CREATIVE INDUSTRY FACES MANY PROBLEMS

Attempt of development of creative industry in Indonesia is facing some problems. These prob­lems are, amongst others, weak human resource and technology development, unavailability of creative in­dustry development scheme, lack of funding aspect, lack of access of industry operators to market, and creative industry is institutionally weak.

Vice Minister of Trade, Bayu Krisnamurthi, on Tuesday (11/27), said that Indonesia still needs vocational school and high school graduates who have competency in information technology. Mean­while, for funding access, many banks are unwilling to provide capital loan to creative industry operators. Concerning market access, Bayu said that the gov­ernment is continually attempting to facilitate exhibi­tion locations domestically and overseas. He said that there should be an encouragement for protection of intellectual property rights and availability of public spaces to support creativity.

Beyu admitted that human resource, either by quantity or quality, is the main problem to development ­of creative industry. This problem must become a collective attention because the contribution of this sector to national economy is quite significant. He said that development of creative economy in Indo­nesia is still on a very early step. So, there are many problems faced collectively in every plan on creative economy development in the future.

It is important to create strong and tough young entrepreneurs who are able to create business opportunity in the midst of tight business competition like recently. His expectation is that there will be more young generations who are interested in creative in­dustry and could become stimulators of change to­ward business and independence, so support from capital owners and banks is needed. Training on how to develop business properly is also necessary.

In addition to the foregoing problems, creative economy growth is also hampered by packaging and marketing. He said that creative industry can actually improve sharply if entrepreneurs improve market­ing system, brand, and packaging. Small and medium businesses in Indonesia have their own uniqueness. Indonesia market is highly oriented toward brands. Consumers are also sensitive to branding. Bayu said that number of creative industry consumers is esti­mated at 50 million people, most of them are young people. 52% of them live in the cities, therefore brand is an important point of consideration in buying a product.

Bayu said that creative economy is the fourth largest sector out of 10 national economic sectors from the aspect of labor absorption after agriculture, animal husbandry, forestry and fisheries, trade, hotels and restaurants, and service sector. Creative econo­my sector absorbs workers through creation of new businesses. Subsectors absorbing the largest num­ber of workers are fashion, culinary, and handicraft with the highest growth recorded by handicraft subsector at 1.42%.

Quoting data of the Ministry of Tourism and Creative Economy, creative economy industry ab­sorbs 11.57 million workers in 2012, or increases slightly from 2011 at 11.51 million people. In 2011, Gross Domestic Product (GDP) of creative economy sector grows by 4.91% reaching Rp 526 trillion. In 2012, nominal GDP of creative economy sector reaches Rp 573.4 trillion. Some creative economy sub-sectors are culinary, handicraft fashion, pub­lishing, design, performance arts, music, interactive games, television and radio, information technology, art market, advertisement, architecture, and research and development.

Business News - November 30, 2012

INVESTMENT INTEREST DECLINE AFTER PEATLAND MORATORIUM

Government’s policy on moratorium on development of oil palm estate on peatland is proven to generate problems. The policy which has been going on since last year has hampered plantation business. Investment interest after the issuance of Presidential Instruction No. 10/2011 on the moratorium is declining.

Data of the Agriculture Ministry stated that total recommendation for plantation development prior to the moratorium (2007-2011) reaches 169 companies located in 12 provinces with plan on development of oil palm estate of 2.49 million hectare and oil palm processing factory (PKS) with a capacity of 9,115 ton of fresh fruit bunches (TBS) per hour.

But, after 2011, the government issued rec­ommendations for 124 companies located in 22 prov­inces. Plan of area development drops drastically, and only reaches 1.37 million hectare, including construc­tion of PKS with a capacity of 4,466 ton of TB5 per hour.

Gamal Nasir, Director General of Plantation at the Agriculture Ministry, said that prior to the mor­atorium policy, which is since 2007 to May 2011, number of plantation concessions (IUP) issued by the government is 78 IUP with area development plan at 948,342.92 hectare. After the issuance of the policy (May-September 2012), total IUP issued by the government is only 48 IUP with sixe of area of 386,849.88 hectare.

Since the issuance of Presidential Instruction No. 10/2011, IUP is granted in consideration of in­dicative map on suspension of new concessions, the Agriculture Ministry has identified and optimalized utilization of abandoned land with concession rights. This activity is carried out in coordination with the National Land Agency.

Supiandi Sabilhm, General Chairman of In­donesian Peat Association, said that Indonesia is a country having the biggest size of peat area reaching 17 million hectare. Peat area is spreading mostly in low land.

Traditionally, since 1930, the local communities have managed peatland in a traditional way. But, since the 1990s, privets companies and the society developed land area for large-scale plantations.

