PREPARATION FOR DIGITAL BROADCASTING 2015 STILL CRITICAL

             The Ministry of Communication and Information (KOMINFO) tend to wait and see about the policy on digital broadcasting in Indonesia. Although Indonesia should have been ready to change TV broadcasting system from analogue to digital, some obstacles stood on the way in terms of regulations. The Media Creative Community (MCM) saw some critical points in the effort to promote broadcasting industry. Digital broadcasting technology was too complicated to be regulated at Minstrial level, it should be regulated by Law which called for intensive discussion between the Government and Parliament.

          MCM saw that there were too many fabricated terminology which were confusing so the stipulations in effect were not in line with rules at higher level. For example the Broadcasting Institution for Broadcast Programming (LP3S) and the Broadcasting Institution for Multi-plaxing Broadcasting (LP3M). In the Ministrial Regulation 39/2009 only the terms Broadcasting of Programming Management and Program Broadcasting and Infra-structure (towers) Management were known. There was also the Multiplexing Management for the Public and the Private Sector in that Permen 39/2009.

        Efforts to dwarf people’s right in broadcasting could always happen. Among them the Set-to-Box aid program which was still a question. The price of this auxiliary instrument was around Rp 300,000. The public, particularly the lower middle class needed transition time to posses this supportive item.

         MCM had never known any discourse about financing for the digitalization process, especially financing for analogue-to-digital conversion plan for public broadcasting institutions (LPP) TVRI. An action as such would weaken strategy and efforts of LPP strengthening in the national broadcasting industry.

         Broadcasting infra-structure affairs only included radio frequency spectrum (SFR) and did not jointly manage towers. The consequences was that broadcasting system turned inefficient, known as high cost broadcasting. The Ministry of Kominfo was advised to observe the matter as many kinds of towers were being built today. The towers mushroomed into a “forest” amids dense populated regions which mad life uncomfortable for people.

          Requirements for permit application also closed doors for new player in the broadcasting industry, especially with matters related to multi-plexing broadcasting. LP3M were obliged to hold permit for using SFR but permit requirements must be fulfilled until declared as complete. A stipulation as such tend to advantage old players in the industry. With piles of application forms in process there would be niche for old players to make eyes with the Government.      

 Business News - February 24, 2012

TO DISSECT OJIK PREMIUM

            Amidst the process of election and selection of the Board of Commissioner of the Authority of Financial Services (OJK) now a small but serious problem appeared about retribution of financial board by OJK to OJK.

           A polemic emerged starting with a question where the financial resource was from which OJK would take money to run operations. Loosely opinions came up that retributions for OJK would be taken from players of the financial industry.

           Rejections busted out to that proposition: was it a proper thing to let the control board (OJK) be financed by monetary institutions? Wasn’t it improper and unethical? Certainly it would be impossible for the controlling board to put sanction on players of the financial industry who financed their operations.

            Further an interesting proposition came up from the Association of National Public Banks (Perbanas) who proposed there should be two sources of operational fund. According to Perbanas, during initial phase of OJK set up, operational fund would be taken from the State Budget (APBN) first, thereafter players of the monetary service sector would obliged to pay retributions for OK operations. 

         The proposition was interesting because in the banking industry, retribution was uncommon. So far the banking industry, retribution was uncommon. So far the banking sector was controlled by Bank Indonesia free of charge. Understandable because BI could finance their own operations. Probably in the stock market retributions were commonplace but perhaps also uncommon.

         Therefore Perbanas proposed two alternatives or two sources of financing for OJK operations. The fist sources of financing for OJK operations. The fist source was the State Budget for Bank Indonesia of the controlling division handed over to OJK. So Bank Indonesia was expected to “share authority” with OJK because the role of controlling was no longer fully in the hands of BI.

        The second alternative source was premium of the Board of Deposit Insurance (LPS). Meaning if LPS premium had arrived at a certain amount it could be partly transferred to OJK. So far LPS premium had come to trillions of Rupiah. If premium had arrived at a certain figure, LPS could share financing with OJK.

            All the uproar about OJK operational expenses showed that as the proposition to set up OJK appeared that as the proposition to set up OJK appeared one thing was overlooked how to finance OJK operations. OJK proposers were narrow minded in the sense that they emotionally urge to establish OJK until they forgot how to support their operational expenses.

