Wednesday 18 January 2012

Monday 16 January 2012

CONSUMERS’ CONFIDENCE INDEX IN DECEMBER 2011


          Consumers Confidence once again strengthened in December 2011 where Consumers’ Confidence index (IKK) rose by 0.2% to the level of 91.6. This was the highest IKK level in the past 6 months. Strengthened consumers confidence was thanks to better consumer’s perception of the state of national and local economy today. This development signaled that the process of expansion in Indonesia’s economy was not affected by the turbulence in the global economy. Throughout 2011 CCI and moved up significantly which indicated that consumers confidence had been constantly improving over the year.

            Survey outcome of Danareksa Research Institute for December 2011 unveiled that of the two components that formed CCI in December, the two components that formed CCI in December, the component which represented the present condition (The present Situation Index or ISS) increased by 2.5% to become 77.6. This increase was because consumers evaluation on national and local economy had increased. On the contrary, other CCI components which reflected condition of the future (Expectation Index or IE) went down by 1.1% to the level of 102.1. This indicated that the public optimism about the prospect of economy as a whole in the next six months slightly dropped. This downturn was related to the expectation of price increase in the next 6 months.

           Survey showed that consumers were still worried about the chances of increased price of goods in the next six months. Index which measured consumers sentiment about inflation had increased by 3.0% to the level of 189.0 in December which was the highest level in the last 4 months. Apparently according to the latest survey, around 89.9% of consumers being surveyed in December were still worried about increased prices of goods which rose by 86.5% against the previous survey.

            Since public optimism of the prospect of economy as a whole in the next six months was kind of law, their plan to buy durable goods also dropped in December. The latest survey had it that around 35.6% consumers under survey planned to buy durable goods in the next 6 months lower than the 40.2% in November. In spite of downturn, consumers’ plan to buy durable goods was still high because the percentage of consumers who planned to buy durable goods was still relatively high, not too far from the highest level in January 2000.

         Meanwhile consumers confidence in Government’s capability to perform their duty slipped back in December. Index of Consumers Confidence (IKKP) slumped by 2.21% to the level of 86.0 against 87.9 in November 2011. In the latest survey, all components that made up IKKP (index of consumers’ confidence in the Government in maintaining price stability and propel economic growth, to procure and maintain public facilities and enforce the law) dropped, except the component which indicated Government’s capability to maintain a safe and orderly environment (index rose by 1.06% to become 100.9 against 99.8 in November.  

The Indonesia Chamber of Commerce (KADIN) : GOVERNMENT NEED TO WORK HARD TO MEET GROWTH TARGET OF INDUSTRY


            Business people rated that target of industrial growth 2012 set by the Ministry of Industry amounting to 7% was relatively too high. Businesspeople as members of the Indonesian Chamber of Commerce (KADIN) believed that target of growth in industry by next year were supposedly lower than, or at least equal to, economic growth. The target of industrial growth of 7.1% in 2012 was rated as being too optimistic and not relevant to the condition of the manufacturing industry. The manufacturing industry was the sustainer of non oil-gas industry growth. Moreover, the export market for industrial products in Europe and America were in turbulence which had their effect on the domestic manufacturing industry.

            Chairman of the Indonesian KADIN Suryo Bambang Sulisto in Jakarta (Monday 9/1/2012) stated that if the Government did not take anticipative measures to face global crisis, the effect would be hard on Indonesia’s economic growth, which means that economic growth of 2012 would tend to be even lower, i.e. around 6.2% - 6.4% The external crisis factor was deep rooted and long term, longer than the general expectation. In other words, Indonesia’s economy would definitely be affected by the crisis factor so it was necessary for Indonesia to anticipate the impacts of crisis. “Under such circumstances the Government must work hard so growth target could be attained” Suryo was quoted as saying.

          Therefore Suryo recommended three points to the Government. Firstly to anticipate the turbulence of global economy. Secondly to anticipate growth resource and acceleration of economic growth to promote economic growth to a higher level.

