first country which declared itself free from recession, followed by Japan. The world was in fear when observing the volatile condition in India. India’s PMI in April 2009 stood at level 53,3. This was very surprising since China was the first who declared itself free from recession, while in April 2009, China’s PMI only stood at level 50,1. And, China’s PMI in March stood at level 44,8”.

The draft MOD is agreed

After a tough discussion, the draft Manado Ocean Declaration (MOD) is finally agreed by all parties in the World Ocean Conference yesterday and ready to be announced tomorrow. There are four articles which became the focus of the delegations namely the Sea Law Convention, technology transfer, funding and the plan to include the ocean dimension in the United Nations’ Framework for Climate Change Conventions (UNFCCC) after the Kyoto Protocol. MOD is binding in nature and comprised of statements on the importance of the ocean’s role in climate change.
Source: PA Asia - Public Affairs and CSR from Kompas,13 May, p.1

Government offers 24 new oil, gas blocks

The government is offering 24 new oil and gas blocks for bids in an effort to boost the country's declining output, the Energy and Mineral Resources Ministry said Thursday, Dow Jones reported.
The ministry said seven blocks are being offered through a "direct offer mechanism through joint study." They are the Kubu Block, North East Ogan Komering Block, Offshore West Java Block, Blora Block, North Makassar Block, East Simenggaris Block and Digul Block.
The government is opening 17 blocks for regular tender in the eastern part of the country, namely the Tomina Basin and Bone Bay.
It set July 30 as the deadline for investors to bid on the seven blocks, and October 13 for the 17 blocks, the ministry said.

East Java to develop micro hydropower plants

The East Java provincial administration will develop micro hydroelectric power plants (PLTMH) with capacity of less than 500 kilowatt-hours (kWh) to help thousands of people in rural areas meet their daily power needs, The Jakarta Post reported on Friday.
"Apart from that, the technology is also easy to learn for the local community," East Java Governor Soekarwo said Thursday as he officially launched the development of a PLTMH in Seloliman sub-district, Trawas district, Mojokerto.
To realize the plan, Soekarwo said, his administration would establish a regional guarantor institution tasked with providing guarantees to both investors investing in the development of PLTMH and banks providing loans for the projects.
"We will offer the projects to banks to help sub-district administrations develop PLTMH in the province," he said.
The PLTMH in Seloliman, with investment of Rp450 million, produces 14.7 kW to help economically challenged families in the region that had so far remained untouched by PLN.

Drinking water leakage reaches 37 percent

In the next five years, the local drinking water companies (PDAMs) are expected to develop 10 million new house connections. Whereas the current leakage of water produced by the PDAMs is still high, i.e. 37 percent. This was revealed during an event titled “Indonesian-Danish Water Days 2009” in Jakarta on Tuesday. The leakage, according to the Public Works Ministry, occurs in various forms, such as careless calculation of water usage and water stealing.
Source: PA Asia - Public Affairs and CSR from Kompas, 13 May, p.18

Sunday, 10 May 2009

April 2009 Deflation Posted at 0.31%

The development of various commodity prices in April 2009 generally showed a downturn. Base on Board of Statistics BPS in 66 cities on April 2009 there was a deficit of 0.31%, or a downturn in Consumer Price Index [IHK] from 114.27 in March 2009 to become 113.92 in April 2009. Inflation rate in Calendar year [January – April] 2009 amounting to 0.05% whilst inflation rate “year-on-year” [April 2009 against April 2008] was 7.31%.

Deflation was due to lowering of prices as shown by lowering of index in food category 1,33%, and garments category 1,70%. Meanwhile the commodity groups which had an increase of index were ready food, cigarettes and tobacco 0.40%; groups of housing, water, electricity, gas and fuel 0.12%, health group 0.34%; education, recreation and sports 0.05% and transportation, communication of financial services 0.07%.

Some commodities having a downturn through April 2009 were among others: gold & jewelry, chili, red chili, rice, chicken meat, onions, spinach, longbeans, fresh fish, preserved fish, young corn, kang kung, vegetable tomatoes, fruit tomatoes, and iron-steel. Meanwhile, the commodities having an upturn were potatoes, lemon, papaya, frying oil, rice with filings, sugar, filter cigarettes, house rent, household fuels, servants salary, physician service and cars.

In April 2009, the commodities which contributed to deflation were food 0.31%, and garments 0.12%. Meanwhile, commodities which contributed to inflation were ready food, beverages, cigarettes and tobacco 0.07%, housing 0.03%; groups of health and transportation, communication and financial services 0.01% respectively. Groups of education, recreation and sports were relatively stable this month.