           Now only after a political decision was made about OJK was made came up the question how to finance OJK operations. Bad but better late than never. About the two options proposed by Perbanas, surely the Government as sponsor of OJK establishment should respond to the matter promptly to keep it from long and dragging.

            In line with selection process of candidates of the OJK Board of Commissioners it would be advisable that the financing problem or OJK operations be settled by 2013. By that time OJK would be operational with dissolved Bapepam and Financial Institutions and to be followed up by inclusion of BI controlling function by BI one year later.

            It was possible that is OJK financing be thought over by the Board of Commissioners formed this October. But it would be much better that before the Board of Commissioners was appointed, financial source would be stipulated by OJK.

          One of the two Perbanas options were worth considering. It was still possible for the Government to make their own calculations and further to announce to the financial industry so they could respond accordingly before the rules were put in effect.

           The important thing was that the final stipulation had overall support and approval from all stakeholders, so the budgeting for OJK operations would no longer pose as a problem. Among the financing resource which could probably be used was carry over budget of the previous year (silpa).

        The important thing was to avoid conflict potential between OJK as controlling agent and players of the financial industry being controlled. Use of budget by OJK must adopt the principles of TARIFF (transparence, accountability, responsibility, Informative and Fairness). Therefore examination of by the Board of Financial Examination (BPK) as auditor became imperative. 

 Business News - February 24, 2012

THE PROSPECT OF INDONESIA’S AUTOMOTIVE INDUSTRY

            Bank Indonesia predicted that demand for space for industry in Jakarta, Bogor, Bekasi, Karawang (Jabobeka) would continue to increase especially for the automotive industry. Some world class automotive industry would in the future join the business rush to buy space for industrial sites in this region.

       It was predicted that some automotive corporations like Toyota, Peugeot and general Motors who were planning to build new factories and assembling centers in Indonesia would be the propeller of industrial estate developments in Jakarta, Bogor, Bekasi and Karawang.

      That was the report of BI survey outcome being released last week (10/2). This report confirmed the ambitious plan of producers like Toyota wo planned to develop their industry through expansion. With the expansion, output capacity of Toyota in their second plant would increase production from 50,000 units to 120,000 units per year in 2014.

            Hence all in all Toyota’s total production in Indonesia, i.e. the Krawang Plant 1 and Karawang Plant 2 would come to 230,000 units per year. Total investment for production capacity for karawang 2 Plant would come to 41.3 billion yen or equal to Rp 7,8 trillion.

            Meanwhile BI also noted that through 2011 there was no additional industrial zone, so the total expanse of the four industrial zone was only 6,504 hectares. On the one hand there had been increase of demand which caused price increase of industrial land by up to 5.93% (q to q) to become Rp 1.28 million per meter.

           Land selling for industrial sites in the past there months of 2011 was posted at 32 hectares. Among them 27 hectares were in Bekasi and Cikarang, the rest in Jakarta. Demand for industrial land for industrial land for automotives, electronics, building materials and food industry was know to contribute significantly to land selling.

        Land selling for industrial sites in quarter IV-2011 inched up by 0.68% (Q to Q) to become 73.24%. Meanwhile occupancy level and rental tariff of industrial land during quarter VI-2011 rose by 0.34% (q to q) and 1% (q to q), so the occupancy level become 66.21% and tariff of land rental came to Rp 36,852 per meter/month.

            For example at the Banten Industrial Estate, the total supply of industry rose by 0.14% (q to q) to become 72.13% and increase of selling price by 6.2% (q to q) to become Rp 847,979 per meter.

            BI’s estimate was not surprising, because Indonesia’s was projected as base of Toyota automotive industry in Asean, the product of which would be marketed to Europe, the Middle East and Africa. It seemed reasonable if Toyota planned to increase their car production in Indonesia from 102,000 units to 230,000 units in 2004.

           Next year Toyota was even reported as having plans to expand their Industry to the maximum to strengthen Indonesia’s position as exporter to Europe, Africa, and the Middle East. The Government of RI responded positively to Toyota’s plan and make Indonesia the base of Toyota Industry.

          There were at least two potential market areas for the automotive industry. Firstly was Indonesia’s domestic market with attractive features among others vast population (242 million) new emerging generation of middle class who were aggressive (100 million people) and high population of productive age (60% of population).

         With sizable income, they were prospective market for the automotive sector. It came as no surprise that streets of Indonesian cities were packed with motorcars of various brands from all parts of the world particularly Japan and Europe.

