Wednesday, 16 September 2009

The Depok-Antasari Section of Toll Road not Worthy of Continuation

The negotiation between the Board of Toll Road Management (BPJT) and PT Citra Wasphuttowa on the development of Depok-Antasari Section of toll road was till at deadlock, as agreement was still not arrived at between the two parties especially on the magnitude of expansion of land-clearing compensation for the project which burdened both parties.

Nurdin Manurung, Head of the Board of Toll Road Management (BJPT) in his disclosure to Business News in Jakarta Tuesday [8/9] said that the continuity of road building of the Depok-Antasari section of toll road depended on the Toll Road Enterprise [BUJT] in this case PT Citra Wasputhowa as investors, whether they were wiling to pay for the costly land clearing expenses in that section zone or preferred to resign from the contract with the Board of toll Road Management [BJPT]. “The final decision is not in BJPT anymore, whether they wish to quit or not. Tell then to call me on the phone directly” Nurdin remarked.

As known, the price of land along the Depok-Antasari had skyrocketed, resulting in the tremendous expansion of the cost of project. Evaluation by BPJT on that section of road concluded that the Depok-Antasari Section was financially not feasible and therefore no longer worthy of continuation. This was due to the fact that cost of land clearing which was formerly estimated at Rp. 700 billion had swollen up to become Rp. 2.1 trillion. While the Government’s capacity to cover up was only Rp. 1.8 trillion, so that investors should increase their investment up to Rp. 300 billions.

The additional investment worth Rp. 300 billion was felt as a heavy burden to investors. Nevertheless they still persist to run the project, hoping that the complementary expenses for land clearing be borne by the Government – and yet the contract between PT Citra Wasphuttowa and BPJT toll road management, as written in the letter of Agreement (PPJT) signed on May 2006 was way overdue.

In fact cases like the Depok-Antasari project could have been avoided if the component of land clearing expenses be excluded from the PPJT. This was the point to be proposed by BPJT Management to the Minister of Finance. BBJT believed that if land clearing expanses would be borne by the Government so that investors were only responsible for building and operating the toll road, there would be certainty in investment climate at the project.
The case of the Depok-Antasari toll road was such that, if the revision of the agreement with PPJT were agreed upon, it would be necessary to repeat the tender of the entire project so the rights were no longer in the hands of PT Citra Wasphuttowa, if another participant came up with better terms.

Proposes Budget for National Cacao Movement 2010 Rp. 1 Trillion

The Department of Agriculture proposed that budget for the National Movement of Kakao Production and Quality Development [Gernas Kakao] be increased. For 2009, the budget for Gernas Kakao Movement was Rp. 983.711 billion, whilst for 2010 the Ministry of Agriculture proposed the amount of Rp. 1 trillion.

Rizki Muis, Director of Spices Plantations and Freshener [TRP], the Directorate of plantation, Department of Agriculture disclosed this to Business News in Jakarta, Wednesday [7/9]. The Proposal for Kakao National Movement [Garnas Kakao] for 2010 was still to be discussed with Commission IV of Parliament, because the fund was derived from the budget of the Ministry Finance 2010.

In the National Kakao Movement [Garnas] the Government took three actions i.e. rehabilitation, rejuvenation, and intensification up to 2011. The Government sets target of rehabilitation of people’s cacao plantation covering 450 thousand ha specified as follows: rejuvenated land 70 thousand ha, rehabilitation 235 thousand ha and intensification around 145 ha.

The National cacao Movement 2009 made evaluations which concluded that the rehabilitation program had been successfully carried out due to favourable weather where the rainy season had not come. If the rainy season had come rehabilitation of plantations would be difficult. So far the rehabilitation had been carried out by way of side connection on old plants with premium clones.

To exercise this rehabilitation plan, up till now the premium seeds produced by Center of Coffee and Cacao Rehabilitation [Puslikoka] Jember was still at distribution stage. Report from the regions disclosed that around 1 million seeds were spread out to the Gernas Cacao operation zones. “The El Nino long drought would hopefully not affect the process of planting new seeds”.

In 2008, the Government designated 40 regencies in 9 provinces which were to be the target of Gernas Cacao national movement campaign, i.e. : South Sulawesi, West Sulawesi, Southeast Sulawesi, Central Sulawesi, Bali, East Nusa Tenggara, Maluku, West Papua and Papua.

Meanwhile, intensification by way of fertilizing were admittedly not running well, since the fertilizers to be distributed had not arrived yet. Hopefully by October next fertilizing could be exercised so that the intensification process should not be hindranced. For this, support of the provincial government was called for.

With this program the Government expected productivity of people’s cacao could be back to normal, reaching 1.5 tons/ha. This will bring positive impact to national cacao production for the next 2 or 3 years; national cacao production was projected at 1.3 to 1.5 million tons. “Presently a good number of plants were infected by pest so that cacao plantation productivity was only 500-600 kg/ha”.

House’s Commission IV Agreed on Budget for Organic Fertilizers of Rp. 6.2 Trillions

House’s Commission IV agreed on allocation of budget for organic fertilizers of Rp. 6.2 trillions. This amount would be allocated in form of activity of development of 10,000 organic fertilizers processing units. Each unit consisted of 30 cows, compost house, organic fertilizers process machine, means of transportation, and training on how to make organic fertilizers. This was one of the conclusions of the meeting between House’s Commission IV chaired by Chairman of Commission IV, Arifin Junaidi, and Minister of Agriculture, Anton Apriyantono, at the Parliament Building.

And, allocation of budget for organic fertilizers would be given in form of direct fertilizers aid. The fertilizers aid was a compensation for reduction of subsidy for chemical fertilizers from Rp. 17.5 trillions to Rp. 11.3 trillions.

Commission IV also agreed on a temporary ceiling of Work & Budget Plan of Ministerial Institution (RKA-KL) for the Ministry of Agriculture for 2010 of Rp. 7.95 trillions. The RKA-KL consists of Pure Rupiah Value at Rp. 7,602 trillions, from Foreign Loans-Grants at Rp. 313 billions, and from Non-Taxable State Revenue at Rp. 36.1 billions.

Minister of Agriculture, Anton Apriyantono, said that allocation of RAPBN 2010 of Rp. 7.95 trillions would be allocated to various work programs, amongst others, for increasing farmers’ welfare at Rp. 3,146 trillions, for increasing food security at Rp. 2,961 trillions, for increasing competitiveness and added value of agricultural products at Rp. 547 billions, for control and accountability of apparatuses at Rp. 33.1 billions, for government administration at Rp. 1,188 trillions, and for middle & high education at Rp. 74.9 billions.

Absorbability of Housing Subsidy for 2009 did not Achieve Target

State Minister for Public Housing, Moh. Yusuf Asy’ari, estimated that absorbability of housing subsidy in 2009 would only reach Rp. 1.5 trillions due to the effect of 2008 global crisis on the national housing sector. “It was difficult to achieve target, therefore we will submit a proposal for re-allocation of budget”, he said in a meeting with House’s Commission V.

Low absorbability of housing subsidy in 2009 was also due to the supply of landed houses (Rsh and Rusunami) not as expected. High bank rate in early part of this year, liquidity problem, and difficulty in obtaining construction credit caused difficulty to developers to expand businesses. And, low absorbability of housing subsidy was also due to decrease or commercial interest rates.

In fact, in early part of this year, BI rate and interest rate remained high, but at present they went down, and it made subsidy claim now. Other factors that caused low absorbability of housing subsidy was un-optimal allocation of subsidy for private residences. Based on the above, the State Ministry for Public Housing proposed a re-allocation of subsidy of Rp. 1 trillion for other programs, such as moratorium.

Secretary of the State Ministry for Public Housing said that the proposal had been submitted to the Ministry of Finance. It was necessary to increase absorbability of subsidy. “We expect that now we still have the time to implement this program”, he said. This is an attempt taken by the State Ministry for Public Housing in order to maximize absorbability of subsidy.

Low absorbability of subsidy was also as a result of coordination with housing stakeholders which indicated that housing development rate would not achieve target. The amount of subsidy set by the government for 2009 was Rp. 2.5 trillions. This amount was to support construction of 170,000 Rsh and 44,000 Rusunami. But, because of the global economic crisis, amount of supply decreased by around 30%. Meanwhile, Chairman of Central Board of Association of Indonesian House and real Estate Developers (Apersi), Fuad Zakaria, stated that the government’s action to re-allocate unabsorbed subsidy fund on other programs was unnecessary if government’s plan at the early part of the year was well prepared.

He continued that a plan should be carefully prepared and consider future possibilities.

Presentation of National Standard of Working Competence in the Forestry Sector

Effective and efficient management of forest resources called for readiness of expertise, education and training of personal who operated them. Therefore, a specialized education and training plan, based on proper standard of competence in forestry management became a pressing necessity.

This was disclosed by the Minister of Manpower and Transmigration Dr. Ir Erman Suparno, MBA, M. Sii on the occasion of Presentation of National Standard of Working Competence [SKKNI] of the Forestry Sector to the Minister of Forestry MS Kaban at the Manggala Wanabakti Building of the Department of Forestry.

In that same opportunity, the National Board of Professional Certification [BNSP] represented ny Head of BNSP Tjepy F. Alowie submitted Letter of Accreditation to the Boar of Professional Forestry Certification [LSP-HI] of the Department of Forestry who had the authority to issue specialized certification in the forestry sector.

The Minister of Manpower and Transmigration stated that the application of SKKMI certificate in the forestry sector would hopefully prepare and promote the competency of human resources of the forestry industry, especially those related to planning, exploitation, rejuvenation and rehabilitation of forests.

Furthermore it was set forth that SKKNI was used as main reference in the formation of educational and training program as well setting up of examination syllabus for certification of working competence. This standard of working competence was also applicable for recruitment procedures, personnel posting, and advancement programs for employees.