Policy on Decision of Tally Tariff to be Re-evaluated

Evaluation on the policy of tally tariff [recording and counting of goods traffic or containers] would be carried out by the Directorate General of Sea Transportation by re-evaluating, after the Department of Transportation reviewed the tariff in line 2 at the Tanjung Priok Harbour particularly in forwarding services, warehousing and import containers. The re-evaluation was in line with Law no 17 year 2008 [BN no. 7669 page 18-108 etc] on sailings and the Decision of the Minister of Transportation no 17 year 2007 on independent tally.

Presently the Director General of Sea Transportation had instructed to immediately discuss matters whereby tally activities at the Tanjung Priok Harbour could be made clear. Hence it would become apparent whether further clarification was necessary, so that the tariff formation might determine the ceiling and bottom price. The objective was to maintain a healthy competition among service providers, such was disclosed by the Secretary General of the Department of Transportation, Bobby Mamahit.

In addition to that, evaluation was also necessary with the critics of the Commission of Business Competition Supervision [KPPU] on tariff decision at Tanjung Priok Harbour which had been agreed upon by a number of associations at the harbour. Since there was allegedly kartel practices [recording or counting of traffic flow of goods or containers] which were being investigated by the Directorate of Law Enforcement of KPPU.

The clarification process was now underway by sending for several involved parties related to Depalindo’s report. The clarification would be accomplished within 60 days or by May 15, 2009 next; in the event that more time were needed, the clarification period could be extended, although presently what had been reported by Depalindo on indications of monopoly, was still not proven.
However, KPPU still called for the Government’s interference in the decision of Tally tariff which was prone to driving kartel practices, this was disclosed by the Director of Communication, Commission of Business Competition Control, Ahmad Djunaedi.Meanwhile, the harbour administration of Tanjung Priok would re-invite all related associations of service providers and users at the harbour. The objective was to find the best solutions to tally tariff problems. An inventory would be made to pinpoint the problem and find the solution. According to the Administration of the Tanung Priok harbour, Susetyo Widayat Hadi, in the near future he would call for more inputs from the related associations at the harbour.

Government Urged to be More Sensitive to Labour Problems in Global Crisis

The Government should be more responsive to the possibility of worsening in labour affairs dueto the prolonged crisis, among others by giving stimulus to the business world and workers, such was the conclusions of two activists of labour unions.

Secretary General of DPN-SP TSK : Queue irony Buyer Crocs Shoes
Indra Munaswar, Secretary General of the National Leader of Textile, Garment and leather workers union [SP-TSK] in an interview with Business News Saturday after noon [25/4] said that the impact of crisis on tectile [TSK] industry was strongly felt, but unfortunately the government was not sensitive of the case. And yet hundred of thousands of workers might lose their job. As a matter of fact around 47,000 workers in the textile sector were dismissed due to the sluggish demand at home and abroad.

Ironically, amidst the low market demand for textile products and footwear, in Jakarta a couple of days ago people stood on a queue to buy Crocks brand of shoes at discount up to 70% it was feared that the products which originated from Europe and China were deliberately sent to Indonesia because those products were out of date aboard and offered as clearing sales in Indonesia.

The problem was, apart from one’s right to trade, the way to launch a sales campaign of imported product might harm the local footwear industry. Moreover this was the time when the market demand was close to bottom line. It would be better if the Government jacked up the domestic industry to meet the local demand.

The Government should also be more responsive to help the local industry not just by giving tax stimulus and electricity, but also by helping businesspeople to get a bridging fund for workers who were being dismissed due to crisis. Estimatedly hundreds of thousands of workers faced the threat of dismissal due to crisis; with the bench-mark of minimum pay and 5 years of service, the fund needed for compensation might come to trillions of Rupiahs.

Chairman of Metal, Electronics and Machines Labor Union [FSP-LEM]: Things are not as yet Disheartening
Harjono, Chairman of Metal, Electronics and Machineries Labour Union disclosed to Business News that the impact of crisis toward metal. Electronics and Machineries continued to blow up, but the situation was not too fearful. To refer to Labourers Insurance [Jamsostek] the number of incoming and outgoing workers were somehow still proportional. In the past three months for example the number of workers who resigned were around 5,000 people while those who were recruited were around 4,000 people.

What should be cautioned was certain businesspeople taking advantage of the present situation to adopt the outsourcing policy. The Government should be more responsive to problems faced by workers whose employment was based on outsourcing.

Additional Capacity for Indonesia Stock Exchange

Additional capacity for trading activities to become one million transactions per day would be exercised on Monday [27/4]. The management of Indonesian stock exchange [BEI] stressed that the stagnant of yesterdays’ activities was not because the system was not fit but because the system was vulnerable to external factors. The problem was, that the system was closely related with the system of the members.

The occurrence of yesterday was that lopping of the sales order of Trimegah Securities reached 220 thousand times. This was followed by withdrawal resulting in doubling to be 440 thousand times Saction had been imposed on Trimegah for the occurrence. “This proves that risk management of Trimegah were not effective, because in fact such should not happen.
Last week the same things happened with Trimegah. But we have talked to them and they said that things are straightened out” such was disclosed by Erry Firmansyah, President Director of BEI.