         For the domestic market, probably the growth of multi function cars (SUV and MPV) would exceed the sedan type of vehicles. Reasonable because the typical habit of Indonesia motorists was to travel in group so the DUV and MPV were regarded as more suitable because of the bigger passenger capacity (5 – 7 passengers) whilst the sedan type was regarded as more suitable for Government officials, state owned companies (BUMN) and the private sector. There were also individual groups who were target-worthy because they go for sedan cars.

        The development of areas outside Java especially Jabobeka would stimulate market demand for automotive. Now a number of cities were developing into places as target market to aim at, i.e. Palembang, Pakanbaru, Jambi, Denpasar, Palu, Gorontalo, Balikpapan, Samarinda, Pontianak, Manado, Makassar, and Papua.

        The second target market were export, particularly countries which were not affected by the crisis in Europe. The target destinations were for example: Africa, the Middle East, and ASEAN states. Some European countries beyond the Euro zone was a potential market as they were not affected by crisis which dragged some European countries. Only thing was that automotive producers, in selling their products, must wisely detect consumers’ characteristics and behavior of the respective target in terms of local customs, tradition, preferences etc.

         To summarize, growth projection of the automotive sector their year would be in the range of 10% - 12% as follow up of 2011 attainment which was around 10%.  

 Business News - February 22, 2012

GOVERNMENT TO RESETTLE FOREIGN FRANCHISE

            The Ministry of Trade planned ro re-regulate foreign franchise in Indonesia with considerations of the positive/negative impact on business opportunity in Indonesia. The Ministry of Trade still referred to regulation Mandag no. 31/2008 on Franchise business and business opportunity so all franchise business were permissible as long as create job opportunities. “We would evaluate foreign franchises. We would reform every business opportunity, but with the spirit of creating job opportunities, avoid monopoly etc”. The Director General of Domestic Trading (DJPDN), Ministry of Trade, disclosed to Business News some time ago.

            Foreign franchise were today mushrooming, especially those managed by PT Modern Putra Indonesia. The company would even turn octopus is 2012. PT Modern had set target to open 57 outlets, way above previous target of 37 outlets. The company continued to increase capital expenditure (capex) of Rp 150 billion, while half of the capex had been spent on opening branch outlets.

           The company set target to open one new branch every month. To look at the ambition of PT Modern, the Ministry of Trade once had ‘warning’ from the Commission of Control of Business Competition (KPPU). “Yes, KKPU reminded that operational domination of a business atmosphere, so we question once again Permendag no 31/2008. From the domestic side we would evaluate the positive/negative side of foreign franchise which is today at large” the Director General was quoted as saying.

         The Ministry of Trade was also hoping that local Governments (provinces, cities) could create a healthy atmosphere in regard to franchise business. The provincial Governments could open more room for applicants of the domestic franchise, because the Ministry of Trade saw that the number of local applicants were still relatively little. “The number is very small or even nearly non existent”.

            In view of the above the Ministry of Trade planned that every permit issued for every domestic applicant be accompanied by assistance, nurturing, facilitation etc. hence domestic franchisers could compete better against foreign franchisors. “But we are not exercising protective policy for domestic franchise. Business opportunity is getting better and may last longer, so registration system would soon be stipulated, wither to be centralistic (the Ministry) or decentralist involving local governments”.

         Other points to underscore was that the govt. were observing rules and regulations which were being applied by the neighboring countries. The Ministry of Trade saw that franchise management in Indonesia, in terms of registration and permit issuance tend to be unfair. By the time foreign franchisors intended to apply to operate in the domestic market, the procedures was very easy. The process was way different when it comes to the degree of hardness experienced by local franchisors who intended to expand overseas. “We demand equal treatment so we feel it necessary to reform the existing rules. Domestic franchisors find it hard to apply overseas but overseas franchisors walk into our domestic market very easily”.

            In view of the above the Ministry of Trade planned that every permit issued for every domestic applicant be accompanied by assistance, nurturing, facilitation etc. hence domestic franchisers could compete better against foreign franchisors. “But we are not exercising protective policy for domestic franchise. Business opportunity is getting better and may last longer, so registration system would soon be stipulated, weather to be centralistic (the Ministry) or decentralistic involving local governments”.