The process of professional certification which referred to the standard of working competence would enable monitoring over workers’ performance and standard of professionalism of forestry personnel, which would eventually lead to better forestry management effectiveness.

The standard of working competence specified worker’s capability including the aspects of knowledge, skill, and professional attitude which was relevant to duties and employees’ qualification. The standard of competence was based on the industry’s actual need as agreed and acknowledged by the stakeholders.

Test of Competence was exercised by the National Board of Professional Certification [BNSP] through the Board of Professional Certification [LSP]. Meanwhile the Department of Forestry itself had since 2006 formed Indonesia’s Forestry LSP which was to undertake certification of professional competence on professional segments in forestry, among others the Head of Forest Management, Forestry Illuminators, Evaluators of Forestry Performance, Technical Personnel of Perum Perhutani, and Forestry Technicians.

G-20 Reviews Stimulus Package

The G-20 states made their commitment to maintain economic stimulus package until economic recovery could roll with certainly and the monetary market remained steady. This official statement was to be presented by the week end [4/9/2009] by the time the Minister of Finance and governors of central banks of the developing and advanced states meet in London, England. In preliminary meetings toward summit meeting by end of this month, the G-20 also discussed prospects of the world’s economy, turbulence in banking bonus, and to tighten up financial regulations and to reform international monetary institutions.

“The stimulus that was released too soon at present has its alarming risk, with significant implications on growth and unemployment”, remarked Head of the International Monetary Fund [IMF] Dominique Strauss-Kahn. Global recovery, according to Strauss-Kahn, would most probably run slow due to the high level of unemployment which might continue until next year. In the USA itself, the unemployment level on last August rose to 9.7% where 216.000 workers lost their jobs. This figure was bigger compared to previous year where unemployment was at 9.4% level. But in Europe, the unemployment level by July 2009 hit the highest record in the past 10 years at 9.5%.

“The riskiest thing was to think that because measures had been taken, recovery is well guaranteed. There is no country who would be satisfied to see these results” said England’s Minister of Finance Allistair Darling who acted as host of the G-20 Meeting. Meanwhile Governor of the Europe Central Bank Jean Claude Trichet stated that the global monetary crisis was not over so the European Monetary Authority would continue the policy until crisis was really overcome.

Trichet remarked that although the process of economic contraction was coming toward end, right this moment was not the time to escape from crisis. “Uni Europe is determined to take firm action in time to come” he said. Signs of improvements in some economic indicators drove ECB to gradually increase forecast reference level.
ECB estimated that Gross Domestic Product [GDP] in Europe would be up by 0.2% by 2010, more optimistic compared to previous forecast which projected contraction of 0.3%. This year ECE projected growth of Uni Europe to be minus 4.1%, better than the previous forecast of minus 4.6% “There is still a great deal of uncertainty and volatility to appear in the coming data” Trichet underscored. The G-20 states were: Argentine, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and United States of America.

Government Imposes Safeguard Measures on Dextrose Monohydrate Products

The Government was taking safeguard measures in the form of specific entry tax on every imported Dextrose Monohydrate originating from China, France, Italy and South Korea through stipulation of the Regulation of the Ministry of Finance No. 133/PMK.011/2009 dated August 24, 2009.

“Based on observation result of the Committee of Indonesian Trading Security [KPPI] for the observation period 2004-2007, there has been a shoot up of examined imported products resulting serious loss in domestic products; therefore the ministry of Trade proposed imposition of safeguard-action charges on Dextrose Monohydrate” remarked Head of KPPI Halida Melani.

This PMK Rules regulated the imposition of safeguard import tax on Dextrose Monohydrate with HS : 1702.30.10.00 and 1701.40.00.00, expect on glucose syrup, dextrose monohydrate pharma grade and maltodextine.
The period of Safeguard Import Tax: was imposed for 3 (three) years, specified as follows first year Rp. 2.700/kg, year II Rp. 1.400/kg and year III Rp. 2.100/kg. Further stipulation on the procedure of imposition of Safeguard Import Tax on Dextrose Monohydrate was regulated by Rules of the Director General of Customs and Taxation. This Regulation of the Ministry of Finance was effective for 3 (three) years from August 24, 2009 to August 23, 2012.

Unemployment Soars up but Dismissal Cases Subside

Karel Dunnel, Statistics Chief at US Buerau Labour Statistics [BLS] Saturday [5/9] sent Business News information of the condition of manpower in the USA “Up till now unemployment level is still moving up to 9.7% level [table 2] but the level of dismissal cases continued to decline. The general picture shows a certain degree of recovery but the industrial sector is still unable to accommodate newcomer workers or long time workers who were dismissed”.

Tight efficiency program also accounted for the ever growing unemployment level in the USA “Before the terrible crisis at end of 2007, most of the industry treated efficiency as nothing but a discourse. Often expressed as a commitment, while the implementation is completely contradictory. The notion that ‘easy money’ was at green light in the USA as economic giant, had side kicked efficiency program as something unimportant. But now that every body is aware that even a Mr. Giant could be crisis-beaten, the efficiency was perceived as something to be exercised somehow. The efficiency program that seems to be so extreme, automatically closed the doors to employee recruitment”.

Business Rolls Positively

With the application of efficiency program and termination of employment occurring at unusually large scale in the USA, the public assumed that business would roll on, while some big corporations were already chalking up profits. However on the other hand, the position of manpower continued to be under pressure. “The 9.7% level is the top record of unemployment in the USA in the past 26 years. It is projected that the joblessness level would break through 10.0% level this year and may remain through 2010. Recovery has shown its clear sign, but the condition is still not conducive for labour increase”.

Through August of 2009, the average productivity level by per week man-hour was at level 33.1 which was the average work week. “There is a notable increase, i.e. around 10% against data of June 2009. Production level increases because the dividing figure [workers] plunge down while industry accelerates significantly. At least this is an indication that a recovery process is taking place. Global demand is not completely normalized, meaning, to jack up productivity is something not really ‘necessary’ because the macro economy being at the early stage of recovery”.

Bank Century Scandal

Bank Century scandal has shocked our banking industry nor yet recovering fully from the 1997 financial crisis. The past 12 incident has reminded us of preventing the massive robbery of state money from repeating. Banking rules have tightened and white collar crime is subject to heavier sanction. Nonetheless, banking authorities have not found an effective way to detect early the embezzlement of state cash by naughty bankers.

Embezzlement still continues but the Bank Century case really surprises because the government has injected fresh funds amounting to Rp. 6.76 trillion. It resembles modus of operandi of banking crime in 1997 when Bank Indonesia and the government conspired to let the state cash open up thus owners of ailing banks could loot freely. Even, the government offered the funds through Bank Indonesia liquidity Assistance (BLBI). It was the starting point of the prolonged crisis that has continued to affect the people. The people already sacrificed hundreds of trillions of rupiah for BLBI keep silent even though the looters have not been sentenced and they understand the limited capability of the government to encounter the white collar criminals. Yet, the government distributed more funds to ailing bank now.

We almost loose word to comment about the issued. Hasn’t the past experience been sufficient to become an extremely bitter lesson? Why does one the government remain ready to rob trillions of rupiahs from the public to rescue only one bank? Later, what is the sense of all slogans related to the banking professionalism and architecture? Like the past crisis, bankers are only greedy foxes never satisfying to lot but the government still deems them as heroes contributing greatly so that they must be rescued even though the bailout is costlier. The real shape of fox comes out the executive dress after the sales of empty mutual funds and embezzlement of customer funds was uncovered. Instead of punishing criminal, the government injected rescue funds. It’s extremely irrational.

Why must the government deem the bank very important? Even, Vice President Jusuf Kalla reminded that the impact would expand if the case is investigated. What is the meaning of the statement? Owners and executives of the ailing reportedly run off funds and assets abroad with the amount estimated at Rp. 26 trillion. It’s not a new modus either because we frequently heard it in the past. “Some Rp. 26 trillion is a huge amount and anybody surely need containers to bring the money to come out of the country”, said Attorney General Hendarman Supandji, apparently intending to criticize why we could loose money in a huge amount without any trace.

Every action taken by the government to win the public sympathy won’t be fruitful. The damage occurred. Numerous irregularities blanket the case thus resulting in an impression that the government has received the people when the global communities are wary off financial crime just annihilating global economy.

In many countries, the criminals subject to long-term imprisonment and their assets are confiscated without compromise. However, in this country, the government injected funds to criminal bank. Is our government extremely lacking awareness of surrounding circumstances and the ongoing global economic development? Is the past crisis only un-valuable lullaby? If the administration trend continues, easy to spend money for improper thing, our country would never develop.

Kalla conceded that he did not know the disbursement of funds to Bank Century. Even, mass media did not trace it on the first occasion. The distribution of funds in such amount should secure approval from the House of Representatives. Up to this extend, the government should not be able to act surreptitiously. Now, the distribution of cash money assistance to millions of the poor people need tough deliberation, is included into draft state budget, reads in state address and waits for approval from the House of Representatives but why could the funds amounting to trillions of rupiah be distributed promptly to an ailing bank without public consent? What happens actually?

The Bank Century case may not be classified as an initial test for the second tenure of President Susilo Bambang Yudhoyono. It’s one of the largest blunders taken by his administration. Indonesia has passed phases of history that should not open space and tolerate banking crime because it has destructive effects like terrorism and corruption. If the government wants to cure injury in the heart of the people from dark story, the injected funds have inevitably to be recouped, fugitives are caught by all possible means and heavy sentence is imposed if they are found guilty. Let’s witness the sentence imposed by the Jakarta District Court on the caught defendants in this case whether the settlement still resembles the method applied to BLBI wherein imprisonment was only imposed on bottom – level executives.