The Worst Stage Had Passed

Kenneth Rogoff, professor of Harvard University, Saturday [25/4] informed Business News on the conclusions of the G-7 meeting held in Washington, USA, Friday [24/4]. Based on the conclusions of the G-7 meeting which went ‘economic recovery will start to take hold in the coming months as evidence mounts that the worst of the recession is over’, Harvard University had the perception that was more or less the same. The worst, the bottom line was apparently over. In some countries signals, where consumers’ confidence level was beginning to crawl up. Meanwhile, China even had just reviewed its growth projection from around 6.0 – 6.5% to 8.0 – 8.5%. The pulsations of life was distinctly notable”.

To detect a positive signal of recovery was admittedly difficult. But at least the curve line was flattening, no longer up or down moving. In the next two or three months, certainly these positive signals would be more visible. The commitment for stimulus put in effect by all nations in the world, became a trigger of the ‘velocity’ of the world’s motion out of the recession. Today, index had shown a move toward the positive direction.

Among the grievances which was worrying was the number of toxic acids which were not completely transparent “There are still toxic assets hidden here and there, but by universal perception, the mysterious toxic assets are no longer systemic as with the explosion when Lehman Brothers went bankrupt or when Fannie Mae, Freddie Mac and AIG screamed for help to the Government [of the USA]. Now there are still homework for the Obama administration to solve once and for all General Motors, Chrysler, and Ford. After that, the homework would be less complicated. The financial sector has shown heartening data, at least Goldman Sachs, JP Morgan and Citigroup has proven their ability of self-restructurization”.

According to studies of the Harvard University, the above table showed a little prove how a combination of various index has shown a platform toward positive perception. “Not really significant, but the low levels or bottom records are by passed. Hopefully this trend would continue toward end of quarter III 2009, all silver linings are shining brighter. To recover completely, surely takes a little longer. But the important thing now is that the world can breathe relievedly. However, we need to be cautious in observing the still liable condition”.

Enhancement of Protection and Rights Security for Indonesian Migrant Workers Abroad

The Government called active participation from the Associations of PPTKIS, PPTKIS and partners abroad to encourage Indonesia’s migrant workers to claim for their voting rights, especially in the Presidential election which would be held in July 2009.

The Department of Manpower in cooperation with the Electoral Commission [KPU] could use their rights to vote wherever they were in the next election. With active participation of all stakeholders it was expected to run a democratic feast that was good, orderly, safe, and smooth for the success of the nation.

This was disclosed by the Minister of Manpower and Transmigration Dr. Ir. Erman Suparno MBA, Msi upon dialogue with the Association of Employment Companies for Indonesian Migrant Workers [PPTKIS] in the office of Depnakertrans Friday [24/4]. This meeting was held to enhance the protection and securing the rights of Indonesian migrant workers abroad.

The Minister of Labour and Transmigration up till now Indonesian migrant workers overseas numbered around 5 million people. Therefore a close coordination was called for from all parties in managing, securing and protecting Indonesian migrant workers to obtain their basic rights, their labourer’s rights and as well as political rights.

In the legislative election last April, the Government had maintained coordination with fellow ministers in managing manpower affairs in destination countries whereby to permit Indonesian migrant workers in retaining their political rights and to assist in running the election process.
The same step would be taken in the second election [the President election] whereby to execution would be properly conducted.

In addition to the above the Minister of Labour and Transmigration called for active participation of the PPTKIS, PPTKIS associations and partners overseas to help and ease procedures for Indonesian migrant workers to have their political rights as Indonesian citizen in the next presidential election.

By coordinating with the Electoral Commission, the Minister of Labour and Transmigration urged associations and PPTKIS to ensure that migrant workers who were still at the dormitory or on the way to departure could use their political rights – whilst for Indonesian migrant workers who were abroad, the Minister called for participation of PPTKIS to publicise and provide facilities and convenience to them.

Meanwhile in regard to the global economic crisis which hampered nearly all countries those where Indonesians work as migrants, the Minister hoped that the crisis effect were not too severe on the workers. The Government and PPTKIS associations were obliged to find solutions that Indonesian migrant workers might continue to work at least until their contract expired.

Corn Farmers Pled to Speed Up Corn Plantation

In anticipating the dry season which might arrive too soon, and the possibility of a long hot summer this year in 2009, corn growers were pleaded to forward their planting schedule by using the TOT [without soil processing] technology. Presently rain still prevailed in several regions so there were still enough water to support corn planting. Climate changes were still unpredictable, it was hard to foresee when rains would stop so it was most difficult for farmers to start planting certain commodities on the right type of soil. Ir. Maxdeyul Sola, Secretary General of the National Corn Council [DJN] disclosed this to Business News Friday [24/4].

