INDONESIAN CHAMBER OF COMMERCE AND INDUSTRY ALERTS AGAINTS SMUGGLING IN BORDER AREAS WHICH REACHES 10% OF SALES TURNOVER OF FOOD AND BEVERAGE INDUSTRY

            The Indonesian Chamber of Commerce and Industry (KADIN Indonesia) urges the government to evaluate trade regulations in border areas, such as the area between Indonesia and Malaysia. This is important considering that the existing regulations are not suitable to be applied in border areas. Indonesia and Malaysia have signed a Border Trade Agreement since 1970. Not only for consumption purposes, but based on the regulations, community in border areas receive special treatment to trade goods with value of border trade on land at RM 600 (Rp 1.7 millions)/ month/border pass (PLB) or on sea at RM 600/shipping/PLB.

            “The regulation is mush enjoyed by Indonesian citizens. Not only for daily needs, but also for retrade. But, there is no firm control on border area so that there are many smuggling cases happening”, said the regent of Sanggau (West Kalimantan), Setiman H. Sudin. He said that the difficulty in getting locally produced basic necessities is due to high cost, infrastructure problem, and other problems so that goods from neighboring countries are cheaper than local goods.

            This includes basic necessities, such as sugar and other. “Sugar demand in Kalimantan reaches 6,000 tons and border area could receive 30 percent. Circulation of smuggled food and beverage products reaches around Rp 60 trillion a year or around 10 percent of total sales turnover of food and beverage industry”, he said.

            KADIN Indonesia is currently encouraging evaluation of regulations on border areas because border areas are the gateways of some commodities, especially sugar for consumption and other foodstuffs from overseas. On the other hand, there was less supply of sugar and other foodstuff from Java due to distance problem and inadequate infrastructure.

            On the other hand, circulation of commodities where a major part of them are illegal must be disciplined. But, there has to be a policy from the government to fill unavailability of product, especially sugar and other basic necessities. “All regulations should be improved so they will not be misused”.

         If import regulations are clear, it can be obeyed and used according to requirement accompanied with control”, said Vice General Chairman of KADIN for Central Region Coordinator, Endang Kesumayadi. She considers that to meet demand in border areas, there has to be special treatment and understanding. “We ask the government to pay attention to this matter, and soon we will coordinate with all parties and will send a letter to the Trade Ministry so that daily needs on border areas will receive attention”.

         Concerning this matter, the Regent of Sangau said that his party has allocated 30 hectares of land for construction of dry port. “We need the support of all parties, including the central government, especially related to clarity of Border Trade Agreement regulating (the use of border pass) and trade regulations on border areas if the dry port has been ready for use.  

 Business News - March 26, 2012

SIMULTANEOUS INCREASE OF OIL PRICE AND ELECTRICITY TARIFF NOT RECOMMENDABLE

           Member of Parliament Robby Rizaldi said that the increase of basic electricity tariff (TDL) in tandem with increase of oil price on April 1, 2012 was rated as inappropriate. If prices of the two commodities were increased simultaneously it night boast inflation to exceed 1 percent which might ignite social unrest.

            About increase of subsidy for electricity around Rp 64 trillion, it was more caused by postponement of the COD PLTU 10,000 MW project. Supposedly such should be included in calculations such as swap of Gajah Baru 40 MMBTUD. The increase of subsidy for electricity from Rp 40 trillion to Rp 64 trillion was inseparable from the Rupiah exchange rate value and price of Indonesian Crude Oil (ICP).

         Finance Minister Agus Martowardojo stated that if subsidy for electricity were not increased to Rp 64.9 trillion, it might result in powerhouses being unable to operate. Among the thinkable solutions to lower operational cost was if the State Electric Company (PLN) were given gas supply. Unfortunately the Floating Storage Regasification Unit (FSRU) in Jakarta Bay was not completed while the program of acceleration of the 10 thousand (MW) generator was behind schedule. The condition had forced PLN powerhouses to use oil fuel and caused subsidy for oil to swell.

         About the size of subsidy for electricity, discussion of subsidy had reached the Budgeting Commission of House and the Government planned to dissect the matter in relation to the recommendation of Commission VII of House about reduction of subsidy for electricity.

Business News - March 26, 2012

MINISTRY OF ENVIROMENTAL AFFAIRS PURSUE PASSING OF 3 REGULATIONS

         The Ministry of Environmental Affairs (KLH) spurred on accomplishment of another three Government Regulations (PP) after Release of PP No. 27/2012 on environmental permit. Three PP which were now being spurred on were rules on exploitation of Karst, peatland and garbage. The Ministry of KLH admitted that the effort to speed up finalization of the PP was not easy; because apart from intensive discussions with the related ministries there was often missing link in the process. “This is a great challenge to us. The process of accomplishing one PP alone takes so long. After a series of talks, discussions and stagnation here and there. This is the thing that slows down accomplishment of PP” the Minister of Environmental Affairs Balthasar Kambuaya disclosed to Business News” (19/3).

          Release of PP No. 22/2012 was also related to the Analysis is of Environmental Impact (Amdal). Issuance of Environmental Permit must be backed by Amdal based on in-depth analysis. Amdal was more than just formality by initiator or planner of activities Amdal as required by PP No. 27/2012 was different than stated in the previous PP, i.e. No. 27/1999”. PP of 2012 was replacement of PP 1999. The new PP was more than just analysis, but there were considerations and other requirements including administrative sanctions for violators” Balhatzar remarked.