WTO Ministerial Meeting to be Held on September 3-4 in India

Minister of Trade, Mari Pangestu, would lead Indonesian delegates in the World Trade Organization (WTO) Ministerial Meeting in New Delhi in September 3-4. The title of the meeting was Re-energizing Doha: A Commitment to Development. The meeting would be attended by ministers of WTO member countries; WTO’s Director General Pascal Lamy; Head of WTO’s Agriculture Negotiations; Head of WTO’s Non-Agricultural Market Access (NAMA); Ambassador Lucius Wasescha; and Head of WTO’s Association of Services Negotiation; and Ambassador Fernando de Mateo.

The goal of the meeting is to follow-up some previous meetings in setting negotiation of the Doha Development Round, amongst others, G-20 Meeting of Finance Ministers and Central Bank Governors on November 15, 2008 and April 2, 2009; Cairns Group Ministerial Meeting in Bali in May 15-17, 2009; and Informal Trade Ministers Meeting in Organization for Economic Cooperation and Development (OECD) Ministerial Council Meeting in June 2009.

In a press conference in Jakarta on Monday [August 13], Minister of Trade Mari expected that the meeting would mark a stronger momentum for all member countries to return to negotiation table and settle the Doha Round not later than 2010. “Indonesia will continuously encourage so that the Doha Development Agenda [DDA] would soon be settled for the sake of developing countries, including Indonesia. Therefore, negotiations on all issues that have been delayed, will be immediately be started”, Mari said.

Before the ministerial meeting is opened officially by India’s Minister of Trade, Anand Sharma, Minister of Trade Mari Pangestu will lead the Group 33 (G-33) Meeting to exchange opinions and update latest issues near the ministerial meeting, considering that the G-33 has not been doing coordination quite a long time.

At the same time, a Cairns Group Informal Ministerial Meeting will be held. The goal of the meeting is to settle negotiation items which results will be conveyed by Australian Minister of Trade as Chairman of Cairns Group at the time of the ministerial meeting.

The Cairns Group meeting will discuss strategies to support negotiation in the Doha Round of the next stage in Geneva.

State Expenditure for 2010 Increased Rp. 3.8 Trillions

State expenditure for 2010 was set at Rp. 1.009.5 trillion or increased Rp. 3.8 trillions from 2009 assumption. The expenditure consisted of central government’s expenditure of Rp. 699.7 trillion, or rose from this year’s assumption at Rp. 691.5 trillions. Allocation to regions was set at Rp. 309.8 trillions, or rose slightly from the assumption in APBN-P of 2009 at Rp. 309.3 trillions. Vice Chairman of the Budget Committee of the House, Harry Azhar Aziz, said.

In line with increase of allocation of state expenditure, revenue must also increase so that deficit of next year would not be too much increased from assumption in RAPBN of 2010, which was 1.6% of Gross Domestic Product (GDP), or equivalent to Rp. 98 trillions. Increase in state expenditure was also to compensate for increase of target of economic growth. Increase of target of economic growth would still require some preconditions, for example, investment expenditure has to be increased. It means that expenditures on capital and goods must be increased, and so is consumptive spending.

The House and the Government agreed to increase target of tax revenue for 2010 by Rp. 6 trillions in order to support economic growth. In RAPBN of 2010, tax revenue was set at Rp. 645 trillions with assumption that economic growth is 5%. This assumption is higher if compared to target in APBN-P of 2009 at Rp. 652.12 trillions.

Meanwhile, Commission XI, in a meeting with the Minister of Finance, agreed to increase economic growth rate in RAPBN of 2010 from 5% to 5.5%. With the above target, government’s expenditure would be more expansive. As a consequence, the Directorate General of Taxation must also do revision or re-calculation of target of tax revenue for 2010 from the previously Rp. 702 trillions.

The Minister for National Development Planning/Head of the National Development Planning Board said that 5.5% economic growth rate was potential to reduce unemployment to 8.9 millions or 7.7% from total workforce. Based on data of Central Board of Statistics, in February 2009, open unemployment rate stood at 9.26 million or 8.14%.

Parliament Sets Assumption of Indonesia’s Crude Oil Price at USD 60 – USD 70 Barrel

Commission VII of Parliament stipulated Indonesia’s assumption of crude oil prices (ICP) for National Budget (RAPBN) 2020 at USD 60 to USD 70 per barrel. The Parliament and Government agreed on assumption of ICP for National Budget (RAPBN) 2010 at USD 60 – USD 70 per barrel. This was disclosed by Chairman of Commission VII the Parliament Airlangga Hartanto upon leading a session with the Minister of ESDM and related State Owned Enterprises at the House of Representatives.

Formerly member of Commission VII of Parliament, Tjatur Sapto Edy stated, crude oil price (ICP) should be assumed at USD 65 per barrel, based on Indonesia’s positive economic growth. Because ICP assumption of 2009 had been set at USD 61 per barrel, it was moist unlikely to be down by 2010. The ideal level of ICP was USD 65 per barrel considering the 2009 level was USD 61 per barrel.

Other member of Parliamentary Commission, Syamsul Bachi urged the Government to make average assumptions of ICP, particularly the minimum average. If in 2009 the Government set the minimum average assumption to be USD 50 – USD 70 per barrel, in 2010 it should be narrowed down to USD 60 – USD 70 per barrel whereby the Government could use the figures more objectively.

Meanwhile the Minister of Energy and Mineral Resources Purnomo Yusgiantoro in his presentation elaborated, that in fact price of the world’s crude oil was basically unpredictable due to several influencing factors like demand for oil, among others increase of supply from states as members OPEC and those outside OPEC. So far the Government has always been giving recommendations of average value to the Parliament about ICP assumptions. The Government already had given recommendations to the Budgeting Committee of the Parliament on ICP assumptions at USD 50 – USD 70 per barrel. Apparently there was no difference between the Government and Parliament’s assumptions.

Fantastic Boom of Middle Class in Asia

Simon Djankov, World Bank Analyst, on Saturday [29/8] informed Business News on World Bank’s latest study on global macro-economy “What was noteworthy was a big leap of middle class number in Asia. This is a fact might serve as a “benchmark” for the Asia region or the world in reforming global economy of the world in the future. The leap was indeed significant but most important for the world, especially in relation to the global economic profile.

This most significant leap was a good portrait of a powerfully energized Asian market. “The role of Asia’s leading countries like China, India, and South Korea including also Indonesia was most important to the development of the Asian region. Japan had forged far ahead, often considered as no longer part of Asia, but ranked with the Western Society. Now with the emergence of China, India, South Korea and Indonesia, the world was more convinced that the Asian region would be most influential to the global economy in the future”.

Asia’s development potentials would have its influence on the world’s economic profile “One thing most noteworthy is that when in the past, the Western Society was regarded as the core of investment, now the world is astonished by the fact, how aggressively Asian investors pursue global assets. This means that Asian states had been able to undo the hegemony of the Western states and if necessary forge further ahead more freely to determine faith of this part of the world independently. This had somehow triggered some kind of worry among the Western Society. On the other hand, for the Asian states it means justification of claim over a bigger portion of the “cake of influence” over the global market. With more sure-footed maneuvers especially with the support of vast domestic markets in China, India and Indonesia, Asia’s bargaining position was getting stronger than ever”.

The big leap of middle east number in Asia had become an astounding phenomenon. With such a clear and visible trend, it was predicted that the global industry would shift to Asia where labour cost was “much cheaper” compared to industrial centers of the western society. “The image of global products would gradually be focused on Asia because up till now, there are no other regions which could be regarded as more competitive. If Asia’s product quality continued to improve, the world will see that the global industry would be centralized in Asia, in Asian states. This certainly must be anticipated wisely and positively, by both the Government and the private sector”.

Agreement on Gas Trading and Amendment to Gas Trading Agreement Worth USD 895.7 Million Signed

One agreement Gas Trading [PJBG] and two amendments of Gas Trading Agreement worth USD 895.7 million was signed on [Friday, 28/8]. The gas Trading Agreement was between Pertamina Gas Medco Gas Indonesia and JOB Pertamina Medco E&P Simenggaris. Two Amendments of Gas Trading Agreement was between PT PLN and Kalla [Bentu] Ltd and between TAC Pertamina Semco.

The Agreement on Gas Trading [PJBG] between the Consortium of Pertamina Gas-Medco and JOB Pertamina Medco E&P Simenggaris worth USD 216.57 million had been signed by the President Director of Pertamina Gas, Suharyanto and the President Director of PT Medco Gas Indonesia, Yunar Panirogo who represented buyer and seller; Director of PT Pertamina Hulu Energy Simenggaris, Edy Purnomo and President Director of PT Medco E&P Simenggaris, Budi Basuki.

Amendment of the first Gas Trading Agreement [PJBG] was signed by the President Director of PT PLN (Persero), Fahmi Mochtar, Chief Executive Officer PT Kalla [Bentu] Ltd Imam P. Agustino and Amendment of the second Gas Trading Agreement [PJBG]. President & CEO Vico, Craig Steward and President Director of PT Pertamina E&P, Salis Aprilian.

By the signing of the PJBG Agreement, JOB pertamina Medco E&P Simenggaris would supply gas to the amount of 20 BBTUD for 11 years which would be used for industry in Kalimantan to the Consortium of Pertamina Gas-Medco Gas.

Signing of the first Amendment of PJBG was carried out between PT PLN with Kalla [Bentu] Ltd involving a contract worth USD 678 million, whereby Kalla [Bentu] Ltd was obliged to supply gas to the amount of 15-30 BBTUD for 12 years to PT PLN to fulfill the need for gas in the region of Pekanbaru, Riau.

The second amendment of Gas Trading Agreement [PJBG] was signed between Vico and TAC Pertamina Semco for a contract worth USD 0.69 million, whereby TAC Pertamina Semco has the Obligation to supply gas to VICO amounting to 1 BBTUD for 6 months.

Indonesia to Offer Infrastructure Package Worth 350 Trillion to The Conference on Infrastructure Next Year

The Indonesian Government planned to offer infrastructure project worth Rp. 350 trillion to investors at ministerial level conference on infrastructure in Jakarta next year.

