Wednesday, 19 October 2011


The Government admitted it was difficult to find land for sugarcane plantation so that target of sugar self-sufficiency by 2014 could be hampered. According to the Director General of Plantations of Ministry of Agriculture, Gamal Nasir, expansion of land for sugarcane plantation is urgently needed to achieve sugar self-sufficiency at 5.7 million tons/year by 2014. He estimated that the target will be achieved if there is 350,000 hectares of land available.

He stated that the government needs to implement an intensive aid and subsidy program to support achievement of the target. The incentive system consist of loan assistance up to fertilizer subsidy. So far, expansion of new land has only been realized at 25,000 hectares in Merauke, Papua where production could reach 150,000 tons of wet rice (GKP). “If only 25,000 hectares of land available, it means that it is still far from target at around 350,000 hectares”, he said.

To realize target of sugar self-sufficiency by 2014, on of the strategies that should be taken by 2014, one of the strategies that should be taken by the government, according to Nasir, is to make standard roadmap of national sugarcane-based sugar self-sufficiency, whether for consumption or for food and beverage industry from the upstream, downstream, and its supporting industry, up to various policy and regulation. Not of secondary importance is availability of land for sugarcane plantation and supporting policy concerning incentive, sucrose content (rendemen) policy, trade procedure, and protection of sugarcane farmers.

He explained that the government will increase sugarcane productivity through land intensification and extensification. Intensification and extensification shall be carried out achieve target of increase of sugarcane productivity, from realization in 2010 at 81.81 tons per hectare to 86.4 tons per hectare. Increase of sucrose content from 6.7% to 8.4% - 8.5%, increase of post-harvest and structuring of sugarcane variety.

According to Nasir, the government and the stakeholders should accelerate revitalization of sugar industry. He admitted that the revitalization program set for end of the 1990s was hampered so that dependence on imported sugar is high. Sugar industry revitalization is aimed to achieve target for 2014 at 5.7 million tons. Therefore, Nasir added, there should be a strategy to increase production of white crystal sugar from the existing sugar factories at 3.57 million tons, consisting of state-owned sugar factories at 2.32 million tons and private-owned sugar factories at 1.25 million tons. There is also additional sugar production from new sugar factories at 2.13 million tons depending on the capacity of the new sugar factories.

Nasir said that the Ministry of Agriculture will set Rp 240 billions budget in 2012 to support target of sugar self-sufficiency by 2014. In this year, a budget of Rp 88 billions has been set. The fund will be used for, amongst other, development of sugarcane seed plantations for demand of high-yielding seeds for rationing activity and expansion of sugarcane plantation as well as for expansion of sugarcane plantations cultivated by farmers, whether in Java or outside Java.

In addition, the fund will also be used for application of culture technology and provision of tractors as well as sources of water for land in sugarcane production centers. Sugarcane farmers will also be given training and provision of accompanying officers to be placed in each sugarcane cooperative.   


Since year 2000 most of tea plantations in Indonesia had been in adverse condition. Total area were contracting by around 8,000 ha each year. In 2000 total area of tea plantation reached 153,675 ha whilst in 2009 it was 126,251 ha. Sutoni Arifin, Executive Director of the Indonesian Tea Council made this statement.

Production output of people’s tea plantation were showing downturn as well, now posted at less than 1 ton/ha/year and many of them even converted their tea plantation into seasonal plants. And yet around 50% of tea plantations in Indonesia were people’s plantation, the number of farmers posted at 100.000 family heads; now their state of welfare being most adverse.

Low productivity and poor welfare of farmers was because land ownership was less than 1 ha per family. The condition made farmers split their attention to other activities, leaving their tea plantations unattended and consequently yielding low output. Compare this to plantations belonging to PTPN where productivity reached 2 tons/ha/year.

If this condition were let to happen, the process of conversion from tea to vegetables would continue. Evidently tea plantations could hold water so land erosion could be prevented. If conversion continued to happen then disasters like landslide might be inevitable.