         Other points to underscore was that the govt. were observing rules and regulations which were being applied by the neighboring countries. The Ministry of Trade saw that franchise management in Indonesia, in terms of registration and permit issuance tend to be unfair. By the time foreign franchisors intended to apply to operate in the domestic market, the procedures was very easy. The process was way different when it comes to the degree of hardness experienced by local franchisors who intended to expand overseas. “We demand equal treatment so we feel it necessary to reform the existing rules. Domestic franchisors find it hard to apply overseas but overseas franchisors walk into our domestic market very easily”.

            In view of the above the Ministry of Trade was also planning rules for restricting the number of outlets for foreign franchisors. In principle, within a certain time frame the opening of new outlets for foreign franchisors. In principle, within a certain time frame the opening of new outlets were limited to a certain number. Although licensing for foreign franchise was in high demand among local businesspeople, the number of outlets must not exceed the allowed number. “They cannot open as many outlets as they wish. We don’t see this as a form of protection, but we are copying the rules in other countries which had been applied long before-hand in the franchisor countries”.

          In addition to the above, the Ministry of Trade would also set up a criteria to differentiate between franchise and non franchise. By giving away certain logo during registration and permit issuing, applicants were bound to rules according to the respective logo. The Ministry would also find it easy to control and nurture domestic franchise. “But we are still in the process of probing deeper into the plan and discuss the matter with stakeholders. As soon as they agree on the key points we would elaborate them into articles of the Act thoroughly. So by the time the Ministers signed the regulations we made, the implementation afield would run smoothly”.

         Meanwhile observations made by Business News afield showed that the 7 Eleven outlets were having various modifications. Among them was the 7 Eleven in the Senayan District South Jakarta. The management staged live music and many visitors use the 7 Eleven as a place for hangout. Another outlet being opened in Menteng Central Jakarta was being visited by more and more visitors especially young people. It seemed that the management was making the best of nearness to public facilities like mall or park to attract visitors.

 Business News - February 22, 2012

HEALTH MINISTRY PROPOSES REVISION OF GOVERNMENT REGULATION NO. 23/2005

            The Health Ministry proposes revision of Government Regulation No. 23/2005 on Management of Finances of Public Service Agency (BLU), following not a small number of regions who not yet understood the implementation of BLU so that the regulation causes uncertainty in the regions. And, the Health Ministry proposes BLU work units, at central and regional government levels, to continue using Presidential Decree No. 54/2010 on Procurement of Government Goods/Service as the only reference for the procurement of goods and services.

         Freshly Hutapea of the Directorate General of Health Promotion Development of the Health Ministry, proposes revision of the provisions in Government Regulation No. 23/2005. The reason is, according to Freshly, because the regulation stated that BLU can be released, party or wholly, from generally application provisions related to procurement of goods and services. This provision becomes a reference for the work unit that BLU flexibility.

        Freshly admitted that some Articles in Government Regulation No. 23/2005 cause confusion to BLU stakeholders, at central as well as regional government levels. Almost all SKPD (Satuan Kerja Perangkat Daerah), not only Regional Public Service Agency (BLUD) in Health Affairs who experiences problem related to the implementation of BULD.

            According to him, procurement for health equipment is very difficult. He was pessimistic that it will obtain a good-quality health equipment if goods procurement is done through tender. Tender tends to seek cheep prices. It is difficult to obtain good quality product at cheap price. Freshly considers that this problem becomes that in Government Regulation No. 23/2005 there is a grade system.

            He considers that revision of Government Regulation No. 23/2005 is a proper action for this time. He said that all parties are ready to give inputs and proposals concerning revision of Government Regulation No. 23/2005. Currently, there are not a small number of goods purchased which are not in accordance with the expected quality. So it causes un-optimality in the services provided, which will finally negatively affect the society. He proposes that in the future there should not only be grade system, but there must also be a merit system in order to obtain the best products.

            He explained that at the end of 201, the Health Ministry invited managers of BLU and Supervisory Council (Dewan Pengawas) to discuss matters concerning implementation of BLU. The matters discussed are, amongst others, budgeting, tariff, and procurement of goods/services. In that meeting, the Finance Ministry promised to grant more flexibility to BLU. BLU is said to have specialty as it is given flexibility, even though procurement of health equipment is still very difficult to be done, he said.   