         Thirdly acceleration and expansion of economic development of high quality which could only be done by way of propelling investments and trading, export of sectors contributive to GDP, speed of economic growth and high employment in the secretors of trading, hotels and industry.

         Furthermore fourthly procurement of job opportunities. Fifthly to enhance private investments. Increased investment would not only propel economic growth, but also create job opportunities. Sixthly to solve imbalance in economic structure and acceleration of economic growth in labor intensive and technology subsectors. Lastly, to adopt a policy for acceleration of poverty eradication plan.

         Suryo reminded the Government to immediately overcome problems which had been overshadowing the business climate. According to Suryo, it was not impossible for the Government to attain growth of that magnitude, provided that the Government was able to adopt the strategy which supported the business world in building a conducive climate. “If Government policy was right it would be easy to attain the right growth target” Suryo remarked.

         Suryo stated that the sectors of food, services and hostelling, miring and energy were the industries with growth potential and contributed more to economic growth. For that matter, if the Government were more focused on such industries with the right policy, he was optimistic that the target would be met. He also stated that if Indonesia’s domestic market were big enough and the nation would no be dependent on export market, then the opportunities to develop industries of certain sectors should be wide.     

GOVERNMENT SHOULD REALIZE COMMITMENT TO GIVE INCENTIVE TO BUSINESSES


          Businesses are happy with government’s plan to give incentive to businesses who will invest in infrastructure to businesses who will invest in infrastructure project. Infrastructure construction is expected to enhance Indonesia’s economic growth. Infrastructure enhancement is also in the framework of anticipating possible decline in Indonesia’s export, and to increase domestic trade. Incentive is given to state-owned and private investors. State-owned investors, for example, should improve their performances due to low return on investment.

              But, the above plan receives lack of response from businesses. Chairman of Indonesian businessmen Association (APINDO), Sofjan Wanandi, reminded the governments to not only give unrealized promises. According to Sofjan, incentive alone is not enough. The incentive concept must be clear and reach the target beneficiary so it will yield optimal result. Sofjan admitted that basically, businesses are ready to invest their money in infrastructure sector. But, the problem faced by the businesses is bureaucracy that reduces competitiveness. “The bureaucracy is too complicated, especially the licensing procedure”, Sofjan said.

              Sofjan also stated that currently from the aspect of labor wage, Indonesia not yet provides convenience to investors. Low inflation was responded by a very significant increase of labor wage. So, there are many Korean investors who postpone their investment in Indonesia. While in fact, they planned to relocate their factories from China in garment, electronic sector, etc.

           The government will provide incentive to private or state-owned investors investing in infrastructure project. This attempt is in framework of covering allocation of State Budget (APBN) fund which is very low. I \n the Master plan for Acceleration of Indonesia’s Economic Development (MP3EI), government’s infrastructure spending by 2014 is budgeted at Rp.363 trillions. While, in 2011 infrastructure spending is around Rp.26 trillion. For this year, the government budgeted Rp.30 trillions.

             Sofjan considered that looking at the above fact, to cover the high shortages of Rp.300 trillions only in 2 years or in 2013 and 2014, there have to be same breakthroughs, amongst other, increase of maximum limit of infrastructure budget through APBN-P 2012 and allocation of very large amount of budget for infrastructure in 2013 – 2014. The government should realize its plan to provide incentive to state-owned and private investors constructing infrastructure projects.

             Sofjan expected that with the incentive, it will increase the role of private enterprises in a sector that will support Indonesia’s economic growth. He explained that China, whose economy is growing rapidly, is because it is balanced with its extraordinary infrastructure. While, Indonesia’s economic growth is mainly supported by natural resources and consumption, meanwhile its infrastructure sector is left behind.

LEVEL OF CHICKEN MEAT CONSUMPTION BY INDONESIAN SOCIETY POTENTIAL TO DECLINE


             Level of chicken meat consumption per capita in Indonesia is potential to decline following increase in price of feed. General Chairman of Indonesian Feed Producers Association (GPMT), Sudirman, said that potential increase in price of feed will threaten level of chicken consumption in 2012. This is due to increase of import duty on feed raw material by 5% as set forth Regulation of Finance Minister No. 13/PMK.011 dated January 1, 2012.