         PP 27/2012 served as streamlining of Amdal process with duration of appraisal 125 working days including 3 documents. The role and competence of the technical team in evaluating Amdal was also getting stronger. Based on scheme of environmental permit which was stipulation of enforceable TUN with legal consequences over violations as regulated in Law No. 32/2009. This PP No. 27/2012 also changed the mindset of all stakeholders including planning of activities of business players as related to environmental of business players as related to environmental conservation. Now environmental affairs encompassed people’s social economy state and health. In the previous PP (No. 27/1999) violation of Amdal was not subject to punishment. “but in the new PP they were subject to legal and administrative sanctions; administrative sanctions include permanent abolition of permit” Blhatzal said.

       PP was implementation of Law No. 32/2009 which would strengthen safeguarding of the environment. PP could promote environmental feasibility as underlying environmental permit with clear and stringent sanction. “This PP does not paralyze investment but was pro-investment instead, because PP clearly regulated relationship between environmental permit and the process of law enforcement”.

      Responsibilities of Environmental Permit holders was part of the preconditions as written in the letter of permit for environmental protection and management (PPLH Permit) Permit was released at operational level. While environmental permit was given at the stage of planning. The PPLH permit included permit for wastage disposal, utilization of waste for soil application, permit for B3 (poisonous trash) wastage management and permit for disposal of waste to the sea. “All are specified in Article 48 point 2 PP No. 27/2012”.

      The Government was against the impression that there was bureaucracy which made business and investment difficult, because PP No. 27/2012 guaranteed the process of Amdal proper evaluation. It the past the process took 180 days, now only 125 days. The duration of process was exclusive of completing requirements, because as permit was being processed there were often incomplete documents”.

      People’s involvement was an essential matter in the Environmental Permit. Communities of the surrounding areas of projects were often disadvantaged by the stipulations. The people could be the decisive factor in determining business fit and proper state. Normally communities around the project were hopeful for getting employment. Application for environmental permit and release of permit must be announced three times during the planning stage. In the past regulation, business players were obliged to make one announcement i.e. at the stage before setting up of Amdal analysis to Non Governmental Organizations, or the village head might represent the community.

        The firmness of the new regulation was that civil servants (PNS) in the Ministries or Office of the Environmental Affairs were not permitted to scheme up Amdal or Environmental Monitoring Efforts (UKL-UPL) This stipulation was designed as effort to ensure accountability of Amdal or UKL-UPL as pure scientific analysis. PP would dramatically change protection system and management of environment.   


Business News - March 26, 2012     

KRAKATAU STEEL GROUP BUILDS AIR SEPARATOR PLANT IN COOPERATION WITH PT SAMATOR GROUP

           PT Krakatau Steel through PT Krakatau Engineering and Bapelkas Krakatau Steel entered into partnership with PT Samator Group to build air separator plant with a capacity of 45,000 normal cubic meter per oxygen hour.

           The plant will become one of the biggest air separator plants in Indonesia with oxygen, nitrogen, and argon as the main products.

           MoU on the partnership was signed in Jakarta and witnessed by Minister of State Enterprises, Dahlan Iskan, on Tuesday (March 13).

        The partnership is a synergy between state owned enterprise and national private enterprise which combines the expertise of Krakatau Engineer in engineering and construction with the expertise of Samator in gas industry. The two companies will develop technology in gas industry.

         The main goal of the plant construction is to provide more assurance in gas supply at competitive price for PT Krakatau Steel so it can achieve efficiency and can compete with other steel industries by providing steel to meet domestic industry demand, which consequently, steel-based finished products can compete in local and international markets.

           And, the plant is also to meet gas demand in the area of Cilegon industrial zone to support other industries.

Business News - March 16, 2012

GOVERNMENT URGED TO INCREASE CRUDE OIL OUTPUT

            Member of Commission VII of House Mardani Ali Sera urged the Government to increase production output of crude oil whereby to downpress oil price increase. The Government should not simply give up in the struggle to increase production of crude Oil. The statement was made in response to the Government’s plan to increase price of oil.

            The Government should be in high spirit to keep up with the performance of Malaysia, Vietnam and India in increasing natural Reserves of oil instead of just complaining. According to Mardani’s data, Malaysia was able to increase their provenance from 2.0 billion barrels in 1980 to 5.0 billion barrels in 2010 Vietnam from 0.0 billion barrel in 1980 to become 4.4 billion barrels in 2012 India from 2.4 billion barrels in 1980 to 8.5 billion barrels in 2010.

            Supposedly Indonesia was able to manage energy better, considering that Indonesia had more experience than Malaysia, Vietnam and India in managing crude oil resources. Therefore Indonesia must be able to increase total volume of oil reserves from 3.7 billion barrels to 10 billion barrels.

           Exploration technology through seismic 2 dimension and seismic 3 dimension and enhance oil recovery (eor) or other techniques were surely mastered by the best sons of the nation. The technology, as well as exploitation techniques could be used for exploring 128 sources in possession. For that matter it was necessary to build synergy among human resources spread out in various Government institutions and in private companies.

In the future if the provenance reserves of crude oil were increased and oil refinery plants were built to process the crude oil, then this nation could be free from the rumbles of oil price increase and the people could benefit from low priced fuel. 

Business News - March 16, 2012