 Business News - February 22, 2012

IRRIGATION IMPROCEMENT BECOMES PRIORITY

           To achieve food self-sufficiency, the Agriculture Ministry formerly designated development of new paddy fields as priority. But, as the land promised by the National land Agency and the Forestry Ministry is not yet realized, starting from 2013, the priority will be on irrigation improvement. Agriculture Minister, Suswono, stated this matter.

 

           The benefit of improvement of irrigation system is productivity will directly become high. “We try to develop land whose plant index is one becoming two as this will affect the yield significantly. While, development of new paddy fields requires a long time to achieve high productivity, but it requires a long time due to land conversion.

         Bambang Soejanto, Director General of Forestry Planology of Forestry Ministry, said that the Forestry Ministry has set aside 3007,700 hectares of forest Ministry has set aside 307,700 hectares of forest that can be used for development of paddy field to support achievement of target of 10 million tons of rice surplus by 2014.

         The forest set aside is located in Central Kalimantan with a size of 178,500 hectares, East Kalimantan (9,900 hectares), and West Kalimantan support rice self-sufficiency”, said Bambang.

         According to Bambang, the setting aside of forest is obtained after macro analysis has been performed on convertible forest (HPK) that can be used for development of agricultural land.

         The above area is assured to have fulfilled criteria of agricultural land, namely non-peat, a river channel that can become source or irrigation, non-forest or bushes vegetation, and relatively flat land. The forest set aside has been in accordance with the National Level Forestry Plan (RKTN) which allocates forest areas for non-forestry activities.

        Information concerning the land has been conveyed to the Agriculture Ministry. Bambang said that he has sent a letter to the Director General of Agricultural Facilities and Infrastructures of the Ministry concerning information on the setting aside of land through letter No. S.163/Viii-REN/2012 sent on February 8, 2012. The letter contains attachment of complete map of the forest set aside.

         Bambang admitted that the area set aside still requires a field survey to obtain a more detailed data. The reason is because the area set aside is acquired from map analysis with 1:250,000.

 Business News - February 17, 2012

THE GOVERNMENT IS OVERPROTECTIVE

            Fish processing industry operators consider that the government is overprotective because it issued policy on prohibition on fish import. While, in fact, domestic fishery production is insufficient to meet demand by fish processing industry. The Ministry of Marine and Fisheries predicted that demand for raw material of fish processing industry 24.62% if compared to 2011 which is estimated at 1.99 million tons. If import prohibition continued to be applied, while domestically there is no increase of production, many fish processing there is no increase of production, many fish processing industries will be unable to continue operations.

            Reportedly, the Ministry of Marine and Fisheries will not issue any policy on fish import until first quarter of 2012. Even though it some regions will experience harvest failure, the government will not yet allow fish import. The Ministry of Marine and Fisheries stated that import will the final attempt taken if supply of demand of fish processing industry cannot be sufficed from other regions. Based on the Ministry’s observation, regions which are sensitive to harvest failure are Sumatera and some areas in the Northern Coast of Java (Pantura). In the early part of this year, there will be some companies who will import fish, but these companies are using the old contracts in carrying out import license.

            Chairman of Indonesian Fish Cannery Association (APIKI), Hendri Sutadinata, considered that the attempt taken by the government is overprotective. According to him, if policy on import prohibition is continuously carried out, national fishery industrialization will not be going smoothly. Therefore, national fishery industry operators urge the government to improve national fishery production. Without that, attempt of controlling fish import which is currently being empowered by the government will become a boomerang to fish processing industry which still depends on import.

            Hendri explained that there are two factors that cause decline in fish processing production, namely low raw material supply and application of import license. For example, mackerel fish which is an ingredient so that many companies planned to import. Low supply of raw materials domestically makes fish processing companies to import from China and India. “We ask the government not to be overprotective in banding fish import as it will cause losses to fish processing industries”, Hendri said.

          He admitted that early 2012 is a bad momentum for domestic fish processing industry. Unsupportive weather and import prohibition have made this industry to continuously complain about raw material shortage. Sardine canning industry, for example, due to declining supply of mackerel fish from local farmers, this industry is unable to operate optimally. 15 sardine cannery companies who become members of APIKI require 600 tons of mackerel fish per day because the average production capacity is 40 tons per day each factory.