              Sudirman explained that increase in import duty on import of feed will cause increase of price of feed and increase of price of chicken and poultry, which will finally result in decline in chicken meat consumption. If price of chicken increases, people will reduce chicken meat consumption, Sudirman said.

            But, the price increase will not happen in a short time as for several months, increase in raw material price will be borne by the factories. This will certainly affect poultry market in 2012.

         Sudirman admitted that chicken meat consumption by Indonesian people is very low. Even though Indonesia’s poultry industry is growing rapidly, even it is able to fulfill demand for chicken meat and eggs, or has achieved poultry self-sufficiency. Production of chicken eggs and meat could be increased, but consumption is low. Chicken meat consumption by Indonesian people is only at 7 kg/capita/year. And, chicken egg consumption only reaches 87 eggs per capita per year, Sudirman said.

              Sudirman compares with neighboring countries, such as Malaysia and Singapore, whose consumption has exceeded 25 kg per capita per year. With per capita income of Indonesian people that has currently reached USD$ 3,000, consumption of products of animal protein, especially of chicken origin, could be higher than now.

               He urges the government to encourage people to increase chicken meat consumption. The reason is that chicken meat and eggs are very vital to growth and health of Indonesian people. He explains that chicken meat and eggs are significant source of animal protein for humans to grow and develop and to support daily productivity. Chicken eggs and meat are animal protein which has cheaper price if compared to other animal protein so its price is affordable to middle and low income society.

               He also expresses his concern about industry’s dependence on imported feed raw material which is quite significant, or around 40% of total demand. According to him, raw materials, which are still imported but are actually available domestically, are, amongst other, corn, fish meal and meat meal. Therefore, he expects the government to issue a conducive policy to support the society in developing feed and livestock industry optimally so that dependence on import can be reduced.  

NON-MILITARY CIVILIAN AGENCY REVIEWS INTERNATIONAL MARITIME LAW


                 The Maritime Security Coordinating Board (Bakorkamla) expects that there will be a formation of a non-military civilian agency to review maritime law so it will crate more certainty about shipping safety and security from one port to another. Bakorkamla must involve various institutions which have so far been performing enforcement of Indonesian law on Indonesian sea territory. Bakorkamla could only coordinate 12 existing stakeholders in accordance with Presidential Regulation No. 81/2005. The non-military civilian agency can review the law concerning every operational activity on the seas within the context of national and international laws, Susanto, Head of Bakorkamla, told Business News.

                    A non-military and civilian agency in other countries is Sea and Coast Guard. The responsibility of the Coast Guard is to guarantee law enforcement in Indonesian sea territory integrally. Law No. 17/2008 on Shipping stated that sea and coast guard shall report to the President. From the technical-operational aspect, its implementation is under the Ministry of Communications. Bakorkamla supervises 12 stakeholders, amongst other, Polairud (Water and Air Police), the Ministry of Marine and Fisheries, Customs & Excise, Department of Sea Communications of the Ministry of Communications, and other. Every operation of Bakorkamla must be acknowledged by each stakeholder. The Indonesian Marine Forces (TNI AL) only maintains state sovereignty or defense. But, matters concerning the law on sea territory are handled by institution like the Coast Guard. Case of ship piracy by Somalian pirates is also the scope of responsibility of coast guard.

                The Sea and Coast Guard supervises, prevents, and handles violations on Indonesian sea territory which is estimated to cover an area of 5.8 million square kilometers or 75 percent of the entire Indonesian territory. Its authority is to guarantee more shipping safety and security within the context of enforcement of international law. Formulation of implementation of technical and administrative support in maritime security becomes a catalyst to the role of society in maritime safety. As in accordance with UNCLOS (United National Convention on the Law of the Sea) 1982, Coast Guard may directly handle various kinds of operations on the sea within the context of international maritime law.