The only way to prevent natural disaster was an integrated national agri-business movement for tea plantation, especially people’s tea plantation. Reformation would begin from improvement of farmers’ business sub-system, processing until marketing. The improvement exercised by the Government today was only on one sub-system, i.e. farmers’ business which did not solve problem on the overall.

His movement would be successful if handled by all parties including farmers, cooperative societies, business people, and trans Governmental ministries and all levels. “The way it has been the one who took to action was only the Ministry of Agriculture through Plantation Divisions in the regions, while other parties were not involved” Arifin remarked.
The tea industry in Indonesia still held great potentials to be reformed and developed. Productivity could still be increased to 2.5 tons/ha/year. The market could also be developed especially at home in Indonesia by increasing per capita consumption from 330 gr/year to 600 gr/year in the next 5 years.

The movement, which was exercised from upsteam to downstream was essentially to increase price at farmers’ level so their welfare could be promoted. The modus was by creating clusters, where in 5 clusters there were at least ha of people’s tea plantation.

In each cluster farmers’ group were formed in the form of cooperatives. In each cluster problems faced by farmers were identified whether in the sub-system of farmers business, processing or marketing. Problem solution must be done on the overall if solutions were portional, for example only on productivity only without quality and price upgrading, then farmers’ welfare would not be too much uplifted.

Partnership between businessmen and farmers which had been engaged so far was between PTPN VII and farmers in Cianjur, Garut and Bandung; Partnership between farmers and PT Pagilaran in Central Java; partnership between farmers and KPB Chakra in Madjalengka, Garut and Bandung; partnership between farmers and Business Watch Indonesia in Central Java and West Java, between farmers and Bhica Tea Indonesia Partnership (ETP) in the Regency of Bandung; and partnership between farmers and PT Sedap Wangi in the Regency of Cianjur.

Tea plantations was known to accommodate 320,000 workers and provide bread and butter for 1.3 million people. Contribution of tea to GDP was Rp 1.2 trillion yielding forex of USD 110 million/year. Direct linkages ahead and backward reached 1.5 to 3.

Total area of tea plantation in 2009 reached 12,251 ha consisting of people’s plantation 46%, PTPN 30% and the private sector 26%. The most expansive was in West Java covering 97,138 ha or 77% of total area of tea plantation in Indonesia. Beside West java tea plantations were spread out in Central Java, East Java, Yogyakarta, North Sumatra, West Sumatra, Jambi, Lampung, Bengkulu, South Sulawesi and Southeast Sulawesi.

In terms of environment, tea plantations was relatively green because it supported conservation of land water. For example if tea plantation were converted into vegetable fields there was bound to be flood downstream.


Indonesia’s export of non oil-gas commodities to the markets of ASEAN, China, India, Japan and South Korea today constituted nearly 60 percent of total national export volume. Therefore, according to the Executive Director and Senior Economists of Standard Chartered Bank, Fazi Ichsan it was only natural if the Asia region served as main destination of Indonesia’s export of non oil gas commodities such as manufacturing, as part of market diversification strategy. In his presentation as speaker at the business forum with business people at the Ministry of Industry, Ichsan stated that, apart from market diversification, other necessary measures would be to ease or facilitate import-export as well as to ease trade financing. Ichsan made his presentation entitled “Anticipating the Impact of Economic Crisis in America and Europe on the National Industrial Sector” on Friday (30/9).

Asia markets were rated as fast growing markets, moreover economic growth in emerging Asian countries were rated as new magnet in the world’s economic system. “Indonesia’s domestic economy is still solid, resting on three sound cornerstones (1) domestic consumption which was constantly growing, where the middle income group constitutes 10 percent of population or equal to the total population of Malaysia (2) Commodity prices which are considerably good (3) booming investment in infra-structure”.