The project included the 30 kilometer long Sunda Straits bridge which connected the islands of Sumatra and Java.

The conference of infrastructure would be participated by 53 countries of the Asia Pacific region, scheduled to be held from April 14 to 17, 2010.

Indonesia aimed the offer at countries of high financial capacity like China, Japan and South Korea.

The important thing is that we have been entrusted to conduct this convention and we are going to make the best of it. We will be presenting some infrastructure projects for which we are ready. Out target is to offer infrastructure projects worth Rp. 350 trillion.

Paskah Suzetta, Minister of National Development Planning disclosed this Business News at the Presidential Palace, Thursday [27/8].

Among the projects offered were roads bridges, harbours, airports etc “I am sure these projects would sell”.

The Sunda Straits bridge was now in the process of feasibility study and would be stipulated by the Government, some adjustments were necessary based on the feasibility study.

“Still to be improved. We shall include this. The plan of the Sunda Straits bridge should be prepared to be offered to the international forum”.

The projects being offered were part of the Government’s endeavours to accelerate economic recovery.

Previously the Ministry of Development Planning stated that the global economy would need USD 30 to USD 40 trillion of investment in infrastructure for the next 20 years, while Asia alone needed USD 6 trillion.

Indonesia was striving hard to step up infrastructures to support the national target of economic growth of around 7%.

President Susilo Bambang Yudhoyono had promised to double the infrastructure spending to become USD 40 billion in his second ruling period.

Indonesia ranked 86 among 133 countries in infrastructure quality at the World Economic Forum 2008 Global Competitive Index. This position was lower than Pakistan and Srilanka.

The National Logistics Agency has Distributed 500.000 Tons of Sugar Produced by PT PN/RNI

The National Logistics Agency [BULOG] has distributed sugar produced by PT Perkebunan Nusantara [PTPN] and PT Rajawali Nusantara Indonesia [RNI] of 500,000 tons from 665,000 tons target. The recent selling price has reached Rp. 8,000/kg. To decrease prices of sugar is ineffective considering that sugar distributed by BULOG reaches only 14.6% of national sugar production. Mustafa Abubakar, President Director of Perum BULOG, told journalists.

If we will control prices of sugar using the similar method for controlling prices of rice, the consequence is that the government must have sugar stock funded by the government. But, this pattern could not immediately be realized because it needs APBN budget. Therefore, it was proposed to the State Ministry of State Enterprises that if price of sugar will be controlled using the same method used for controlling price of rice, the government must have sugar stock to stabilize prices. The amount, up to this date, has not been calculated.

The reason is because BULOG, until this day, has not received any assignment to stabilize price of sugar so the role of BULOG is only as marketing agent of sugar produced by PTPN and RNI. BULOG has distributed sugar through second and third distributors. Third distributors consist of traders being members of Traders Cooperatives [KOPPAS]. Its members consist of members of Apegti [Association of Sugar and Wheat Flour Businessmen]. This is to shorten the chain and to accelerate even distribution of sugar to all regions.

The Government is Looking for a Foreign Investors to Invest in Propulsion Turbine Sector

To show attention to local machinery industry operators, government was looking for a partners, especially foreign partners, who is interested in making investment in propulsion turbine production in Indonesia. Currently, the government was expecting a serious response from Siemens to invest in small turbine production business in partnership with one of local producers, namely Nusantara Turbin Propulso (NTP), C. Triharso, Director of Machinery Industry, Directorate General of Metal, Machinery, Electronics, and Multivarious Industries, Ministry of Industry, told Business News.

We have made some approaches to other large, companies, such as General Electric (GE) and producers of similar products from China and Rusia, but none of them gave a response as we expected. So, we hope that Siemens will respond to serious request of the Indonesian government so that finally Indonesia will be able to develop propulsion turbine business that requires large amount of capital and quite sophisticated technology.

Actually, NTP has been able to produce the prototype of small turbine, but to develop it will require the support of large corporations of world-class. Meanwhile, NTP was only developing itself as a recondition industry, so the government encouraged them to produce small-scale turbine so they will finally able to improve their capacity as local manufacturer.

“It is difficult to find working capital and the market access because it is not easy for end consumers to trust the strengths of local industries, especially machinery industry so what they are looking for are well-known corporations, and finally, consumers are interested to buy the products. It also expected a technology transfer from world-class corporations, such as GE or Siemens”.

Data from Directorate General of Machinery Industry, Ministry of Industry

Machinery industry, particularly energy machineries consisting of boilers, turbines, and internal combustion engine, and other generators, in January-April 2009 recorded an export value of USD 117,567,830, decreased 24% from that of the same period in last year or USD 154,768,482. Viewed from import perspective, in January–April 2009, its import value reaches USD 936,131,806 or decreases 16.5% from that in the previous year or USD 803,233,647.

Be Cautious about Analyzing Situation

Nouriel Roubini, Professor of New York University, Tuesday [25/8] informed Business News on the probability of another round of crisis hampering in the next few months if America did not take aggressive steps to break in-transparency of the operators of the financial sector, remarked : “The discourse on the world’s new economic system is emphasized on openness. But the fact is that most of the problem handling concepts are still grey, not resolute. The most fearful things is that so many lendings or credit which are not focused on credit for consumption, housing, or property but also credit for investment portfolio which involve risk, like among others, shares”.

According to Nouriel Rubini, who was better known as “Dr Doom” [of Doomsday] there were to many companies of the financial sector who shoulder heavy loan obligations to be invested in various investments portfolio “With such a low level of interest rate and definitely unattractive to investors there are many other security companies or financial institutions who drive global investors, private or corporations, to invest in risky investment portfolio. As you are aware, financial products are so numerous, so complex and so extraordinary in the value of funds that spin within. With the tendency of America being less transparent, that risk is still there that in time to come, the bubble will burst once more”.

With the risk of bubble burst, Dr Boom stated that the global economic structure would take the form of W-shape “We have not even made it to return to the initial point where the global perception was at normal point, we plunge again and this would form the W-shape. With such probability, it is better to prepare for the worst scenario”.

In respond to the said graphic figures Noriel commented : “Just see how massive the lending extended to investment portfolio in the form of share papers. Worthless papers are for sale when the corporates represented by those papers go bankrupt. Who could guarantee that a company would survive a turbulence? For example, who dare to bet that a company as big as General Motors would not go bankrupt? The truth?”.

Dr Doom was regarded as representing false-tune voice in the discourse of global economy. Jean Claude Trichet, ECB President did not fully agree with Dr Doom’s perceptions. “The opinion of Noriel Roubini is not completely wrong. But after the world experienced such a terrific turbulence, it is unwise if we do not learn from the essence of problem and find the solution. Now even the banks of Switzerland which normally so tightly protect customers’ privacy, now are more open, more transparent and are willing to share customers’ data with other institutions. With such facts, the world has shown significant changes, at least in the financial sector”.

Pertamina Oil & Gas Production Reaches Highest Record

Oil production of Pertamina EP again broke the highest record with production output of 136,504 barrel per day or 11,004 barrel higher than 2009 target of 125,500 barrel per day. This record complemented Pertamina’s highest production which reached 184,158 barrel per day including production of Pertamina Hulu Energy [PHE] of 47,654 barrel per day.

The achievements was one of the accomplishments of Pertamina at upstream industry which had been focused on finding breakthroughs to explore new oil reserves, whereby to jack up Pertamina’s production output. These achievements had built optimism at Pertamina to become the leading operator of oil & gas in Indonesia with the capability to increase production year after year.

In addition to oil, gas production of Pertamina also showed best performance with total production output 144 million cubic feet per day [MMDSCFD] which were contribution of Pertamina EF 1090 MMCFS and PHE amounting to 365 MMCFD. This attainment wads 15% above the target of Pertamina [Persero] of 1256 MMCFD. By maintaining this level of production, both Pertamina EP and Pertamina [Persero] were optimistic about surpassing target of 2009.

Pertamina was the biggest gas producer for domestic needs. Of the total output, 28% were pipelined to The State Gas Company [PGN] 28% for industrial need, 18% for fertilizer industry, 18% for electric powerhouses and 14% for Pertamina plants and company’s own needs.

Pertamina’s oil production had been increasing since 2003 with average growth [Capital Average Gross Ratio/CSGR] 3.1% of level production of 95.6 thousand barrel per day [MBOPD] in 2003 to become 102.2 MBOPD in 2006. This production reached 6.7% growth in 2007 to become 110.3 MBOPD and had increased again in 2008. Average production output of Pertamina EP in 2008 reached 116.6 MBOPD. In 2009 Pertamina EP lifted up production target of oil production by 6.2% with production target of 125.5 MBOPD.

Pertamina EP was a subsidiary company of Pertamina [Persero] which operated in the exploration and exploitation of oil & gas in Indonesia was recorded as the biggest contributor of profit among all business units in the Pertamina [Persero] group.

The total profit of Pertamina EP kept increasing year after year in 2006 profit before tax of Pertamina EP aw Rp. 11.29 trillion, in 2007 it went up to Rp. 15.16 trillion and scored the highest profit in 2008 i.e. Rp. 19.08 trillion or more than 70% of total profit of Pertamina [Persero].
Pertamina EP was also the only producer of oil-gas in Indonesia which was optimistic about increasing the production of crude oil. Based on data of BPMIGAS, today Pertamina was in second position of oil producer in top ten ranking after Chevron and also in number 2 position of gas producer after Total Indonesia.

The Rattan Potentials of Central Kalimantan has International Bargaining Power

Head of the Technical Team of Commission VI of Parliament of Central Kalimantan, Hasto Kristiyanto stated, the potentials of Central Kalimantan as resource of rattan raw materials was vast so that the development of clusters of rattan industry may develop in time to come. All matters concerning people’s capability to produce became the main attention of Commission IV of Parliament.