            Therefore, he asked that import of mackerel fish will not be made complicated. APIKI predicted that production of fish processing industry this year could grow by 25%. The growth is due to increase of demand of processed fish domestically. Production from fish processing industry this year could reach 250,000 tons due to increase of domestic demand because beef price is expensive. But, with industry capacity which only stands at 35%-40% due to difficulty in getting raw material, it will be difficult to meet the demand. “We expect that there will be addition of raw material, as it is difficult to acquire fish from Eastern Indonesia due to long distance”, Hendri said.

 Business News - February 15, 2012

TO WELCOME INVESTORS FROM AMERICA

             In line with promoted rating to Investment Grade by Moody’s Investor Services and Fitch ratings recently, Indonesia had broad opportunities to drum up foreign investors. Enter a team of American investors to Indonesia.

          There American investors were combined in the US-ASEAN Business Council had their commitment to increase their investment this year in tandem with investment grade rating achieved by Indonesia.

         The President of US-Asean Business Council Alexander C Feldman said the investment grade rating achieved by Indonesia gave more confidence to American companies to continue investment in Indonesia they had growing confidence in Indonesia’s investment climate. The rating testified that the economic policy put in effect was good.

            For information US Asean Business Council was a business forum of American businesspeople operating in the ASEAN region. This organization enlisted more than 100 old and new companies whi were interested in investing in Indonesia and Asean states.

          Fieldman stated that every year the US-Asean Business Council invited American companies to see business potentials in Indonesia and Asean states. This time 25 companies were invited to see business potentials in Indonesia 5 days ago. It was noteworthy that normally the length of visit was 3 days, but now extended to 5 days and involving more companies.

       Having met Vice President Boediono, the US Asean BC Delegation also visited the Indonesia Security Exchange, a number of cabinet Ministers, business associations and the Parliament. While praising Indonesia’s economic condition, they also stated their expectation for a definite and reassuring business climate whereby to enliven their spirit and zeat in business. They expressed their commitment to increase investments this year in line with Indonesia’s promoted rating to Investment Grade.

            In this case American companies were also ready in supporting Indonesia in infra structure building within the framework of the Indonesian Economic Acceleration and Expansion Development Plan (MPSEI). Development of infra structures within this plan would attract American companies to invest in Indonesia.

            In fact their expectations for legal certainty and legal assurance and involvement in infra structure building had been in line with The Government’s program, who was now in the process of promoting business climate through better regulations. Beside the two above mentioned aspects settlement of labor dispute between employer corporations and workers in industry should be settled accordingly.

         National business competitiveness based on doing business index must also be part of Government’s attention because this was related to corruption eradication plan and reformation of the bureaucracy to serve investors’ interest. Widespread news of cases of corruption lately might lead candidate investors to think twice before investing in Indonesia.

            Semesterly and annual review and monitoring of doing business index should be part of the Government’s main agenda whereby good rating might be maintained or even improved so foreign capital inflow could be increased. In times when export was under oressure of slowed down global economy, investment should compensate on lessened income from export so national growth target of above 6% could be attained.


 Business News - February 15, 2012

STATE FINANCE BILL SHOULD BE DISCUSSED THROUGHLY

             Legislation Council (Baleg) of the House of Representatives expected that amendment of Law No. 17/2003 on State Finance which is currently being discussed should produce qualified and optimal result. This bill needs to be discussed more thoroughly by all members of the Legislation Council so that important inputs from members of the Work Committee on State Finance Bill are much expected. This matter was conveyed by Vice Chairman of Legislation Council, Dimyati Natakusumah, when chairing the meeting of the Work Committee on State Finance Bill at the House of Representatives building.

            It is stated that discussion of the bill requires prudence judgment considering that it is very urgent and important. The former State Finance Law is considered unsystematic and unqualified so it is easy for people to commit violations corruption, collusion, and nepotism (KKN).

            Executive, judicative, and legislative matters are expected to have bigger role, but they are restricted by Government Regulation. Take for example, the case involving the Budget Council of the House of Representatives which still adopts the old Government Regulation in state finance management. While, in fact, Government and legislation is still governed by a Government Regulation.

            Member of the Legislation Council, Nusron Wahid, added that amendment of State Finance Law was once proposed by the House of Representatives of the 2004-2009 period. At that time, there were two crucial matters that should be prioritized, namely why the Law needs to be amended, whether its implementation is considered not in line with legal demand, or whether there is finding of the Constitutional Council about constitutional violation against the substance of Law No. 17/2003. These two matters should receive priority attention before discussion of the bill.