This was notable because even without super infra structure Indonesia’s economy Indonesia could score growth of 6.5% More over if infra structure in Indonesia could grow to the level of 8 percent as in China. “The question is why is it so hard build toll roads? Naturally toll roads are an important part of infra structure. If infra structure were adequate cost could be downpressed. If production cost were low the process of production could be more efficient and the end result would be more competitive. In the process of de-centralization, infra structure are today most needed outside Java. That is the reason why a grand design is needed for the next five to ten years” Fauzi Ichsan remarked.

Predicting commodity prices, Fauzi remarked that global warming had injured global harvest which in the end triggered increase of Bank interest in the market of growing countries in 2010. Vulnerability of global stockmarket in 2011 triggered prices of precious metal like gold or silver which were regarded as safe assets. However slowdown of global economy limited commodity prices. Commodity prices were predicted rebound in 2013. As with Indonesia, growth in 2012 was predicted at 6.5 percent and inflation would be around 6 percent.

Meanwhile economist Mirza Aditryaswara in that opportunity disclosed that to anticipate potential crisis that might happen in 2012, the condition of Rupiah and foreign currencies must have good liquidity; even if there were lowered commodity prices, inflation must be under control, presumably around 5 percent. In fiscal, acceleration of projects execution would be necessary while liquidation of funds be made easy. About the demand select and limit export (of certain products) like raw rattan and bauxite Mirza said that the condition was a matter of international negotiation. Meaning if Indonesia totally prohibited the raw materials, advanced countries like China and Japan who needed supply of raw rattan and coal in large quantity would demand Indonesia to stick to the commitment of the agreement.

Therefore Mirza insisted that the condition of Indonesia’s macro economy in terms of trade balance and goods and services remained to be in state of surplus, meaning the kind of commodities exported were only those of added value; also importing should be wisely done, so the products imported were only those not available in Indonesia. “Things should not be in the way it is happening now where imported consumers goods were more than capital goods, which was because the value of Rupiah were lower than USD” Mirza added.

In that opportunity the Minister of Industry M.S. Hidayat set forth the present crisis was not too disheartening, athough admittedly there was lowered demand from Indonesia’s trade counterparts i.e. America and Europe which was due to decrease demand in the said countries. The point was their purchasing power and priorities. Accordingly export should be more selective, not just to sell raw materials but commodities of added value.    


The Board of State’s Financial Accountability (BAKN) of House urged the Government, in this case the Directorate General of Oil-Gas and BP Migas to  make evaluations of oil gas collaboration contracts underway especially over cases of dispute or other unsettled cases. This was among the conclusions read by Chairman of BAKN Ahmad Marzuksi during hearing session with the Director General of Oil gas and BP Migas at the House of Representatives.

Other conclusion was that House proposed that to solve this problem coordination be made between BP Migas, BPKP and the Directorate General of Tax so the hindrances should not drag on, while BP Migas was asked to make approaches to contractors (at the head quarters) to urge them to solve oil-gas taxation problem.

Vice Chairman of BAKN of House, Yahya Sacawriria stated that the Government, c.q. Directorate General of Oil Gas, the Ministry of Energy and Mineral Resources had made approaches to foreign contractors whose tax obligations were still due. According to the Board of Financial Control and Development to the Board of Financial Control and Development (BPKB), there was still remaining tax due by foreign contractors including those of England who had been operating including those of England who had been operating since 1990’s the total amount of which came to Rp 4 trillion.

This occurred because of different interpretation of tax treaty. According to the foreign contractors the range of tax treaty was 10 percent whilst BPKB claimed 20%. Such thing was not applicable to American contractors who only started operations in year 2000 when the Law of Oil Gas was put in effect.

Different perception needed not be synchronized so the Government needed not to bear loss. However proper approach was necessary so operators would not walk out of the country.

The Directorate General of Tax was expected to promptly issue a tax decree to prevent the fund from escaping. Very probably the case would be brought into the realm of Law. Indonesia had souvereignity over mineral riches in its earth. If this case were let to drag on, it was the Government who would be disadvantaged. Beside losing money, the Government would be charged as unable to manage energy. The public might even suspect there had been some sort of leaking or manipulation.