The problem in peatland development is that many do not understand about peatland character­istics. Some of them are careless of its long-term, local, and global consequences. Basically, peatland could create benefits. But, problems arise due to human error in choosing the right technology for peatland utilization.

Data of Tropenbos International stated that peatland utilization for development of oil palm estate increases continually. In Sumatera, in 2000, there is only around 704,474 hectare and In Kalimantan 19,334 hectare, and in Papua there is none at all. But, in 2010, size of oil palm estate on peat area in Sumatera has reached 1.39 million hectare, in Kalimantan 317,515 hectare, and in Papua around 1,727 hectare.

To prevent problems, in the future, peatland development must be oriented toward thick peat be­cause it is relatively difficult to find thin peat. So, there should be a policy reorientation based on peat capacity and suitability. Regulations concerning peat management must proportionally accommodate so­cial welfare and environmental aspects.

Oil palm-based peatland development is one of the attempts to increase social welfare, but it must be based on conservation and management concepts.

Business News - November 30, 2012

LOCAL WORKERS NEVER BE SPECTATORS IN THEIR OWN DOMAIN

Execution of Free Trade Act, known as the Regional Comprehensive Economic Partnership between ASEAN and six regional countries in Pnom Penh Cambodia sometime ago incorporated the service sector. Foreign workers of countries who joined the Pact were desirous to work in ASEAN states includ­ing Indonesia. The Pact included ASEAN countries, China, South Korea, Japan, Australia, New Zealand, and India.

Meanwhile the scope of collaboration was not just in trading only but also included investment, service and increased of capacity. In principle the Pact respected the workplan of each country adjusted to domestic capacity. In consequence, Free Trading also encompassed the service sector. A condition a such would make ASEAN the target of the labor sector from India and China. It was also agreed that ASEAN with PAGE media opened the service sector with certain limitations. The types of profession being opened included the level of director, manager and specialists.

Chairman of the Indonesian Businesspeople Association (APINDO), Sofyan Wanandi on Monday (28/11) reminded the Government to consider competitiveness of Indonesia's industry in the future. Supposedly the Government did not run a mere popular policy for a short term benefit. Without sound preparation, Indonesian workers would be mere onlookers when the ASEAN market pact was in effect. Foreign workers would enter the labor market in Indonesia which could have been filled by local workers. “I am afraid our workers would become mere spectators as they were unable to compete against foreign workers coming from may countries” Sofyan was quoted as saying.

Poor control in labor affairs due to autonomy of regional Governments caused foreign expatriates to hold positions which could have been filled by local workers. Poor understanding of labor affairs among regional leaders made many Personnel Department head position being held by incompetent officials. He showed as an example outburst of workers revolt in Batam, the Province of Rau in 2010 lest could be a lesson to learn from. There was accumulated griev­ances among local employees because many expatriates of Indian origin were holding positions which could have been held by local personnel and the situ­ation had triggered the outburst.

Sofyan warned that employment of Foreign workers (TKA) in Indonesia must be under control and strictly supervised. Therefore employment agencies recruiting foreign workers were obliged to obey local rues end regulations in labor affairs. Solyan said that the Government must be selective in giving away work permit for foreign workers and exercise strin­gent control so companies would obey the existing rules and regulations.

To quote data of the Ministry of Labor and Transmigration, based on the Permit for Employing Foreign Workers (IMTA) released by the Ministry, in January-September 2012 there were 57,826 foreign workers. The foreign workers working in industry sector were posted at 31,073 people, the trading sector 11,367 people and the construction sector 5,031 people. In 2011 the IMTA permit being re­leased came to 77,144 people broken down as: the majority working in the industrial sector 40,423 workers, trading 14,142 workers and construction 7,177 workers.

According to Sofyan foreign workers must bring advancement promoting quality of develop­ment, i.e., through transfer of knowledge and transfer of technology. Foreign workers working in Indonesia must transfer their knowledge to local workers. Therefore employers or companies must make sure that foreign workers transfer their skill and knowl­edge to local workers working in the same company. Other considerations were the principle of benefit and legality. Beside having to produce documents and permit, employment of foreign workers would open wide employment opportunities especially for local workers.

Business News - November 30, 2012

PERTAMINA SERVE NATIONAL INTEREST IN DISRIBUTION OF SUBSIDIZED OIL

The Government set national economic growth at 6.9% in 2012 an increase against realized economic growth In 2011 at 6.4%. Economic growth of a nation was strongly related to energy supply, es­pecially oil fuel. Moreover as economy grew, people’s purchasing power would be uplifted and the number of vehicles were bound to swell which in the end would increase consumption of oil especially diesel.