The production of rattan raw materials from Indonesia has strong bargaining power at the International market. It was expected that development of the industry would enhanced. There has already been stages of improvements, where rattan were not just delivered as raw materials but in the form of ready made goods like furnitures or other handicrafts. The objective was to step up rattan exports in terms of quality and quantity time after time.

Commission IV of the Parliament would constantly support the condition of Expo or rattan products at home and abroad. The regency of Katingan could participate in such events as a medium of promotion to market rattan products. In regard to processing machines for rattan, Commission VI of Parliament believed that the Department of Industry sticks to its commitment to develop machines which may speed up the rattan processing around the Katigan regency.

Meanwhile Surya, Vice Regent of the Regency of Katingan urged the Central Government to pay attention to the rattan industry in the Regency of Katingan in Central Kalimantan by developing the rattan industry and building market base whereby to sell the rattan products, so that the mission and of the Katingan to become center of rattan industry and trading in Indonesia could be realized.
Managing Director of the rattan Industry of Katingan Regency, Sonny remarked that in spite of the immense resources of rattan raw materials we did not wish to remain as supplier of raw materials, we have the ambition to be the exporter of rattan products.

Labour and Investment Accommodated by The Industry Exceeds Medium-Term Development Plan (PRJM) Target

Although in the past five years the growth rate of the processing industry sector was unexpectedly below the average growth target of the Medium-Term Development Plan of 8.56% per annum, i.e. merely growing by 4.43%/year on the average, was surprisingly above target, investment wise or from the aspect of labour accommodation. After opening the Ramadhan Fashion and Accessories Product Expo at the Plaza Perindustrian, Tuesday [25/8] Minister of Industry Fahmi Idris disclosed Tuesday [25/8] the trend was on account of various factors.

Minister Fahmi stated, “In the Technical Meeting with Commission VI of Parliament on Monday [24/8] it was discussed that investment wise, domestic or foreign investor, showed indications of growth and so was working opportunities, in the same period, investment in the industrial processing sector the annual realization was posted at Rp. 19.41 trillion for domestic investment of USD 4.33 billion for foreign investment, based on the assumption of average exchange rate of Rp. 10 thousand per 1 USD, the Foreign Investment absorbed by the processing industry was around USD 43.29 per year.

When added up, the total foreign investment absorbed by the processing industry amounts to around Rp. 43.29 trillion per annum. When foreign and domestic investments invested in the processing industry are added up, the total average was Rp. 62.43 trillion per year. This figure exceeds the investment target in the processing industry of Mid Term Development Plan [RPJM] i.e. between Rp. 40 trillion up to Rp. 50 trillion”.

In export and import, increased were chalked up year after year. In the past 5 years there had been an average increase of export value 11.5% and import 22.47%. The performance of manufacturing industry had been most heartening, being able to contribute 65.21% on the average of Indonesia’s total export, although the total export of manufacturing in the past 5 years only contributed 66.8% on the average of Indonesia’s total import.

The figures of import value showed that according to category of economic goods, there had been increase in import through 2004-2009: 22.47% on the average. Meanwhile import of consumptive products rose 19.64%; import of raw materials/auxiliary materials rose by 22.8% and import of capital goods rose by 26.81%. Increase of capital goods import and raw/auxiliary products which were still high showed the low level of capital goods procurement and domestic raw materials used in the industrial sector.

The average fulfillment of production capacity in the industrial manufacturing sector only reached 64.2% on the average, which was below the target of National Mid Term Development Plan [RPJMN] of 80%. There were only around 47 industrial sub-sectors in Indonesia with production capacity of above 80%, while 96 sub-sectors, and 83 industrial sub-sectors had the capacity between 61% to 79% respectively. In fact there were even industries whose utility level was below 60%.

The sub-sectors having utilization level of above 80% were dominated by the upstream chemical industry with higher added value whilst the fixed capacity was lower. The industrial group with higher added value compared to the chemical industry such as machineries and electronics, the utilization ranged around 61% to 79%; many of them were even below 60%, like industries of radio/radio cassettes, palm oil processors, oil mill processors and metal processors.

The Fashion Industry
Upon opening the exhibition, Minister Fahmi stated, judging by the chain of production the scope was extremely wide, being supported by raw materials which were widely available in Indonesia. The raw materials used in the fashion industry were woven textile sheets, plain coloured or with designs, originating from the spinning and weaving industries which were now were widely developed in Indonesia.

In Indonesia there were 1,044 spinning and weaving companies employing nearly 345 thousand people, mostly located East Java and Central Java. The fashion industry were normally run by businesspeople, employing skilled workers like cutting, designing, sewing etc.

Tuesday, 15 September 2009

Allocation for Subsidy Fund of 2010 needs to be reviewed

The FBR fraction [of the FBR political party] at the House of Representative firmly evaluated that the allocation policy of subsidy fund as ingrained in the State Budget [APBN] 2010 needed to be reviewed at the forum of discussion of the Budget Committee of Parliament. This view was set forth by spokesperson of FPBR, Zulhendri Cahniago, upon presenting general review on the 2010 Budget at the Parliament grand session.

In spite of the fact that the National Budget Plan of 2020 showed deficit up to 1.6% the FBR fraction was of opinion that the subsidy budget for the lowest social strata should be maintained. However the allocation policy should be continuously improved to make it more focused. The allocation of budgetary fund in the National Budget Plan [RAPBN] 2010 was projected at Rp. 144.4 trillion or down by Rp. 15 trillion compared to subsidy allocation in National Budget Plan 2009. The sectors having reduction of subsidy fund were electricity, food, and fertilizers. Other cases of budget reduction was on account of Government’s plan to redesign subsidy policies. Under such circumstances, the FBR fraction reminded the Government to be more careful to prevent turbulence.

The Government seemed to be over-cautious in scheming up Budget Plan 2010 in stipulating the basic assumptions of macro economy and targeting state revenues. The Government’s prudence was reflected in the prediction of state revenues and grants for 2010 which was set up at Rp. 911.5 trillion or only increasing by Rp. 40 trillion from revised version of State Budget 2009. More over, even the State target of non tax income [PNBP] was only set as Rp. 180.9 trillion or down from the target of non-tax income in revised state budget 2009 amounting to Rp. 218 trillion.

Lowering of the Non Tax Income [PNPB] Target was caused by decrease in non-tax income of oil and gas as result of oil-gas recovery cost. This needed to be questioned, because in the discussion of State Budget Plan/Revision 2009 the Parliament asked BP Migas to press down recovery cost. In addition to that, the lowering of non-tax income target was caused by reduced profit deposit of State Owned Enterprises. Further PBR Party questioned the performance of State Owned Enterprises why the amount deposit to the state kept declining.

The FBR Fraction could understand deficit of State Budget Plan 2010 which reached Rp. 98 trillion i.e. 1.6% of GDP. Such a size of deficit was understandable considering the high need of state spending.

The educational budget remained to be allocated 20% form State Budget, in accordance with the content of 1945 Constitution. Budget for alutista of the Army [TNI] should be increased, and so was the development of infrastructure, agriculture, energy, and other sectors.

Indonesia Expects Wheat Supply from The Province of Henan-China

Indonesia expected wheat supplies from the Province of Henan, China, as alternative resource of wheat supply from Indonesia, because so far Indonesia had been importing from the USA, Canada, and Australia. Upon conducting a dialogue in the Indonesia-China/Henan Forum on Monday [24/8], Indonesia’s Minister of Industry Fahmi Idris disclosed that Henan was the most important producer of agricultural commodities in China. The province supplied 10% of food products for all of China and was in the 5th position in terms of GDP output in China.

“In addition to that, in the effort of strengthening food resilience strategy, the Province of Hainan also procures premium seeds of agriculture, which Indonesia may benefit on the basis of cooperation. Besides, supportive to the industry, Henan is also in need of rubber, tapioca, fruits, bauxite ores, picron, and coal. Therefore, Indonesia supports the industrial development in Hainan” Minister Fahmi Idris, who was accompanied by the Governor of Hainan Province Guo Gengmman, and the Indonesian Ambassador to China Sudradjat, remarked.

Minister Fahmi added that presently Indonesia was in the process of developing seeds qualification for hybrid plans, which was why it was necessary to foster collaboration with other countries who were more capable of developing premium seeds. The province of Henan had the potential to serve as center of logistics and activating of human resources and information resources, while China also has competence in manufacturing industry.

“In manufacturing, this provinces produces various commodities like preserved food, and machineries, which are the core industries in the Province of Henan. In the industrial estate, in addition to producing preserved food, Henan also has the Henan Zhengzow Yong Tong Special Steel Corporation, which, in collaboration with PT Mandan Steel had built a steel plant using local raw steel materials in South Kalimantan. This project has won the status of national vital industry by the Indonesian Government” Fahmi further remarked.

In the same opportunity, Governor Guo Gangmao also stated that trading between Indonesia and the Province of Gangmao in 2008 reached the value of USD 216 million, up by 47.7% against 2007. Among the main commodities are rubber and iron one. In July 2007 Henan had signed a Latter of Intent in the formation of collaboration with the Province of West Java, Indonesia.

Henan Zhongyuan Oil Field had signed a contract in oil exploration with Indonesia worth USD 20 million. Today signing of investment agreement took place between two of Henan companies in Indonesia, i.e. Yong Hua Steel joint venture company and China nickel Group worth USD 64 million and investment of Good Friend Tire Co worth USD 15 million. All in all, the value of investment agreed upon in the MOU between Indonesia and the Province of Henan is worth USD 200 million incorporating six companies.

Henan was the foremost province of China in producing electrical transmission equipments, transformation equipments, heavy equipments for mining, agriculture, and transportation equipments. Henan was also the important base of aluminium industry of China capable of producing 3.1 million tons per annum, firmly financed and well integrated.
The province was also the foremost in heavy and medium weight tractor industry, drying machines, secondly relay protective instruments, high-voltage switchboard, explosion proof motors, hydraulic mining equipments and non ferrous metal processors.