At the early stage of growth, up to pollination and yielding of corn required plenty of water, but by the time the corn blomed but watering was not sufficient, the process of filing into the fruits became distorted. Result: the corn was not fully grown and the productivity was low so as a whole, the productivity of plant decreased.

If the growth process of the corn stopped before full maturity, the plant could still used for animal feed. A corn plantation of one ha could yield 100 tons of young com. The market price of young corns for animal feed was around Rp. 100/kg.

What should be publicized to the public was that by season it was not necessary to grow corn until full maturity. Although corn could not be harvested at maturity stage, young corn had its own economic value, at least to keep farmers from losing business. If this program could popularized, young corns for animal feed could become a non oil-gas commodity to be exported to countries like South Korea where corn was not produced but the demand for animal feed was prospective.
Apart from export, corn-based animal feed could also be used to meet the farmers’ own need thereby it could support the national program of self-sufficiency in meat. To speed up this plan, it was expected that the integration of livestock through platform 2, 3, 4 [2 ha of corn plantation, 3 harvest time for 4 cows] for one family of farmer could be realized.

In the effort to expand areas of cornfields, in the past season DJN had developed corn plantations in Karawang. The habit of the communities in Karawang was that after harvest time the soil was left to remain idle while waiting for the rainy season to come. DJN saw the unused soil and opportunity to plant corn for one single season using the TOT technology.DJN’s effort to cultivate corn in non-irrigated land in Karawang had full support from the Government of Karawang Regency, because it was regarded as an opportunity to increase the farmers’ income. For that purpose the Regent of Karawang launched an informative campaign to the farmers in this region who were only wiling to cultivate rice. Furthermore DJN sent for corn farmers from Gorontalo whose task was to transfer technology of corn cultivation to the people of Karawang. The next period of corn plantation would commence on June 2009 next, when rice harvest was over.

Law Proposal on Sustained Protection of Agricultural Land Might Anticipate Global Food Crisis

Member of the Special Committee for Law Proposal for Sustained Agricultural Soil, Bomer Pasaribu stated, presently and excessive re-functioning of land was going on, around 148 million ha/year of land changed status from agricultural land to non-agricultural, Degradation of Agricultural lands were happening faster than the rehabilitation process.

The Law Proposal for Protection of Sustained Agricultural Soil might serve to anticipate global food crisis. This law would regulate all alterations of land functions including the sanctions to be enforced to law breakers regardless of their high ranks or positions.

Quoting the data of the Department of Forestry, Indonesia’s land areas was 192 million ha, consisting of cultivated land 123 million ha [64.5%], and conservation areas 67 million ha. Meanwhile of the potential agricultural areas was 101 million ha, only 47 million ha remained and the expansion potential was 54 million ha [consisting of 50 million ha Wt climate and 4 million ha dry climate], 36 million ha land areas for food staples or plantation, 15 million ha for rice fields and 5 million ha for livestock.

According to Bomer, we were suffering from severe global food crisis, while on the other hand we were now self-supporting in food/rice. The Law Proposal for Sustained Agricultural soil had become a National Legislation Program [Prolegnas]. This was one of the 288 law proposals to be passed within 5 years in the MPR legislative in 2007. In 2008 the draft of this law proposal was completed and accepted by the parliament as a law proposal of the Parliament initiative, whereby the Parliamentary convention had ordered Commission IV of the Parliament to pass the law.The Law Proposal on the Protection of Sustained Agricultural land was included in the national legislation [Prolegnas] Other law proposals which were part of the PROLEGNAS were among other ib law, Susduk, etc.

Director General of Customs and Tax Urged to Decide PCC Food Grade

APKI [Indonesia Pulp and Paper Association] urged the Director General of Customs and Tax to determine Precipitated Calcium Carbonate food grade ex Schaefer Kalk Malaysia which was used as industrial raw materials for cigarette paper for PT PDM Indonesia with import tax of 5% [HS 2836.50.10.00]. So far PT PDM Indonesia [formerly PT Kimsari Paper Indonesia], a foreign investor company [PMA] in Medan produced cigarettes papers only by using PCC food grade produced by Schaeffer Kalk Malaysia which were already certified by Schaeffer Kalk [Certificate of Conformity from ISEGA Germany] by the verdict of Indonesia’s tax Court.