Consumption of diesel (solar) oil increased on the average by 6% in the past 5 years while con­sumption of Premium oil increased by 8% per year; in 2011 increase of national oil consumption even reached 11%, the highest in history. This year, in line with the outspreading of investment and industry to some areas outside Java based on the Indonesian Economic Development Acceleration Masterplan (MP3EI) in some provinces of regencies/cities outside Java oil consumption grew by up to 25%. “Growing need for oil especially for land transportation was a reality as impact on national economic progress” Al Mundakir, VP Corporate Communication Pertamina disclosed to Business News (26/11).

On the other hand, apparently in the past 5 years realization of oil consumption tend to be above quota. The year 2006 was the last time that real­ization of subsidizes oil consumption was below the stipulated quote. Last year in 2011, realization of oil consumption reached 41.7 million KL or 40.4 million KL. However, quota of subsidized oil this year was once sat at 40 million kilolitres or less than realization of the previous year.

Assuming that quota for subsidized oil at that time were riot increased, especially when controlling program as planned by the Government was not totally successful, it was just like denying the achieved economic growth. Eventually the Government and House stipulated additional quota to become 44.04 kilolitre in September 2012 of which 43.88 million kilolitres was Pertamina’s responsibility. The addi­tional oil quota was in fact below Pertamina’s projec­tion which was forwarded during stipulation of APBN budget assumption of 2012, i.e. 45.24 million KL.

Based on meeting to evaluate pipelining of subsidized oil in October and November 2012 which was being coordinated by the office of Vice President and attended by related ministers, it was necessary for the Government to control pipelining of subsidized oil so as not to exceed quota. Of several options for solution, the Government assigned Pertamina to con­trol pipelining of subsidized oil by way of proportional quote application in each province according to remaining quote divided by remaining days till end of year.

With reference to letter of BPH Migas no 943/07/Ka/Bph/2012 dated November 2012 re Dis­tribution Control of remaining quota of Subsidized oil 2012, Pertamina was beginning to control with windmill per November 19, 2012, with axing of daily quota in all gas stations and other distributors whose percentage varied between 1% to 36% according to the remaining quota in related area. Based on data per November 23, 2012, while windmill was exercised there had been average savings of around 13% of normal pipelining projection in that period for diesel and 10% for Premium.

While windmill was exercised in the past week, there was notable long queue in gas stations in all regions like Batam, Pangkalpinang, Banka Belitung, Jambi, Bengkulu, Palembang, Tanjung Pinang, Lampung, Tarakan, Palangkaraya, Pontianak, West Kutai, Masalembu, Surabya, Sidoardjo, Atambua, Flores, Kupang and other regions. In fact Pertamina had been preparing non subsidized oil in all provinces in Indonesia as alternative for the people. Somehow queue continued to happen because the people persisted to use subsidized oil, they were even willing to sleep in gas stations although non-subsidized oil were still available. “This indicates the fact that the public are not fully ready to buy gas at un-subsidized price as long as there are subsidized oil available” Al Mundakir remarked.

In some regions, queue had triggered tensions. There were potential queue to happen in other regions and had the potential to create horizontal conflicts the way it happened in West Kutai.

Based on the reality afield and based on Pertamina’s sense of responsibility ro maintain national security stability, as per 25 November 2012 Pertamina decided to distribute subsidized oil the normal way while waiting for further directives from the Government up to November 24, 2012, realization of Premium pipelining reached 25.2 million KL and Diesel 12.9 million KL. Through normalization of subsidized oil distribution it was predicted that quota of subsidized oil would be surpassed by around 450,000 KL respectively. In this case Pertamina always consulted the Government c.q the Ministry of Energy and Mineral Affairs (and formerly BPH MIGAS) as authorizer.

Pertamina was constantly consulting the Government in regard to the plan to run the National Day Without Subsidized Oil which would be exercised on December 2, 2012, where Pertamina had the assignment to run the program. The potential for saving form this movement was around 15,000 KL with total value being saved at Rp 75 billion. However, so far Pertamina had not received any official letter in regard to the National Movement from the Government.

While waiting for formal letter from the Government, Pertamina was beginning to inform the Association of National Oil-gas Entrepreneurs (HI-AWANA MIGAS) that on that day as from 06.00 AM to 18.00 PM all gas stations operating in Java-Bali and 5 other big cities outside Java, namely: Medan, Batam, Palembang, Balikpapan and Makassar would stop serving subsidized oil and would prepare altetnative of non-subsidized oil, i.e. Pertamina and Pertamax Plus. The public needed not to worry because gas stations would remain to operate and oil would be ready for sale.  

Business News - November 30, 2012