            Other member of the Legislation Council, Rahadi Zakaria, has a similar opinion that the bill should have a strengthening point that could ensure that it will have a long durability. Based on second meeting of the Work Committee on January 19, 2012, there are some conclusions that should be paid attention to, amongst others, the State Finance Bill must be able to realize the relevance between planning document and budget.

            The bill must be able to increase discipline on planning so that APBN (State Budget) absorption will be optimal. It should also incorporate how to limit authority of the related Finance Ministry in state finance management.

            The bill should also incorporate how to manage Non-Tax State Revenue and APBN and should have the proper time for its implementation and accountability. The definition of State Finance should be re-considered if it is related to government’s capital in state-owned enterprises. Separated state assets should be included in APBN. 

Business News - February 10, 2012

INDONESIA – PAKISTAN TRADING POTENTIAL MAY COME TO USD 10 BILLION

              The total value of Indonesia-Pakistan trade volume had the potential to reach USD 10 billion, while today before discussion of Preferred Trade Agreement (PTA) between the nations was signed, the total value was posted at only USD 1 billion. The increase was because Indonesia’s export of CPO to Pakistan would increase after import tax was lowered based on PTA agreement between the two countries. This was disclosed by the Ministry of Trade Gita Irawan after signing of PTA between Indonesia and Pakistan with the Ambassador of the Islamic Republic of Pakistan, Sanaulah on Friday (3/2).

            The two leaders agreed that the agreement would be mutually beneficial to both nations, especially in terms of Indonesia’s export to Pakistan which would be more competitive without import tax barriers. Over the past three years, before Indonesia-Pakistan PTA was signed, Indonesia’s CPO had been unable to fill in Pakistan’s domestic market which accounted for slump of Indonesia’s export of CPO to Pakistan from USD 552 million in 2007 to USD 91.2 million in 2010”, Gita remarked.

            Meanwhile Pakistan’s Ambassador Sanaulah stated his optimism that Indonesia-Pakistan trade relation would reach USD 2 billion by end of this year with the signing of PTA agreement between the two nations. Meanwhile Gita was convinced that Indonesia’s export of CPO to Pakistan might come to USD 60 million while also more tan 400 product items would be liberated.

           Under the PTA Agreement, Indonesia had agreed to open market access for 246 tariff posts. The list included commodities needed by Pakistan like fresh fruits, textiles, garments, sports equipments like badminton and tennis rackets. Furthermore also leather products and other industrial products. Indonesia had also opened access for kinow (Mandarin) lemons and Pakistan’s oranges with zero percent import tax.

             In return, from Pakistan Indonesia got access to 287 tariff posts to enter the Pakistani market as agreed in PTA including vegetative oil and CPO Palm Stearin, RBD Palm Oil, Palm Olein, Palm Kernel Oil, sweet candies, cacao products, consumers goods including toothpaste, soap, deodorants, chemical products, household goods, rubber products, wood, glass products and electronic goods.

           Among the concessions give by Pakistan would be equal tariff for cooking oil from Indonesia (Just as Malaysia under the Indonesia – Malaysia Free trade Agreement) Indonesia’s export to Pakistan included coal products coal brackets, coal condensed goods (USD 229.5 million) CPO products and by products USD 40.6 million; synthetic fabrics Rp 40,6 million; unlayered paper worth USD 30 million. On the other hand Indonesia’s main imports from Pakistan included cotton USD 20.6 million; 85% cotton cloths worth USD 10.1 million, and woven clothes USD 6 million.


 Business News - February 8, 2012

CERAMIC INDUSTTRY DEPENDS ON GOVERNMENT’S POLICY

           National ceramic industry operators are optimistic that domestic market has quite significant potency for growth and development of national ceramic industry. Data of Indonesian Ceramic Industry Association (ASAKI) shows that ceramic sales in Indonesia in 2010 reach Rp. 17 trillion or increase 30.7% if compared to 2009 at Rp. 13 trillion. Increase in sales is supported by rapid growth of property sector which mostly absorbs ceramic. For this year, ASAKI sets target of ceramic sales in domestic market at Rp trillion or increases 17.6% from 2011.

          The target can optimistically be reached because in addition to the very big market potency, national ceramic consumption at present is low. ASAKI data stated that ceramic consumption per capita is only one square meter. While, in ASEAN countries, ceramic consumption has reached more than two square meters. Ceramic development in Indonesia, such as ceramic tiles, table wares, sanitary, or ornamental ceramics have achieved a satisfactory result, whether from the aspects of capacity, revenue acquirement, or absorption of workers so that ceramic product can be designated as leading product in accelerating national economic activities.