Since its establishment, PT PDM Indonesia used PCC food grade [calcium carbonate – food Quality] HS 2836.50.10.00 with 10% import tax, 10% value added tax imported only from Schaeffer Kalk factory [Malaysia] Sdn. Bhd. Import process ran smoothly except in 2004 when the Custom and Tax Dept that PCC imported by PDM Indonesia did not originate from food grade and had to use HS 2836.90.90.00 upon which import tax of 10% was imposed. PT PDM Indonesia raised objection and brought the case to the tax court in Jakarta. The Tax Court decided that based on supporting facts, the PCC imported by PT PDM Indonesia from Schaeffer Kalk Factory Malaysia was PCC Food Grade and that the HS used [HS 2836.50.10.00 with import tax 5%] was true.
Recently the Custom and Tax Dept imposed NHI [Notice of Intelligence] that PCC food grade so it was necessary to use HS 2836.90.90.00 by paying 10% of import tax. According to some reports by APKI, in fact the PCC imported by PT PDM Indonesia was the same old PCC, which was imported from Schaeffer Kalk Malaysia.With the absence of Customs rules on PCC food grade with HS 2836.50.10.00 the import tax imposed was 5% - so the factory was threatened to stop production and dismiss the workers.

Indonesia’s Tourism Might Take Advantage of Political Unrest in Thailand

The mounting political tension in Thailand had its negative impact on tourism in that state, while opening opportunities to Indonesian tourism to offer alternative tour packages to points of interest in Bali and other destinations in Indonesia.

Diyak Mudahela, Director of the Council for Tourism Information Development [LEPITA] disclosed to Business News in response to the statement made by the Indonesian Minister of Culture and Tourism Jero Wacik who essentially said that Indonesia did not wish to dance at the expense of someone else’s misery, but Indonesia would offer to facilitate activities of MICE [Meeting, Incentive, Convention and Exhibition] which was originally scheduled for Thailand to be relocated to Indonesia.

To take advantage of business opportunities caused by the adverse political climate in Thailand was not meant to dance over someone else’s misery, but simply our responsive act to any popping out of business opportunities. Moreover Indonesia’s tourist attractions had its sharp competitive edge – while the tariffs were notably low in the world with attractions that were unmatched by any other tourist destination in the world.

Naturally it would not be easy for us to re-route loyal “repeated guest” types who had been visiting Thailand for 5 to 6 times, but we can drum up fresh visitors or newly introduced tourists who cancelled or suspended their visit to Thailand. We could offer substitute destinations to Pattaya-bound tourists for instance, like Bali and surroundings.

The same steps could have been taken by our neighboring competitor states who benefited from the Travel Warning imposed by the USA and other European states to Indonesia. And now after 2-3 most of post withdrawal of the travel warning, Indonesia took on more aggressive measures to grab opportunities.

Those opportunities were most important considering the tough competition in tourism among ASEAN states. Cambodia and Thailand, who in the 1980’s only managed to drum up hundred of thousand of tourists, now were able to draw millions of tourists. The flow of tourists to Thailand alone was chalked up at 4.5 million people.It principle, we should be able to make the best of the conditions in Thailand by energizing promotion activities and offering of low-priced tour packages in the effort to meet target. The growth of foreign tourist influx to the Southeast Asian region were projected to remain positive and it was through this sector that the ASEAN states might survive from the global economic crisis.

Commission IV of Parliament Urged The Department of Forestry to Speed Up Forest Conversion Analysis

Commission IV of the Parliament urged the Department of Forestry of RI to speed up survey and analysis by the Coordinated Team on the proposal of forest conversion. The Commission asked that the forest conversion survey and analysis could be made faster by the Coordinated Team in accordance with the regulations and law no 41 of year 1999 on forestry. This was disclosed by Chairman of Commission IV of Parliament Arifin Junaedy in the Meeting with the Ministry of Forestry.

In his presentation the Ministry of Forestry MS Kaban elaborated, that the conclusions of the Coordinated Team, i.e. proposal on the re-positioning of forest in “The Space planning of Provincial Areas” [RTRWP] of the Province of Central Kalimantan and the “Space Planning of the Regency of Pahuwato of the Gorontalo Province had been accomplished. For the province of Central Kalimantan a coordinated study had been exercised but not as yet been forwarded because a public test was still underway. Meanwhile 18 other provinces were still awaiting for the Parliament’s approval for forming a Coordinated Team. The Provinces were Aceh, North Sumatera, West Sumatera, Riau, Riau Islands, Jambi, Bengkulu, South Sumatera, Central Java, East Java, Bali, West Kalimantan, East Kalimantan, North Sulawesi, Gorontalo, West Sulawesi, North Maluku and Papua.

Commission IV of Parliament could accept explanations by the Minister but they needed time to comprehend conclusions of the team’s study and analysis before the Commission were able to give recommendations in accordance with the message ingrained in chapter 19 Law no 41 year 1999 on forestry. Commission IV needed time for in-depth study of the analysis conclusions at least until one month later.

Member of Commission IV of the Parliament Bomer Pasaribu stated, because recommendation from the Coordinated Team were public documents, we need to firstly read and observe the overall content of study. We had to prioritize on the principle of cautiousness. The Commission IV of Parliament were still in a position to make an alternative revised proposal as supplement so that not all recommendations of the Coordinated Team were acceptable, in spite of the already given figures.