         Indonesia’s role is acknowledged in many United National negotiations concerning increase of implementation of UNCLOS 1982. Indonesian diplomats were directly involved in integration of international maritime law in 1973. This attempt was finally successful in formulating UNCLOS in 1982 which has made our Archipelagic Concept (Wawasan Nusantara) acceptable internationally. UNCLOS 1982 is a whole legal concept that rules about exploitation of marine resources.

                  The Convention which started to be effective in 1994 contains, amongst others, stipulations concerning sea zone, border zone, continental shelf, and exclusive economic zone (ZEE). Indonesia jointly with 160 other countries has ratified UNCLOS 1982. While, there are 10 big countries, including the United States, which not yet ratified the Convention. We also know about the expectations of international society who uses ALKI (Indonesian Archipelago Sea Lanes). We must be able to preserve our assets, including ALKI.  

Sunday 8 January 2012

PARADIGM OF KTM


             Independent Integrated City (KTM) may be called as a breakthrough of the Manpower and Transmigration Ministry in the reformation era. In relation thereto, the transmigration program is better focused on efforts to create new entrepreneurs. Surely, the measure is rational and in line with the present need as most of the poor lives in rural areas. The reality has caused urbanization to continue uncontrollably thus bringing about social and economic impacts in rural and urban areas.

           KTM constitutes a breakthrough expected to be capable of answering national issues. Since the agricultural land is located in rural areas, the development of KTM would be directly related to need of national food security development. How could national food security be realized if more farm land is left by farmers? In relations thereto, KTM must be able to restore attractiveness of the agricultural sector while boosting the birth of new entrepreneurs.

            In addition, KTM should also be projected to become an instrument to ensure the equitable distribution of investment which has so far been centralized in urban areas, mainly Java. Here, the program is also expected to create energy capable of preventing urbanization from broadening. The birth of new entrepreneurs in KTM would contribute positively to poverty alleviation and creation of new job opportunities. In 2011, the number of unemployment in Indonesia totaled seven million. Without new job opportunity, the jobless people are predicted to increase in 2012.

            KTM is a transmigration area expected to become a center of growth. To realize the obsession, it requires support of human resources, capital, infrastructure, natural resources and policies, which are integrated and have spirit of growth and equitable distribution. In the government language, KTM is projected to become an integrated development planning process. For the purpose, dozens of ministries and government institutions are involved to support the realization of the obsession.

            We want to affirm that regardless of the obsession and goal which would be accomplished by KTM, it must lead to the development of national economic resilience fully supported by inner strengths based on communities. It’s the highest expectation we must set. In this context, surely investment is badly needed. However, the investment must be able to ascertain the involvement and accommodate rights and interests of local communities. Conflict costing lives in Mesuji is expected to not repeat anymore.

          Recently, the Minister of Manpower and Transmigration granted award to 12 heads of regions (six governors and six regents/mayors). The award named Transmigration Award was granted to heads of regions becoming origin and destination of migrants. The granting of the award is acceptable because the flow of transmigration is highly determined by commitment of regional governments to boosting people fulfilling the right to migrate. The role of regional government overseeing the destination of transmigration is also ascertain that transmigration is not only movement of location but also life from poor to become alleviated from the poverty. Briefly, KTM should become a new area where the whole residents may undergo better livelihood.

           At the end of this article, we may emphasize on several things. Firstly, KTM should become Unicom wherein social, economic and cultural interactions with other surrounding regions take place, which affirms the nature of Indonesia as an extremely heterogeneous nation. Secondly, the establishment of KTM in remote areas should result in effect of investment distribution from Java to outside Java, mainly Eastern Indonesia. Any of the distributed investment indicators is visible from contribution of region to GDP. Smaller contribution of a region means lower economic activity in the region, as a consequence of low investment and vise versa.  