Friday, 11 September 2009

Fasting Month brought Turnover of Bakery Companies down to 50%

Past experience showed that during the fasting month turnover of bread and bakery traders usually decreased by 50%, due to drop of demand. Under such circumstance it was hard for bakeries to expand because of their struggle to increase selling price when during the month of Ramadhan prices of raw materials normally jumped to 15% to 30% higher. Chris Hardijaya, Chairman of the Association of Indonesia Bakeries disclosed to Business News.

“Toward end of the fasting month our sales or turnover tend to be back to normal, in addition to that some traders begin to re open their outlets, after visiting their hometowns during the early days of Ramadhan. The condition is different from selling traditional snacks or dry cakes which are merrier toward the Idul Fitri Holidays” Chris Hadijaya remarked.

Bakery business did not only mean production of bread, but also a range of other items like doughnuts, pastry, cakes, snacks and traditional wet cakes.

Biscuits were not part of the bakery business, because the business scale was industry, whilst the scale of bakery ranged from micro to big business. Around 60% of bakery business belonged to the micro and small category, around 20% to 25% was of medium scale business while only 15% were small business. The production process of bakery was 90% manual, carried out by skilled workers, while their number were limited.

Increase of Raw Material Prices
To make bread, it look at least eighteen types of raw materials, starting from flour, white sugar, yeast, raisins, etc. Toward the month of Ramadhan, the price of white sugar had gone up by 15% since last July and was estimated to continue to rise until end of Ramadhan and Idul Fitri to as high as 30%. The same was with price of eggs, which might increase between 15% to 30%.

“Usually toward Idul FItri, since H minus 7 the prices already sky-rocketed. Meanwhile the price of flour needed by bakeries are the types containing high protein like Cakra Kembar which are now priced at Rp. 165 to Rp. 170 thousand per 25 kg. The price of flour are relatively stable but prices remain high since August last year, particularly because the Value-Added tax is no longer borne by the Government”, Chris Hadijaya remarked.

“The problem is that once a price goes up, it is mostly unlikely to go down again. At that time the reason of traders increasing the price of flour was due to production slump due to harvest failure some countries, and also due to strengthening of the US dollar against the Rupiah. Now things have changed, Rupiah is strengthening against the US Dollar while flour harvesting in some countries are flourishing, but unfortunately the EI Nino long drought comes as another menace”.

The most influential factor to bakery business was not growth of real estates since they had their own potentials for developing bakery outlets, but rather it was the per capita income of the people. In terms of flour consumption, the biggest absorption was in noodles which was posted at 60%, whilst the bakery industry consumed around 20% to 25% of total flour consumption which totaled 4 million tons/year.

“The higher the income”, Chris remarked, “the bigger the chance for consumers to consume bakery products. Meanwhile bakery business in hotels has little impact on the development of premium housing, hotels, and apartments because if the occupancy were high the hotel guests would prefer to dine at the hotels. The bakery business in those locations were merely complementary factor”.

That was the reason why expansion could only be made by bakery shops especially among the middle class and up, because their condition were hardly affected by crisis. Meaning, since the market segment were exclusive, in the event that they increase the selling price, the impact were not too strongly felt. The case was different with bakeries of the middle and lower class, where the market now was in stagnant position.

Stated-Owned Enterprises [BUMN] to become Public Companies without Entering Market

State Minister of State Owned Companies [BUMN] was processing the Government Regulation [PP] which enabled BUMNs to become public companies without having to be registered at the stockmarket. Today, the proposed regulation was expected to be ready in the near future.

Secretary of the State Ministry of State Owned Companies [BUMN] M. Said Didu remarked that organizational transparency within the BUMN was clearly visible without selling their shares. “State Owned Companies would be an open company but the shares were not for sale” he stated in Jakarta Friday [21/8].

Under the circumstances the State Minister of State Owned Enterprises were preparing a criteria which would serve as a bench-mark for a company to be worthy of being a non listed company. Among the main criteria were value of asset, sensitivity to the market, and most of all the Government owned company must serve the interest of the general public.

Among the state owned companies who were planning to adopt this plan was PT Pertamina. The plan of this state owned company to the first company to be open but not being a member of the stockmarket was already proposed since mid 2008. However it could not as yet be realized because the Government Regulation related to the amendment of law No. 8/1995 on stocket was not put in effect.

The Government expected that Pertamina, being a public company which was not listed at the stockmarket, would be able to run good corporate governance.

So far only Pertamina was interested in adopting the plan, while non of the other state owned Companies were planning to do the same.

The IMF SDR Facility is no Debt

Indonesia was truly no longer a “patient” of the International Monetary Fund [IMF], but as a member Indonesia was entitled to Special Drawing Rights [SDR] amounting to SDR 1.74 billion or equal to USD 2.7 billion. Bank Indonesia underscored that this facility was not a debt of any kind. In the effort to handle monetary crisis, IMF would exercise this SDR facility to bolster up global liquidity in 2009. The policy would help to strengthen foreign reserves of IMF member states including Indonesia.

“The SDR allocation was basically not at IMF lending facility as was given to Indonesia during the 1997-1998 crisis. This allocation was for all members of IMF and was particularly part of the global effort to handle crisis through providing global liquidity which was interrupted by crisis” this was the official statement of bank Indonesia Saturday [22/8].

Realization of the general allocation of SDR for IMF member states would exercised simultaneously on August 28, 2009; whilst realization of special SDR would be carried out on September 9, 2009. The distribution would be carried out proportionally according to the present quota of each nation at IMF. In general the increase of allocation of SDR for each respective state would be 74% of quota. For Indonesia, the increase of SDR allocation would not include net charges except administration cost which was relatively small [0.01% p.a.]. This was because Indonesia obtained interest income at the same interest rate as the SDR.

On the other hand, the SDR allocation would be beneficial for obtaining reserve buffer for Indonesia’s external liquidation by increasing Indonesia’s foreign reserves amounting to SDR 1.74 billion or equal to USD 2.7 billion consisting of SDR 1.54 billion from general allocation and SDR 200.1 million from special allocation. Basically SDR was international reserve assets created in 1969 as additional foreign reserves of IMF members.

The SDR was given without conditionalities, but rather based on the need of each member state respectively through exchange mechanism with other IMF member states. In general there were 2 (two) types of SDR allocations given by IMF this year to 186 member states including Indonesia. Firstly, general allocation at the total value of SDR 161.19 billion or equal to USD 250 billion which were a form of IMF’s support to overcome global crisis with the negative effect on global liquidity. Secondly, special allocation at the value of SDR 21.5 billion or equal to USD 33 billion which was a realization of the past agreement [of 1997] and was only realized this year.

Indonesia would Get Special Drawing Right Worth USD 2.7 Billion from IMF

The International Monetary Fund [IMF] would allocated Special Drawing Rights [SDR] worth USD 2.7 million to Indonesia, as a measure to strengthen global liquidity for 2009.

The policy would bolster up foreign reserves for member states of IMF, including Indonesia “The SDR allocation is basically not a loan facility as once received by the Indonesian government during the 1997-1998 crisis. This facility applied to all IMF members and is exclusively part of a global effort to overcome crisis through procurement of global liquidity which has been interrupted by crisis” Hartadi A. Sarwono, Deputy Governor of Bank Indonesia, disclosed this in a statement made for Business News Friday [21/8].

General allocation of SDR for IMF members would be given simultaneously on August 28, 2009 whilst the realization of specific allocation would be executed on September 9, 2009. The SDR would be proportionally distributed according to the present applicable quota at IMF.

Generally speaking the SDR allocation would increase rights by 74% from quota for all members of IMF.

“For Indonesia, the increase of SDR from IMF would not include additional net charges except management expenses which is relatively small [0.01% p.a.]. This is because Indonesia also gets interest earnings at the same interest rate of the obtained SDR. On the other hand, the allocated SDR has the benefit of strengthening the reserve buffer for Indonesia’s external liquidation by increasing foreign reserves of SDR 1.74 billion or equal to USD 2.70 billion which consist of SDR 1.51 billion originating from general allocation and SDR 200.1 million from special allocation”.

SDR was an international reserve assets created in 1969 as additional foreign reserves for IMF member states. The SDR was given without conditionalities, but rather it was based on the need of each respective countries through exchange mechanism with other IMF members.
Generally speaking there were 2 (two) types of SDR allocation extended by IMF this year to 186 member countries including Indonesia. Firstly, the general allocation amounting to SDR 161.19 billion or equal to USD 250 billion which was a form of IMF’s support to troubleshoot the global crisis which had its negative effect on global liquidity. Secondly, the special allocation at the amount of USD 33.0 billion which was the implementation of previous agreement [1997] and was only realized this year.

The Department of Industry would Encourage New Entrepreneurs to Advance

The Department of Industry would as ever encourage the growth of new entrepreneurs through the program of incubator business. Fauzi Azis, Director General of the Small and Medium Industry disclosed to Business News this program was aimed at jacking up the growth rate of small business to be 1% above the economic growth which was projected to be 7% to 8%.

“In the event of collaborations with institutions like the Board of Study and Technology Application, business incubator is put at work. The businesspeople, having passed the program would be given a certain amount of initial capital to be used in business operation. For this purpose we expect that the fund they get was not from Government resources, but rather from the venture capital, which are basically set up to assist small-and-medium business”.

We regarded venture operators as risk taker. The type of credit injected like for example Rp. 50 million per beginner entrepreneurs such as IT animation business could be spent on softwares. At best on the Rp. 50 million loan, commercial banking rate was not being imposed [which at the moment was still above 10%], but interest-free platform is applied instead like a 5 year interest free credit. Other possible platform was the credit program for incubator business development with interest rate below that of the bank’s level.

Meanwhile the interest rate level for Small-and-Medium-Business should be as competitive as possible because financing for the small-and-medium business should also be competitive, whereby the can run business fairly. That the small business might grow by 9%, the interest rate imposed on them should be fixed, like between 5% to 6%.