About the plantation locations permit which were already given, Bomer questioned the time frame given. This was meant to inform all parties that they might know exactly the measured period. According to MS Kaban, the location permit already given to plantations were 35 years, whereby chance were given to businesspeople to exploit until production time was completed. This was the moderate solution to prevent dismissals, social conflicts etc.

System of Overseas Debts Control Still Ineffective

Investigative outcome of the Board of Financial Examination [BPK] of Semester II 2008 unveiled that the control system over overseas debts were still inferior “The control system of foreign debts as related to realization of loans, monitoring of specific accounts, and inventory of state-owned properties are still ineffective” this was disclosed by Head of the Board of Financial Examination [BPK] Anwar Nasution Tuesday [21/4].

On semester II 2008 the Board Examination examined various cases including examination with certain purpose [PDTT] on the management of overseas loans. The examination was exercised on the managing institution of foreign loan, i.e. the Ministry of Finance, Ministry of PPN/National Planning Board [BAPPENAS]. And users of foreign loans consisting of 9 K/L and 8 state-owned companies [BUMN] encompassing 66 credit documents worth IDR 45.29 trillion. According to BPK the procedure of planning and liquidating of planned loan did not run effectively.

The clause on insurance cost, commitment expenses, and banking expenses for the required administration in the agreement text was an extra financial burden for the state i.e. IDR 36 billion. The weakness in planning, coordination, and monitoring resulted in the fact that some projects financed by foreign loan worth IDR 438 billions could not be realized to the maximum, and there was an extra cost of IDR 2 trillion caused by suspended project operations.Result of BPK examination which needed special attention of the related entity was the system of loan recording which had not resulted information on the foreign loan appropriately. As a result there were no information resources on the position and loan withdrawal which might be used by the Government of Indonesia in assured decision making.

Indonesia Probed on Development of French Fries Business

The Department of Agriculture was probing the possibility of French fries development in various potato centers in Indonesia. So far the need for potatoes used in fast food restaurants had to be imported from Canada, the USA, and Australia.

Achmad Dimyatie, the Director General of Horticulture disclosed this to Business News in Jakarta Tuesday [21/14].

Presently the Government was planning to import potato seeds which would be planted in Indonesia. It was expected that with the nursery of those potato seeds, Indonesia would be self sustaining. “The development of French fries industry is being pioneered. This very year we would begin adaptation plans and feasibility study for production”.

If all goes well this year, by 2010 it would have been known which region were worthy of being cultivated for potato plantation. Feasibility studies and experiments for adaptations would be carried out at the Kerinci Regency in the Province of Jambi and the Regency of Modoinding, North Sulawesi.

The said regions were not highly potential for potato plantation developments, but also safe in terms of environmental conservation. Some areas in Indonesia were centers of potato plantations but the condition were not safe for the environment.

The Regency of Modoinding of South Sulawesi had the potential of 10.000 ha and the Kerinci Regency were around 3.500 ha. This area were safe in terms of soil conservation because the land surface were flat at the altitude of 1.500 meter above sea level.

For the development of French fries, the Government encouraged businesspeople to collaborate with counterparts from Australia, Canada and the USA. In seeds procurements. Presently the import of potatoes especially French fries were estimated at around 48.02 tons or worth USD 33.14 million.

In the development of imported potatoes, Indonesia had an experience in the adoption of potato chips. Formerly, to fulfill the need for potato chips the product had to be imported, but since 2003 the Government attempted to pioneer the development of potato chips in certain regions. While trying to test fertility locations, it was concluded that potatoes for chips were cultivable in Indonesia. Now there were even potato chips of Indonesian origin, i.e. the Margahayu variety.

The development of potato chips raw materials were now being carriedout by PT Indofood Fritolay Makmur in partnership with potato farmers in Garut, Bandung, Wonosobo, Pemalang, Mondoinding [South Minahasa] and the Regency of Kerinci.

Presently there was a shortage of fried potatoes and potato chips in Indonesia. In terms of consumers potatoes, Indonesia was somehow self-sustaining for the most part the total production on national potatoes, which amounted to 1 million tons were consumers potatoes.

In this case Indonesia was able even to export potatoes to some countries like Malaysia and Singapore. This year the export target of consumer potatoes was around 139.96 thousand tons or worth USD 16.4 million. On the other hand however, Indonesia still had to import around 48 thousand tons of potatoes worth USD 33 million.

Business News record had it that nearly 90% of potatoes planted in Indonesia were of the Granola variety. Some of the plus points of this potato variety were: notably high yields [around 20 tons/ha], short-lived and highly adaptive. However this type of potatoes were not really suitable as raw materials for fried potatoes or chips, which required a high standard of density.