MINISTRY OF TRADE PREDICT TOTAL EXPORT WOULD COME TO USD 230 BILLION IN 2012


             The Minister of Trade projected export of oil gas and non oil gas products in 2012 would reach 230 billion and Indonesia’s total export to non traditional states would rise by 25 percent next year. In 2012 it was predicted that global economic performance in 2012 would be the same as 2011, growing by 4 percent while some developed nations would only post 1.9 percent growth. This was disclosed by the Minister of Trade Gita Wirjawan upon announcing trade performance of 2011 and trade outlook 2012 on Friday [30/12]

            Assuming that trade volume of goods and services of the world only grew by 5.8 percent it means that growth was slower compared to growth of 2011 which was posted at 7.5 %. Import of developed countries was estimated to grow by 4 percent and export grows by 5.2 %, whilst export of developing countries was expected to grow higher than developed countries was expected to grow higher than developed countries where import was projected to grow by 8.1 percent and export 7.8 percent.

            The projection was that although Indonesia’s economic growth would still be better, but it was predicted that Indonesia would still be pattered by the storm of global crisis. The decline in global demand was visible from the sluggish performance of export, especially over the last months of 2011. In 2011 Indonesia’s economy was estimated to have grown by 6.5 % and the Government was trying to post up economic growth at around 6.5 % to 6.7 % in 2012.

            Gita stated “With downturn of demand in the global market, Indonesia would strive to balance economic growth with focus on domestic growth. The Government would prioritize on domestic market whereby to jack up economic growth. By 2012 domestic Rp 4,124 trillion. The trading sector as propeller of growth played an important role in Indonesia’s economy. The trading sector, hotels and restaurants will be among the sustainers on national economic growth in 2012”.

            The main strategy of the Ministry of Trade was to aim at vital targets with the objective o strengthening the domestic market, of which 95 percent of household consumption was fulfilled by domestic products with targeted ratio consumption of domestic products against household consumption in 2014. According to Gito today had reached 92 percent and set at 95 percent in 2014. For that matter it was deemed necessary to have an indicator which uplifted domestic transaction value like health as parameter, especially in the management of traditional market.

            Furthermore it was expected to stabilize price of food based on indicator of average varied co-ef-efficient of 10 main food commodities was not more than 7 percent. In addition to that contribution of the trading sector increased based on real annual GDP growth of big traders and retailers was at least 7 percent. Deputy Minister Bayu Krisnamurti admitted that sizable domestic economic growth would serve as magnet to overseas exporters.

           With the downturn of demand in the global market, Indonesia would strive to maintain balance of economic growth resources; the Government would prioritize on domestic market to propel Indonesia’s economic growth Economic Performance of 2011.

            Indonesia was a country whose total export would soon come to USD 200 billions and would be posted at USD 211 billions this year 2012, although it was still not calculated how much was the actual trade surplus, Gita was quoted as saying. Indonesia was also a country which had been able to multiply export volume in five years. In 2011 Indonesia’s main export destination countries were China, Japan, the USA, Singapore and Malaysia.

INFLATION IN DECEMBER AT 0.57 PERCENT


          Commodity prices in December 2011, in general, show an increase. Based on result of survey of the National Bureau of Statistics (BPS) in 66 cities in December 2011, inflation occurs at a rate of 0,57 percent or there is an increase of Consumer Price Index (IHK) from 129.18 in November 2011 to 129.91 in December 2011. Inflation rate by calendar year (January – December) 2011 and inflation rate year-on-year (December 2011 against December 2010) reaches 3.79 percent, respectively.

              Inflation occurs as a result of price increase as reflected from increase of all expenditure indexes, namely foodstuff group. 62 percent; index of ready-to-eat food, beverages, cigarettes, and tobacco group by 0.50 percent; index of housing, water, electricity, gas, and fuel group by 0.28 percent; index of clothing group by 0.20 percent; index of health group by 0.17 percent; index of education, recreation, and sports group by 0.07 percent; and index of transportation, communication, and financial service group by 0.14 percent.