BAKN of House as instrument of Parliament to control state’s finance, would try to help to find solution for Indonesia in trying to fight for their right.

BAKN of House has invited BPO Migas to explain this case of tax overdue from KKKS Migas. This was one of the conclusions of the hearing session with the Director General of Tax Fu ad Rahmani and Head of BPKP Mardiasmo at the House of Representatives.

It was disclosed that BAKN of House would follow up outcome of meeting with the Director General of Tax to Commission VII of House to finalize the process of BPK or BPKP examination in regard to the case of overdue tax of KKKS Migas. Member of BAKN of House Edwin Kawilarang said that things like tax treaty was unknown. He said that the law was stronger that tax treaty unless there were other law which amended it. Today there was no law related to tax treaty and there had never been any clarification that tax treaty was lex specialis.

According to the Director General of Tax, the under payment of tax was due to several reasons, among other tax subject KKKS Migas did not pay Migas Income Tax and KKKS Migas applied tax treaty lower that the obligation of income tax )Article 26 point 4).

Audit income of BPKB and BPKB of payment of oil gas tax disclosed that the portion for state in-come which was supposedly 85% became 73.15% The difference was because the company demanded 15% of payment to be received net without tax.

The result was that interest tax, and royalty amounting to 13.5% was included in state income. So 85% of Government portion consisted of 71.15% gross income and 13.85% royalty interest tax and dividend. Therefore the Board of Financial Examination (BPKP) persisted to ask to loss of state income amounting to USD 159.3 million due to out standing tax of some oil gas companies.


High interest of the society in entrepreneurship has promoted business growth in Indonesia which has promoted business growth in Indonesia which has been increasing from year to year. This condition is marked by the emergence of new business opportunities and increase of public interest in various kinds of business investment in franchise business is very attractive.

The Trade Ministry sets target of revenue acquired by all franchise businesses in Indonesia in 2011 at UDR 132.4 trillions. This target has increased, where in 2010, sales turnover of all franchise businesses is recorded at IDR 114.6 trillions. This has made many people to be interested in franchise business that promises high profit.

According to Chairman of Indonesian Franchise Association (AFI), Anang Sukandar, franchise business is an easy way to start a business. The variety of franchise business is quite large, starting from food, laundry services, up to removal services.

Anang admitted that food and beverages is still dominating the franchise business. It is recorded that sales turnover of food and beverage business in 2010 reaches IDR 49 trillions. He said that franchise business is not only limited to food business. There are many other kinds of franchise business, like handicraft, culture, even swallow bird nest. He mentioned that for retail franchise business, target of sales turnover is set at IDR 38 trillions, property broker IDR 21.5 trillions, courier services IDR 0.1 trillions, education IDR 7.4 trillions, health & beauty IDR 2.9 trillions, fashion IDR 1.9 trillions, automotive IDR 0.7 trillions, and other businesses IDR 5.0 trillions.

He expected that increase of franchise business will reach 10% this year. He explained that Business Opportunity and Franchise is much different. Every year, increase of BO reaches 90% while franchise only 10%. For BO, he regretted that this kind of business is sometimes good and sometimes bad.

The development of franchise business shows that it is one of the business alternatives that could survive if compared to other businesses. This is proven by its contribution to labor absorption, business opportunity, and acceleration of technology transfer process. He said that the strength of franchise business is a partnership scheme between franchisor and franchisee which is mutually depending on each other, strengthening each other, and benefiting each other.


Development of prices of various kinds of commodities in September 2011, in general, shows an increase. Based on result of survey of the National Bureau of Statistics (BPS) in 66 cities, in September 2011 inflation occurs at a rate of 0.27 percent  or there is increase of Consumer Price Index (IHK) from 128.54 in August 2011 to 128.89 in September 2011. Inflation rate by calendar year (January-September) 2011 reaches 2.97 percent and inflation rate year-on-year (September 2011 against September 2010) reaches 4.61 percent.