Rice Export Hindranced by Bureaucracy

Ever since the Government gave opportunities to the private sector to export premium quality rice, without involving the Board of Logistics [BULOG] it did not make any easier in terms of export permit procedures. Rice traders complained on the lengthy procedures of bureaucracy to obtain recommendations for rice exporting from the Ministry of Agriculture.
Suherman Dinata, President Director of PT Alam Makmur Sembada [AMS] disclosed to Business News in Jakarta Monday [20/4] questioning the export plan of rice by the private sector.
PT AMS and other companies formerly were combined with Prum BULOG to export rice, after which the Government gave chance to private companies to export rice by only obtaining permit and recommendation from the Department of Agriculture, by passing BULOG.
In reality the Government’s policy failed to speed up bureaucratic procedures, what happened was exactly the reverse : rice export got stocked. And yet the exporting company which were located at Lemah Abang, Bekasi had already prepared export-bound stocks of rice as much as 15.000 tons. Moreover, PT AMS already signed contracts with their counterparts aboard.
If the Government really intended to drive the private sector to export rice, the bureaucracy should ease procedures instead of making things difficult the way it happened now.
Because the recommendation of the Department of Agriculture never came up, PT AMS up till now was in no condition to export rice. Even the buyers aboard frequently inquired the plan of rice exporting “I came to visit the office of the Department of Agriculture to inquire about the plan to export rice, but up till now nothing can be realized”.

Director General of Processing and Marketing of Agricultural Yields [P2HP] : verification of rice stock necessary

Zaenal Bachruddin, Director General of processing and Marketing of Agricultural yields [P2HP] disclosed to Business News in Jakarta Monday [20/4] admitted that there were already 11 applicants requesting recommendations for rice exporting, but up till now not a single permit had been issued by the Government.
In order to issue export permit for rice, in was necessary for the Government to make verifications of the exporting company, not just about the status of company but also the readiness of rice stock to be sent aboard. The verification procedure was to be exercised by the Department of Trade and PT Succofindo.
Although not a single company had obtained any permit, the Government was confident that the export plan could be realized this year “We expect that the export plan can be realized before the maximum time limit, which is next June”.
Budi Gardjita, the Director of Domestic Trading, Department of Agriculture stated that the verification process on the private companies were well underway. But up till now the volume of rice applied by the private companies amounted to only 80.000 tons, while the quota given by the Government was 100.000 tons. “We are still waiting for the remaining quota for 2009 as much as 20.000 tons”.
According to Business News data there were at least 11 private companies who joined BULOG in exporting rice, consisting of 9 rice suppliers namely: PT Padi Unggul Indonesia, PT Alam Makmur Sembada, PT Bangun Citra Mandiri Tama, PT Jatisari Rejeki, PT Gentrade, PT Pertani, PT Jayamas, Insan Sentosa Prima and PT SInar Balango Prima. Additionally there were 2 suppliers of organic rice namely PT Makrifat Mulya Perkasa and PT Bloom Agro.From the buyer’s side, there were 7 companies who were ready to buy Indonesian rice of fragrant and organic types, i.e. Seacor Commodity Trading LCC, PT Maubeni, PT Indoboga Jaya Makmur, Olam International, Louis Dreyfus Commodities, Nisia Interlinkage, and PT Prava International.


The profit to be made by Pertamina Oil Company this year was predicted to decrease by 50% to become IDR 13 trillion, lower than the profit made in 2008 amounting to IDR 30 trillion.
The global economic recession accounted for the decrease of profit, marked by the lessening demand of oil from Indonesia in addition to adverse local economic condition.
“Profit would slump this year as result of global economic downturn” this was stated by Anang Rizkami Noor, Vice President for Corporate Communication of Pertamina to Business News by phone on April 20, 2009.
In addition to that the downturn of world’s oil price also had its notable effect on the profit made by Pertamina.
The present world price of oil was between USD 40 and USD 50 per barrel, way below the price of oil in 2008 which reached USD 147 per barrel.

“There is still hope, knowing that the trend now is upgoing”
Pertamina would continue to make investments this year at the value of IDR 21 trillion.
IDR 11 trillion of the said amount would be allocated for upstream business like explorations and company acquisitions, whilst another IDR 10 trillions would be invested in downstream sector like processing.
The Indonesian Government had lowered the target of economic growth to 4.5% this year amidst the growing effect of the downgrading of the world’s economy.
The decline of the global economic activity had lowered demand as well as selling prices of Indonesian products like palm, rubber, copra, textile, and minery products.
The heightening of domestic economic activities before the global crisis which started on September last year had boosted the need for energy. The Government strived had to draw investors by offering various convenience including incentives whereby they can invest in gas-oil business.Indonesia’s oil and gas production output continued to plunge in the past few years, because the oil wells and resources were drying up while investments were scarce.