Other factors to be observed by new entrepreneurs that they might be energized to grow was that the product they offer should be innovative so that Indonesian products might be known and be the master in their own threshold here in Indonesia hence their mission was in line with the Government’s policy.

The Business Incubator System was Never Appreciated
“On the other hand, the Incubator Small Business seems never are appreciated, although the process of making professional entrepreneur is not easy, and the training itself a process of long term investation. If the positions are filled with qualified persons, it would contribute to the achievement of 7% to 8% of IKM growth”. Fauzi remarked.

“However”, Fauzi said, “the effort such as funding should be consistent, it should be done by one-stop service system, whether through the State Minister of Cooperative and Small Business or other departments which are appointed to channel out credit or funding for small business. Meanwhile the Department of Industry would concentrate on quality upgrading and standardization of products as well as assisting in terms of marketing”.

How far was the role of research and development institutions under the directions of the department of Industry, it was expected that their role was only to do research with focus on the execution only, so there could be link and match needed by the businesspeople.

It was true that to research, observation was needed which was generally focused on the producers’ commodity. We expect that the role or R&D and workshop be optimized so as to keep their knowledge from being lower than that of corporations, especially in terns of utilization of required technology. Their quality of research should be up to the high standard of technology, not just the local standard but the international standard applied in advanced countries.
“Two important aspects which we underscore to realize the 9% target growth of small-and-medium business was to strengthen marketing strategy through expanding market base and application of domestic technology for existing industries as well as new comers”.

Government Sets Target for Industrial Machineries Restructurization Worth Rp. 350 Billion by 2010

The Government set a target to carry on with technological advancement till 2010, allowing a fund of Rp. 350 billion. According to the Directorate General of Textile Metal-Industry Machinery and Variety [ILMTA] of the Department of Industry Ansari Buchari on the occasion of the official opening of the 4th International Metalworking and Machine Tools Expo 2009 and Indo Automotive Indoplast Indoprint in Jakarta, Wednesday [12/8], the 2010 Restructurization Program would be focused on four industrial fields namely textile, footwear, sugar mill, and up stream petro chemical industry.

“Of the said amount, the biggest potion is allocated for the Textile-and-Textile-Products while the rest of the fund amounting to Rp. 50 billion would be allocated for 3 industry lines namely textile, sugar mill, and upstream petro-chemicals – whilst the biggest allocated fund for Textile-and Textile-Products totaling Rp. 200 billions. IF the Parliament approves the budget next year, it means the restructurization plan has embarked on the third year, and the program is estimated to last between 3 to 5 years” Ashari Buchari remarked.

Further in a written message Ansari remarked that the statistical data as reported by the Board of Statistics [BPS] revealed that export of industrial manufacture products in the past five years [2004-2008] rose by 18.5% on the average per year which in 2004 reached only USD 1.61 billion, and in 2008 reached USD 4.28 billion.

Similarly, the import of machinery products including components, showed an upturn of 2.4% on the average per year, i.e. reaching USD 15.47 billion compared to USD 5.52 billion in 2004. Although the absolute figure of import of machinery products exceeded that of export, the trend of export in the past 5 years had been rising by 18.5%.

“We see a promising market opportunity domestically, and this condition is due to need for infrastructure development including road building, construction of bridges, buildings and infrastructures for oil and gas explorations like off-shore oil rigs. On the other hand the domestic industry is only capable of producing less sophisticated machines like tanks, tools [though limited], and boilers. Where instruments of higher precision are needed, certain machinery tools still have to be imported” Ashari Buchari remarked.

On the other hand, one of the managers of the Indonesian Chamber of Commerce [KADIN] and Chairman of the Combined Association of Metal and Machinery Industry [GAMMA] Achmad Safiun remarked that supposedly basic industry consisted of all types of industries classified as machinery tools whereby to support the development of infrastructures. However those industries could only operate effectively if the domestic steel industry were strong.

“The steel industry must have a broad-based spectrum, meaning to serve as a wider base, instead of just specializing in a few items. The steel industry should produce a wide range of products from iron ore to iron cust, sheets and pipes of different specification” Saifun remarked.

The inferior capacity and capability of local metal industry accounted for the low contribution of manufacturing industry to the nation’s GDP. Through Quarter II this year the contribution of processing industry to national GDP was down to the level of 26.27% compared to Quarter I which reached 23.44%. Meanwhile the Government set a target for processing industry’s contribution this year to reach 23.44%.

According to Saifun, the decreasing percentage was mainly caused by financial crisis and also due to low absorption of bank credit in the machinery processing sector. Fading trust and confidence also accounted for the regress, in line with the closing of factories which resulted in dismissal of workers; consequently banks were extra-cautious lest the debitors might fell into default installments.

Greenpeace Expect Indonesia’s Future Cabinet be Filled with Leaders with Strong Commitment to Forest Conservation

Indonesia’s president Soesilo Bambang Yudhoyono would hopefully appoint ministers who were concerned about forest endurance and were strongly committed to forest conservation endeavors in Indonesia.

The level of forest destruction in Indonesia were considerably high, which would have its negative impact on the nation’s economy.

“President Soesilo would hopefully appoint candidate ministers who had strong commitment to preserve environments in Indonesia” Greenpeace stated this to Business News by telephone on Wednesday [12/8].

“President Soesilo had a historical momentum to lead global endeavors to prevent the worse impact of climate change, which would be discussed at the UN Negotiation on Climate Change in Kopenhagen next December”.

To meet the criteria of a candidate minister, it would be necessary to look at the candidate’s track record; this was the task of President Soesilo who would be sworn as president on next October 2009 for the second term of presidency.

With a strong support from parliament, and victorious background in the presidential election on July 8, 2009 in which he scored around 60% vote, President Soesilo would be in a strong position and be at liberty to choose his cabinet ministers.

Forest destruction had been of great disadvantage to Indonesia’s economy.

With deforestation going on at high speed, causing flood in every rainy season and forest fire during the dry season such as in Riau, Palembang, Pontianak, Samarinda, Jambi, smoke and haze pollution were at large causing serious disturbances to the economy through flight cancellations etc which disabled people from doing their activities while our forests vanished just like that.

An example of severe forest fire in Indonesia was the one occurring in 1997/1998 where smoke fumigated neighboring countries, inflicting million dollar losses. The case led a number of ASEAN countries to agree upon the ASEAN Agreement on Trans-boundary Haze Pollution in June 2002 which was effective in 2003, although Indonesia had not ratified the agreement.

Masneliati Hilman : Preventive Measures Needed to Minimize Forest Destruction
It became imperative to take preventive measures to minimize forest destruction in Indonesia.

One of the considerable steps was to turn dried-up and decayed tree branches into compost instead of burning them, such as being done by the Ministry of Environment.

“We are taking preventive measures by changing people’s traditional habit of burning of trees that fell during land clearing. The exemplary educational project for the rural communities had succeeded in minimizing forest fires up to 86%” Misneliati Hilman, Deputy Chief of Environmental and Natural Resources Conservation Management of the Ministry of Environmental Affairs disclosed to Business News by telephone on Wednesday [12/8].

According to Hilman, this good habit needed to be enhanced in Indonesia where forest fire often occurred. Today, forest destruction in Indonesia amounted to 1.08 million hectares per year “The negative impact of forest destruction is clearly visible in the form of flood, landslide, and whirlpool wind”. In addition to that, forest destruction increased the glass house effect which triggered global warming.

Forest destruction in Indonesia was caused by illegal logging, forest fires and land possessions. Forest fires occurred in ex-Licensed-Forest-Utilization [HPH] zones where land were burned by the people. This had been going on the past 2 where people came to visit the village chief [Lurah] to obtain permit to process land and they interpreted it as burning the dried grass and foliage. And possessions and occupations also occurred ib ex HPH zones.

Government Offers Two Options of Stimuli For Sea Transportation

The Government had issued two options of stimuli in regard to sea transportation operations. One of the stimulus was a 5% discount for every sea transportation services which was to be revised soon. In particular, three components of harbour services upon which discount were applied would be cut down to only to one or two components.

According to the Director General of Sea Transportation, what was meant by two components was, firstly discount would remain to be given only to ships carrying Indonesian flag. Formerly, ships carrying foreign flags and their agents in Indonesia serving international routs also benefited from this stimulus. Secondly: discount was only given to ship-guiding and ship delaying services, but not CHC services.

However, the two options were still to be reviewed and were expected to show result before August 14, 2009, which would then be forwarded to the Director General of Sea Transportation before any decision were taken. The discount itself were meant as payment for ship-guiding and delaying, and handling of containers at the harbour [known as container handling charge/CHC] in all general harbours managed by PT Pelabuhan Indonesia I, II, III and IV.

The revision of stimulus was carried out with the termination of regulation on discount allowance amounting to 5% [second phase] on harbour services on August 14, 2009. So far the stimuli of 5% had been given in two phases. The second phase would end by August 14, 2009 however the stimulus would still be applied in spite of the revision in the components.

A 5% discount had been given to harbour service agents, every 3 months after the drop of domestic and international cargo transportation volume after the global crisis. The first discount was given in the period of February 14 to May 15, 2009, whilst discount of the second phase was given between May 15 and August 14, 2009.

The above policy was in line with the decision of the Directorate General of Sea Transportation on the Extention of Service tariff for towing, guiding, and delaying in all Indonesian harbours issued on May 14, 2009. This issue had been brought up for discussions at the meeting with harbour operators [Pelindo] and elements of the association, i.e. Depalindo and the Indonesian National Shipowners Association [DPP INSA].

Coffee Production Output Might Plunge by 20% This Year

In addition to the climate factor, the Coffee Beans Borer [CBB] pest posed as a threat to productivity of coffee in 2009. The CBB pest attack which hampered national coffee might cause slump in total coffee production output up to 20%. Drs. Rachim Kartabrata, Executive Secretary of the Association of Indonesia Coffee Exporters [AKEI] disclosed to Business News Wednesday [12/8].

