RUPIAH WEAKENED, COMPANIES’ PERFORMANCE FELL

Trading in the last few day recorded that companies’ performance has decreased due to the weakening of the Rupiah. The negative sentiment hit Indonesian stocks. Economic downturn ahead of general election gives a bad signal to the Indonesian economy in 2014.

Bank Indonesia has raised its benchmark interest rate six times. As of January 10, 2013, BI rate stands at 5.75%, and until 12 November 2013 Bank Indonesia has set BI rate 7.50%. The increase in the benchmark interest rate drastically this year actually indicated that the Indonesian economy is increasingly sluggish.

The weakening of the Rupiah also has an impact on Indonesia’s foreign debt, which automatically increased as a result of this situation. “Trading in the stock exchange weakened as the flow of money out of Indonesia is quite large”, economist of the University of Indonesia, Syarifuddin, told Business News (December 6).

The export rate is very significant to offset the balance sheet due to imports. “The people are the one who is mostly affected by the decline in the Rupiah.” But the government seemed to relax seeing this situation. The government should undertake strategic measures. Currently, the government cannot find solutions to the problem of the market depends on the trend, so the measures taken by the government is considered as a sign of giving up on saving the Rupiah.

Government not seeking to control the fall of the Rupiah has an impact on market psychology. Investors will consider that investment climate in Indonesia is unfavorable due to decrease of investment and Indonesian stocks which were hit by the negative sentiment.

Meanwhile, a source of Business News at PT Timah in Bangka, said that there was confusion in Article 13 of Regulation of the Minister of Trade No. 32/2013. So that PT Timah increasingly be inconducive. Regulation of the Minister of Trade ideally would apply export through a one-stop service, namely PT Timah. The impact is that unconventional mining activities or commonly known as artisanal mining will be disciplined. One-stop export service would also streamline tin trade in the domestic market. During this time, tin bars and other forms before being exported shall be traded through a tin exchange. While, the international tin market in Indonesia is part of a futures exchange. “Price of tin at the LME (London Metal Exchange) is approximately USD 23,000. While, its price in the country is around Rp. 11,000. In addition, sales in Singapore, the State Electricity Company (PLN) is still not inconducive. Tin sales were minimal, “the source told Business News a few days ago.

Regulation of Minister of Trade No. 32/2013 is still far from expectations. Central Government and Provincial Government (of Bangka Belitung) still have to do lot of things for controlling artisanal mining. In addition, the Regulation is not strict. There are ambiguous clauses. For example, the provisions on Mining Authorization (KP) which is at risk of overlapping with the rules on protected forest. “In the past, it is the central Government who issued Government Regulation (PP) No. 57, then Government Regulation No. 798 is issued. In all Government Regulations, there is no definition of protected forest, Mining Authority, and others. But in practice, there are many interpretations.”

Size of Mining Concession area of PT Timah Tbk on land is approximately 360,000 hectares or approximately 35 percent of the land area of Bangka Island. This state-owned enterprise also has acreage in Mining Concession in Belitung Island which is approximately 126 455 hectares or 30 percent of the land area of Belitung Island. “PT Timah should also be smart in searching for land. We only got KP, and not protected forests which are actually owned by other miners.”

Among miners, there was a discourse about partial submission of Mining Authority of PT Timah to small-scale miners. Because PT Timah has most of the Mining Authority, while artisanal miners continue to gain tin. This discourse is expected to reduce social phenomena such as unemployment, poverty, and crime rate in Bangka. “Because up to 70 percent of the economy in Bangka still relies on tin, including artisanal mining.” 

Business News - December 11, 2013