Indonesia to prioritize boosting domestic gas market

President Susilo Bambang Yudhoyono said here on Tuesday that the government would prioritize increasing the domestic gas market, when opening the 33rd Indonesian Petroleum Association (IPA)`s Annual Convention and Exhibition. He said Indonesia had several natural gas projects which were expected to be able to secure natural gas supply for domestic needs and exports, as well as to have trickle down effects namely jobs and business opportunity, e.g. the projects in Senoro Donggi, Masela, Makassar deep sea and Tangguh.
Source: PA Asia - Public Affairs and CSR from Antara news website, 10:52, 6 May

Modern retail sector relies on local products

Around 95% of the total turnover of modern retail business this year (Rp 43.8 trillion) is contributed by local products. Currently, Indonesian consumers tend to choose local products over imported products for their food and beverages, clothes and electronics. Thus, according to the Indonesian Retailers Association (Aprindo), imported products only covers a maximum 10% size in modern retail stores in Indonesia, depending on each retailer.
Source: PA Asia - Public Affairs and CSR from Investor Daily, 6 May, p.1

Foreign companies treated as locals in merger, acquisitions

Foreign companies would be given the same treatment as local companies when registering pre-notification of merger or acquisition plans with the Commission for the Supervision of Business Competition, an official said Thursday, The Jakarta Post reported.
“We have a lot of foreign companies with representative offices in Indonesia, and just like local companies, they will have to comply with the regulation we have put down in the guideline,” director of communication for the commission, A. Junaidi, told a press conference.
He added that the pre-notification of merger and/or acquisition to the commission is voluntary for companies but incentives are provided for those who chose to do so.
“The companies which pre-notify the commission will not have their merger or acquisition nullified by the law should they do any illegal conduct after the merger. For instance, if after a merger a company is monopolizing the market, we will not demand a nullification of the merger. Instead, we will press charges under the monopoly law,” he said.

Shell submits old exploration data

The Indonesian government and Netherlands-based gas company Shell signed a memorandum of understanding to submit exploration data of oil and gas working area in Indonesia for any period prior to 1965. Hadi Suprapto, Ferial VIVAnews.
Director General of Oil and Gas at the Department of Energy Evita Herawati Legowo said that Indonesia has requested the data since last 2006. "We are expecting of discovering new oil and gas working area based on the data," Legowo said in Jakarta on Tuesday, April 28.
There are abandoned high potential of oil and gas working areas in the country, according to Legowo. She explained that it will take 15 months to complete the data transfer from Shell to the Indonesian government. "We are optimistic that the data copying will be completed by July 2010," she said.
Since the data is mostly old and fragile, Shell is willing to spend US$500,000 for data scanning to make the soft copy. After asking for data transfer to Shell, the government is also planning to make similar transfer with Chevron and ExxonMobil.


Government may end KAI monopoly in railway operations

The government will soon introduce a regulation paving the way for the liberalization of the railway sector, Asia Pulse reported on Thursday.
The Ministry of Transport has submitted a draft regulation on the railways to the State Secretary for presidential approval, The Jakarta Post reported
Director General of Railways Tunjung Inderawan said the draft regulation calls for an end to the monopoly of PT Kereta Api Indonesia in railway operation n the country.
A railway analyst from the Indonesian Institute of Sciences (LIPI), Taufik Hidayat, said the regulation should also address matters such as safety in railway transport and equal treatment of all players in the business.

Retailers need legal security, Carrefour case as a reference

The chairman of the Indonesian Employers Association (Apindo) Sofjan Wanandi yesterday said that the investment in the retail sector really needs legal security from the clarity of laws and the government’s firm actions. He stated that the current case of Carrefour should be solved in good terms and with solid evidence. According to him, it is time for Indonesia to have a trade law that specially regulates the retail sector.
Source: Media Indonesia, 30 April, p.18

A communication forum is officiated

Trade Minister Mari Elka Pangestu officiated a communication forum on the development of traditional market, shopping centers and modern stores, through a Decision Letter No.737.1/M-DAG/KEP/3/2009. The forum currently has 18 market actors and observers. It chaired by the Director General of Domestic Trade, Subagyo.
Source: Investor Daily, 30 April, p.14

Indonesian government initiatives to stimulate investment in infrastructure and clean technologies

On 28 April, the Co-Ordinating Ministry of Economic Affairs presented the recently established PT Sarana Multi Infrastruktur (PT SMI). This state-owned company has been established with the objective of bringing government institutions, private companies and financing institutions together to realize infrastructure investments. The company aims to arrange the needed government support for infrastructure projects and to assist in the arrangement of financing. It may also participate in joint ventures that build and operate infrastructure projects.
Last year, the Indonesian government launched the Clean Technology Fund. This fund has US$ 250 million available to invest in projects that are using environmentally friendly technologies, projects in renewable energy, in water and in agriculture. The fund can invest in projects of up to US$ 80 million, with equity amounts of between US$ 5 and 20 million and can arrange additional financing from other funds and from financial institutions. The Fund will apply market-based profitability criteria in its project selection, but uses the Ministry of Finance’s influence in arranging the necessary support from government institutions and state-owned companies.