Inflation occurs as a result of price increases as shown by increase of ready-to-eat food, beverages, cigarettes, and tobacco by 0.48 percent; index of housing, water, electricity, gas, and fuel by 0.26 percent; clothing index by 0.97 percent; health index by 0.22 percent; education, recreation, and sports index by 0.54 percent; and transportation, communications, and financial services index by 0.18 percent. While, food substance index in this month experiences 0.09 percent deflation.

Commodities which experience price increase in September 2011 are, amongst others; rice, red chili pepper, gold jewelry, filter clove cigarettes, air transport tariff, house lease tariff, university tuition fee, long beans, cucumber, green chili pepper, soybean cake tempe, cooking oil, noodles, clove cigarettes, house contract tariff, cement, tariff of drinking water company supplied by PAM, housemaid salary, and high school tuition fee. While, commodities which experience price decreases are: purebred chicken meat, purebred chicken eggs, fresh fish, red onion, garlic, spinach, cherry tomatoes, and cell phones.

Group of commodities which contribute to inflation in September 2011 are: group of ready-to-eat food, beverages, cigarettes, and tobacco at 0.08 percent; group of housing, water, electricity, gas, and fuel 0.06 percent; clothing group 0.06 percent; health group 0.01 percent; education, recreation, and sports group 0.04 percent, and transportation, communication, and financial services group 0.03 percent. While, food substance group in this month contributes 0.01 percent to deflation.

Consolidated Inflation of 66 Cities in September 2011, Calendar Year 2011 Inflation,
and Year-on-Year Inflation by Expenditure category (2007 = 100)


Inflation rate




General (Headline)
Instant Food, Drinks, Cigarettes, and Tobacco

Housing, Water, Electricity, Gas

and fuel
Education, recreation and sports
Transportation, communication

and financial services

1) Percentage of IHK Index September 2011 against IHK Index of previous month
2) Percentage of IHK Index September 2011 against IHK Index December 2010
3) Percentage of IHK Index September 2011 against IHK Index September 2010

Contribution of Expenditure Category to National Inflation (2007 = 100)
September 2011 (percent)

Expenditure category
Inflation share (%)


Food raw materials
Food, beverages, cigarettes & tobacco
Housing, water, electricity, gas and fuels
Education, recreation & sports
Transporation, communication & financial services

Food substance group in September 2011 experiences 0.09 percent deflation or decrease of index from 150.11 in August 2011 to 149.97 in September 2011.
From 11 sub-groups under the food substance group, 4 sub-groups experience deflation and 7 sub-groups experiences inflation. Sub-group which experience the highest deflation are sub-group of meat and the products thereof at 3.13 percent, and the lowest is experienced by sub-group of fresh fish and sub-group of fruits at 0.09 percent, respectively. While, sub-groups which experience the highest inflation are grains, tubers, and the products thereof at 1.33 percent, and the lowest is experienced by vegetable sub-group at 0.31 percent.

This group in September 2011 contributes 0.01 percent to deflation. Commodities which dominantly contribute to deflation are, amongst other, purebred chicken meat 0.10 percent, purebred chicken eggs 0.04 percent; fresh fish, red onion, and garlic 0.02 percent each; and spinach and cherry tomatoes 0.01 percent each. While, commodities which dominantly contribute to inflation are, amongst other: rice and red chili pepper at 0.08 percent; long beans, cucumber, green chili pepper, mustard greens soybean cake tempe, and cooking oil at 0.01 percent.

In September 2011, inflation occurs at a rate of 0.27 percent with Consumer Price Index (IHK) reaching 128.89. From 66 cities of IHK, 45 cities experience inflation and 21 cities experience deflation. The highest inflation occurs in Singkawang at a rate of 1.53 percent with IHK at 135.00 and the lowest occurs in Bogor at rate of 0.01 percent with IHK reaching 128.92. And, the highest deflation occurs in Palu at 2.33 percent with IHK at 132.18 and the lowest occurs in Sumenep at 0.02 percent with IHK at 125.05.