While causing a drop in production coffee output, the CBB pest also defected the quality of coffee since coffee would be degraded, which would spoil the taste. Consequently, this would pull down the price of coffee which naturally decreased the nation’s foreign reserves while reducing the farmers’ income.

The attach of CBB disease waa detected by the Center of Coffee and Cacao Research in Jember, Java, and certain coffee production centers in Indonesia. The CBB pest also generally attacked cacao seeds, which brought losses to cacao farmers. In the effort to eradicate this CBB pest on coffee seeds, AEKI had reported the case to the International Coffee Organization [ICO] to obtain restoration fund from the Common Fund for commodities [CFC].

Further CFC had sent a team of consultants from July 26 to August 8, 2009 led by Dr. Gerrit van de Klashhost, to research the Arabica and Robusta coffee which had indications of being infected by CBB pest in Indonesia. The research started in the province of Aceh to see the Arabica coffee, continued to Lampung to observe the Robusta coffee, to Jember to see the Robusta coffee where visit would be made to the laboratory of Research and Development of the Coffee and Cacao Research Center in Jember, followed by visit to Arabica coffee plantations in Situbondo, further to Bali to observe the Robusta coffee plantation in Pupuan, and Arabica coffee plantation in Kintamani. In these visited regions the CFC Consultant Team would check the degree of severity of the CBB infected plantations.

The irregular climate change also ha its effect on coffee production in Indonesia. Due to the climate change, coffee production of 2009 were expected to be lower than the previous year. In spite of the scarcity of reliable data of the coffee production estimate this year, there were strong indications of productivity decrease. For example during the “wet” drought where rain still fell in coffee plantation areas, the blooming coffee plantation did not show any sign of pollination, the coffee leaves seemed bloomy but the coffee fruits were non-existent.

The temporary data obtained by AEKI showed that the total coffee production of 2008 was 687,450 tons. Such an enormous volume of coffee production were obtained from people’s plantations covering 1,259,656 ha producing 657,621 tons of coffee, plus the state’s major plantations covering 26,664 ha producing 17,049 tons of coffee, and large private plantations covering 26,989 ha producting 12,780 tons of coffee.
In 2008 the total area of coffee plantation was posted at 1,313,309 ha with total production of 687,450 tons. Species wise, the total area of Arabica coffee was posted at 178,816 ha producing 96,035 tons of coffee, whilst the total area of Robusta coffee was chalked up at 591,415 tons of coffee.

Indonesia's Halal Law Will Face Challenge By Business

If enacted, the proposed law on halal labeling will face legal challenges from business groups over its constitutionality. The Indonesian Chamber of Commerce and Industry (Kadin) said it would challenge the proposed law, which would tighten halal labeling requirements on local products, on the grounds that it would unfairly burden millions of small businesses. The bill, sponsored by the Ministry of Religious Affairs, is expected to be passed by lawmakers on Sept. 15 and states that all packaged foodstuffs, beverages, medicines and cosmetics produced and sold in Indonesia must be certified as halal or not halal.
Source: PA Asia, The Jakarta Globe website, September 08, 2009

Ministry pushing for climate policies

Although the negative impacts of climate change occur across the globe, the government has not yet created any policies specifically designed to adopt to climate changes that could further deepen the rate of poverty, especially in rural areas. However, the environment ministry is drafting a decree that will require all local authorities to conduct scientific research on climate change to help them formulate measures needed to protect local communities. So far scientific research assessing the policies needed to cope with climate change has only occurred in West Nusa Tenggara (NTB).
Source: PA Asia, The Jakarta Post, p.5, September 07, 2009

Financial sector in urgent need of reform: Sri Mulyani

Governments urgently need to improve the regulatory framework and supervision of the financial sector, as loopholes in the financial services industry led to the global economic crisis. During the G20 meeting that concluded in London last week, Finance Minister Sri Mulyani Indrawati said Monday there should be “significant corrections” to supervision and regulation in the financial sector to avoid the kind of “careless behavior and excessive risk-taking” by those operating in the financial services industry that triggered the economic crisis. Such behavior has caused governments worldwide to spend taxpayers’ money to bailout failing financial institutions to avoid worsening global economic conditions.
Source: PA Asia, The Jakarta Post, p.13, September 08, 2009

RI moves to improve defense in trade disputes

As the global trend of trade protectionism becomes more apparent, the government, in cooperation with the private sector, is moving to prop up its defense in facing disputes under the WTO. The government, via the Trade Ministry, is currently in the process of setting up a team of legal advisors comprising both local and international lawyers to assist local companies battling dumping accusations from importing countries. The initiative to set up the team was the result of continuing pressure from Kadin, Hidayat said. The situation was equally complicated when local businesses wanted to sue foreign businesses that had allegedly dumped products in the Indonesian market. The government should not only set up a team, but a special agency to take care of trade disputes.
Indonesian Textile Association (API) chairman Benny Soetrisno said the government’s legal assistance might not be necessary “because we are the ones who understand the matter, and the government needs only to talk to its counterpart”.
Source: The Jakarta Post, p.13, September 09, 2009

Legislature unplugs PLN’s monopoly on electricity

The legislature has ended the monopoly of state-run PT Perusahaan Listrik Negara (PLN), paving the way for regional management of electricity rates. The new law stipulates that the electricity business, ranging from power generation to distribution, can be carried out by state enterprises, state regional companies, private companies and cooperatives and further stipulates that PLN and regional cooperatives are given first priority to provide electricity for public consumption. For areas that are not connected to a power provider, the central government or regional government will appoint or establish state regional companies, private companies and cooperatives to provide electricity for them. The new electricity law also provides room to adopt a new rates system that involves decision making at a regional government level. The law states that regional governments will determine power rates based on benchmarks from the central government and with the approval of regional legislative councils. Since the new law requires several implementation regulations, region-based rates will not be introduced until 2010 or 2011.
Source: The Jakarta Post, p.1 , September 09, 2009

Rabobank Indonesia sees growth in lending, assets

Rabobank International Indonesia, which has an extensive lending portfolio in the agriculture sector, expects assets to grow by between 10 and 20 percent this year, having recorded a fairly healthy first half-year performance.
“We believe we can achieve this by deepening relationship with existing clients and delivering services to new clients from corporations and small-medium enterprises,” said president director Hank Mulder. The trend would continue in the second half on the back of fairly strong economic growth. At the moment, the agricultural sector comprises 60 percent of loan product in the bank’s portfolio and as part of the effort to boost lending to the agricultural sector, the lender is rolling out several programs to help empower farmers and small companies operating in the sector including the horticulture niche market. A specialized research body is going to be established for researching on specific sectors that benefit corporations and small-medium enterprises in the country, including those involved in agriculture.
Source: The Jakarta Post, p.14, September 10, 2009

Indonesia Rises Again in Ease of Business Ranks

The country was ranked as a “star performer” and moved up to 122nd place from 129th in the global “ease of doing business” rankings, published in the Doing Business 2010 report by the World Bank and International Finance Corp. on Wednesday. “Indonesia has made its rules more efficient to help increase opportunities for local firms by, among other things, cutting the time required to start a business and register a property,” said Joachim von Amsberg, the World Bank country director for Indonesia, following the release of the report.
Over the past year, the nation also strengthened disclosure requirements for transactions between affiliated companies, in a bid to protect investors, and has attained remarkable achievements with democratization, decentralization and economic and financial stability, even in the face of the global financial crisis.
The rankings in the report are based on a set of indicators and business factors, such as the climate for launching businesses, dealing with construction permits, and ease of property transactions, getting credit and investor protections. According to the report, Indonesia was now one of the leading performers in East Asia and the Asia-Pacific region.
Source: The Jakarta Globe, p. section B, September 10, 2009

Monday, 7 September 2009

Standby Loan Facility may be extended to 2011

Indonesia may extend the remaining unused US$4.75 billion in standby loans by a further year to 2011 as the country may not use all the facility for budget financing during 2010, Finance Ministry says.
The government has received $5.5 billion in standby loans, sometimes referred to as deferred drawdown options (DDOs), from the Australian government ($1 billion), the Japanese government ($1 billion), the Asian Development Bank (ADB) ($1.5 billion) and the World Bank ($2 billion). Of the $5.5 billion set aside, Indonesia has so far used only $750 million to guarantee its first ever issue of yen-denominated bonds (samurai bonds) in Japan, Finance Minister Sri Mulyani Indrawati told a press conference Wednesday.
This year, the budget deficit is estimated to reach Rp.129.8 trillion (US$12.77 billion), or 2.4% of the GDP – while in 2010 it is predicted to be lower only Rp.98 trillion or 1.6% of GDP.
Source: The Jakarta Globe, p. 13, 3 Sept.09

Government insists on marine concession plan for fisheries

The Maritime and Fishery Affairs Ministry will go ahead with plans to introduce cluster-like territorial water areas for fisheries where concession rights will be allocated to firms by tenders, arguing that this will not be detrimental to small-scale fishermen.
The planned cluster division system would in fact facilitate healthy competition among fishermen and fishing companies. The system is based on the Ministerial Regulation No.5/2008 and may take effect as early as next year. Further, the system is similar to that of Forestry Ministry concessions for rights where holders can exploit a certain area of forest for a certain period of time, would be based on the concept of environmental sustainability. It will let big-scale and small-scale fishermen exploit water resources to a certain extent only, based on certain related research which will be published by end of this year. The research will also determine details on the sizes of clusters, the maximum period of the fishing rights in each cluster, detailed mechanisms for the tenders, arrangements between central and local administrations, monitoring systems and related systems.
The Indonesian Fishery Industry Association (Gappindo), however has already voiced its objections on concerns that the proposed system would pave the way for big industry players to dominate the country’s proposed territorial water divisions.
Source: The Jakarta Post, p.3, 3 Sept. 09