            Currently, Indonesia is the fifth largest ceramic tile producer in the world with a capacity of 32 million square meters so it is expected to be able to fulfill domestic demand, and is still prospective to be developed. Yet, however, it does not mean that national ceramic industry did not face any problem. One of the problems faced by national ceramic industry is low gas supply in addition to unsatisfactory infrastructure condition.

            General Chairman of ASAKI, Achmad Widjaya, stated that the target set for 2010 can be realized if the government could ensure gas supply to ceramic industry and to improve infrastructure condition. According to him, the target is much dependent on government’s policy. Producers are more focused on domestic market due to its improving condition.

             Currently, the problem faced by national ceramic industry operators is no longer competition with ceramic products imported from China, but problem of gas supply. He said that price of ceramic product made in China is already expensive so consumers choose to buy local products. But, the problem is that ceramic producers have difficulty in fulfilling domestic demand as there is no assurance of gas supply from the government. Quoting ASAKI data, volume of national ceramic production currently reaches 247 square meters per year.

           Achmad admitted that since the past three years, national ceramic producers have been complaining about limited gas supply, whether from the aspect of quantity or quality. Gas is used to burn feldspar and silica sand which are the main raw materials. He explained that national industry, including ceramic industry, this year is haunted by problem of shortage of supply of gas as fuel. National industry’s demand for gas reaches 1,500 millions metric standard cubic feet per day (MMSCFD), but only around 800 MMSCFD that has been fulfilled.


 Business News, February 8, 2012

NIK NUMBERING MAKES CONTROL OVER CUSTOMS PROCEDURES EASY

             In spite of rejections from companies, especially from importers and exporters on the implementation of Custom Identification Number (NIK), it seemed that the Government was determined to put in effect NIK by mid January 2012 according to the set schedule. The Director General of Tax and Customs, the Ministry of Finance noted that so far 16,539 companies were already in possession of NIK as pre requirement for running import-export activities. Hence more than 90% import-export companies had been harnessed in the registration program and were already in possession of NIK.

       Deputy to the Coordinating Minister of Trade and Industry Edy Putra Irawady said in Jakarta (Friday 13/1/2012) that NIK was registration guideline of exporters-importers including PPJIK (center of employment service) and transportation operators in accordance with the Regulation of the Ministry of Finance no 63/PMK.042/2012 of Custom Registration. According to Eddy, the data was most representative, representing users of Customs services. The indicator was ratio between companies holing NIK and customs-related business players who were still active at the moment.

            Edy stated that there was no substantial reason for postponing NIK implementation considering that data was representative enough. He elaborated that before the application of NIK, the Government was already in possession of exporters data, i.e. through export Identification Number (AEP). However, in line with Government’s policy to jack up export, APE was stopped and renewed through NIK. “We seek for cooperation from exporters and importers. This NIK was put in effect because we want to be orderly and easy to control customs activities” Edy said.

            According to Edy, implementation of NIK was already in accordance with the rule, because illumination had been made for all related parties and stakeholders. Illumination and information on NIK had been made for 30 days in Jakarta and other main cities all over Indonesia. Furthermore publicizing was also conveyed through website of the Director of Customs and portal of Indonesia National Single Window (INSW) and advertised in several national print media.

            However, the Government stated that they were ready to open a dialogue. The Government, according to Edy, had promised to facilitate business people with NIK service. The Directorate of Customs had set up service posts (posko) in all KPP Customs offices to settle problems related to customs. This was necessary so fiscal policy adopted by the Government would be right on target. The way it had been, he said, that the fiscal policy adopted by the Government had created no maximum result. Edy was sure that the application of NIK could prevent blackmarket  importers and exporters. The implementation of NIK ownership was also needed by the Government for the sake of transparent documentation and custom verification.

            Edy stated that implementation of registration of custom through NIK had in fact been done since July of 2011 and supposedly end by December 2011, but checking of NIK in relation to export-import was only exercised by January 19, 2012. If there was any exporter or transporter who was still not in possession of NIK, there was still time before the NIK stipulation was implemented in the Computer Service System (SKP) for export in January 19, 2012 or 19 days since January 1, 2012.


 Business News, January 18, 2012