            Commodities which experience price increase in December 2011 are, amongst other, red chili pepper, cherry tomatoes, purebred chicken meat, fresh fish, purebred chicken eggs, tomatoes, fee of non-supervisory construction worker, air transport tariff, mustard green, carrot, cayenne pepper, oily cookies, rice and side dishes, beef rending, clove cigarettes, filter clove cigarettes, white cigarettes, cement, tariff of house rent, housemaid salary, and jean trousers.

            While, commodities which experience price decrease are: gold jewelry, red onion, string beans, French beans, potatoes, cucumber, sweet corn, garlic, and gasoline.

            Commodity groups which contribute to inflation in December 2011 are: foodstuff group 0.37 percent; ready-to-eat food, beverage, cigarette, and tobacco group 0.09 percent; housing, water, electricity, gas, and fuel group 0.07 percent; health group 0.01 percent; education, recreation, and sports group 0.01 percent, and transportation, communication, and service group 0.02 percent. While, clothing group is relatively stable this month.

            Foodstuff group in December 2011 experiences inflation at 1.62 percent or increase of index from 150.33 in November 2011 to 152.76 in December 2011.

            From 11 sub-groups under the foodstuff group, 9 sub-groups experience inflation while 2 sub-groups experience deflation. Sub-groups which experience the highest inflation are condiment sub-group at 3.96 percent, and the lowest inflation is experienced by preserved fish sub-group at 0.13 percent. While, sub-groups which experience deflation are oil and fat sub-group and legume sub-group at 0.12 percent and 0.02 percent, respectively.

DIRECTOR GENERAL OF TAX PLAN TO ISSUE TWO REGULATIONS ON TAX HOLIDAY


            In the effort to ease procedures on the facilitation of tax holiday, the Directorate General of Tax had issued two regulations on the execution of tax holiday this December 2011. The two regulations regulated the beginning of commercial production for tax subject [WP] who were entitled to tax holiday and the procedures of reporting of fund utilization and realization of capital investment for organizational tax subject getting tax holiday.

            Regulation of the Directorate General of Tax No: PER-45/PJ/2011 stipulated that by subjects [WP] which already had approval from the Ministry of Finance to have tax holiday was when they had realized all capital investment and had sold their production to the market. Only when such requirements were fulfilled, the tax subjects were allowed to benefit from the holiday.

            To make sure that the two requirements were fulfilled, the Directorate General of Tax would carry out field examination based on written request of WP. To ensure accountability of examination, the Director General of Tax planned to issue a decree on the stipulation to commence production commercially within at least two months since issuance of notification letter addressed to tax subject.

            Regulation of the Directorate General of Tax no: PER-44/PJ/2011 stipulated that report on fund utilization by tax subject having access to tax holiday must be submitted every quarterly. Meanwhile report on the realization of capital investment which had been audited must be submitted to annually. The two reports must be submitted to the Director General of Taxation and the Committee for Verification and Issuance of Tax Holiday facilities.

            In the event that receiver of tax holiday failed to report within the given time, the Directorate General of Tax could propose to the Committee of Verification of Tax Holiday extension whereby to issue recommendation to the Minister of Finance to cancel the given tax holiday.   

PERTAMINA UNABLE TO SUPPLY GAS BASED ON CONTRACT


               The Working Committee for Upstream Electricity Sector of Commission VII of House in their technical visit to Belawan had detected a case where a gas powered generator did not get sufficient supply of gas from PT Pertamina as agreed in contract. This was disclosed by Head of Team of Commission VII of House, Drs. Azwir Dainy Tara during meeting with PT Pertamina and PT PLN at PLTG Meeting Hall in Belawan.

           PLTG Belawan obtained gas supply from PT Pertamina based on Gas Trading Agreement [PJBG] in December 19, 2005 for a contract period of 10 years including gas supply of 151.90 BSCF. However realization of gas supply from Pertamina to PLN in 2009 had always been below contract, and since December 2009 to December 2010 gas supply from Pertamina was stopped due to application of gas specification.

                Gas Supply from the Glagah Kambung oilfield [operator of Salamander gas] was unrealized as agreed in contract because PLN Belawan generator was malfunctioning as the being supplied was of the wrong specification. Additional gas supply was being sought after by PLN Belawan from floating storage and degasification unit of FSRU Belawan which was being built by the State Gas Company PGN. FSRU needed LNG amounting to 1.5 -2 MTPA but now the supply being realized was only 1 MTPA from BP Tangguh.

                The State Electricity Company PLN had asked PT Pertamina EP to pipeline gas from Pangkalan Susu and the specification should be in accordance with PJBG. Taking and sampling of gas should be done by Pertamina EP regularly every 2 weeks and to be witnessed by official of PLN Powerhouse of North Sumatra.

IN ASIA, PRICE OF UNCOATED WOODFREE PAPER STILL EXPERIENCING PRESSURE


           Information received by Indonesia Pulp and Paper Association (APKI) from various sources stated that in Asia, especially in China, price of Uncoated Woodfree (UWF) paper distill experiencing pressure, even though price decrease has been slowing down. Price decrease is due to oversupply. In China, price of UWF paper decreases from RMB 6,000/ton in September 2011 to RMB 5,700/ton in October 2011. While, price of Coated Woodfree (CWF) paper also decreases from RMB 6,200/ton in September 2011 to RMB 5,700/ton in October 2011 and to RMB 5,500/ton in November 2011.

            Ir. H, Mansur, Head of APKI Presidium, told Business News that in North America in October 2011, demand for UWF paper is stable at 1.9 million tons. But, it is lower than in October 2011. In October 2011, paper factories operate 89 % of installed capacity, but are able to sell 92 % of the utilized capacity, Therefore, paper factories have successful in controlling their production, which has a further implication on stability of paper price, and/or paper price tends to increase.

            In October 2011, demand for mechanical UWF paper is 9.5 % lower than in October 2011. Sales also decline due to limited supply as a result of closing down of Port Hawkesbury factory that has a capacity of 375,000 tons/year, and cease of operation of 2 paper machineries in Sartell factory with a capacity of 95,000 tons/year.

            In October 2011, demand for UWF paper is stable at 758,000 tons or down 3.3 % if compared to October 2010. UWF paper factories operate 84 % of installed capacity. Capacity use at such a rate is considered unprofitable as paper factories wish to operate at least 90 % of installed capacity.

            In West Europe in October 2011, demand for UWF paper reaches 1.9 million tons, or down 5.1 % from September 2011. The highest demand occurs on CWF paper which declines 6.1 % if compared to September 2011. Economic sluggishness and overcapacity of UWF paper has put pressure on price of CWF paper.

            It is hard for CWF paper producers to expect paper price to increase, especially due to a very high oversupply. Even though paper factory in Europe (Sappi) has closed down its CWF paper factory in Biberist with a capacity of 435,000 tons/year, Lecta paper factory reduces production, Kymi paper factory temporary closes CWF paper factory with a capacity of 450,000 tons/year, Stora Enso paper factory changes from CWF paper production with a capacity of 140,000 tons/year to specialty paper production, and M-real paper factory will close down Paper Machine No. 2 in Aanekoski factory with a capacity of 200,000 tons/year, but market is still experiencing oversupply of CWF paper.

INVESTMENT GRADE RATING FOR INDONESIA


         One of rating agencies for Indonesia, i.e. Fitch Rating, on Thursday (December 15) upgraded Indonesia’s sovereign rating for foreign currency long-term senior debt at BBB- with stable outlook.

            Rapid progress in overcoming structural weaknesses and sustainable economic growth which is even better than Fitch’s projection and without causing external imbalances or high inflation pressure will strengthen Indonesia’s economic fundamentals and promote increase of Indonesia’s further sovereign rating. Fitch still highlighted on structural weaknesses such as low per capita income and fiscal revenue, shallow domestic financial market, and problems in infrastructure quality and corruption eradication. But, these factors do not become obstacles to rating upgrade. This is explained by Bank Indonesia’s Public Relations Bureau, Dyah N.K. Makhilani.