INCUBATOR FOR SMALL BUSINESS DEVELOPED TO STRENGTHEN COMPETITIVENESS

The Government had made universities in the regions as strategic medium to develop capacity of micro-and-small business players through training programs in entrepreneurship in Indonesia. In this case tertiary schools must actively operate their incubator centers to promote small business capability in entrepreneurship. To quite data of the Central Board of Statristics [BPS] the number of national entrepreneurs today was 1.56% of total population, still below the international standard of 2% of total population

By theory, tertiary schools were believed to have their comparative advantage in playing their role to fulfill UKMK’s need. For example in terms of human resources capacity, technical counseling, and to build the spirit of entrepreneurship as well as capital management. Why was incubators needed to develop UKM ? The answer was because the number of national entrepreneurs were still Low. Therefore incubator centers under university guidance were highly potential to promote UMKM capacity.

Today the pioneering effort to develop incubators sponsored by four national universities had succeeded in making entrepreneurs through publicizing. Deputy of Small Business Resources Development of the Ministry of Cooperatives and UKM Meliadi Sembiring stated in Jakarta on Monday [14/4] that the development of business incubators in four universities was in accordance with Government’s agenda as written in UMKM business through business incubators. The Ministrial Regulation authorized all legal bodies to conduct businessplayers’ development through business incubators.

The four national tertiary schools which had pioneered in incubator education system and succeeded in training the tenants were the Bogor Institute of Technology, ITS Surabaya, and the Brawidjaja, University Malang. Each tertiary school had their own specification in promoting competence of UMKM.

According to Meliadi, through illumination to all provinces the business incubator program was expected to develop. The successful effort of universities to promote competence of small businessplayers might trigger other institutions to set up incubator centers. According to its function, the technology based development center was to help newly established UMKM. With the touch of incubators, it was expected that the related regions would perform economically well.

Meliadi disclosed that he was probing on collaboration possibilities with members of the Asia Pacific Economic Cooperation [APEC] to develop incubators for each member country for UKM players. The prioritized collaboration was with Taiwan which had some incubator facilities.

He further disclosed that the Ministry of cooperatives and UKM had made use of incubators managed by state and private universities in Indonesia, but Muliadi felt that to collaborate with APEC member countries would bring positive impact, i.e. the opportunity to develop entrepreneurship among Indonesian overseas workers [TKI] in Taiwan scattered in many cities. A program was as such was often conducted by the Ministry in countries where TKI worked.

According to Meliadi, this was in line with APEC Small Medium Enterprise Working Group 2014 which came up with important points to be implemented for the benefit of businessplayers of the real sector in each respective member country. One of them was readiness of UKM to face natural disaster. APEC agreed to set up Business Continuity Plans [BCAP] to facilitate UKM of the trading and investment sector. (SS)   

Business New - April 21, 2014

TO WATCH ON CONGLOMERATION OF THE FINANCIAL INDUSTRY

The Financial Service Authority [OJK] was scheming up integrated control regulation on conglomeration enterprise in Indonesia. This was to ensure contribution of conglomerate companies to Indonesia’s economic growth.

The regulation was targeted to be ready this year in the form of OJK Regulations as legal basis, which authorized banks or financial conglomerations to do or not to do things regulated by OJK.

Some banks had formed conglomerations involving other financial companies like security, insurance, reksadana, financing etc. Information Technology had enabled inter-company exchange of data or between holding company and subsidiary companies.

To protect the consumers, it was necessary to let OJK to regulate and control matters based on Law no 21 year 2011. OJK was in charge of controlling and managing the banking sector, Non Bank Financial Industry [IKNB] the stockmarket and conglomerate companies. Individual control was still exercised in line with collective inspection of banks.

The tendency to conglomerate in Indonesia was triggered by stimulus on the demand as well as supply side. On the demand side, in line with people’s better literacy level, people’s need for products and services and financial services were getting more complex than ever. On the supply side big banks specializing in non-bank financial service: life insurance, general insurance. Leasing and financing, security, syariah banking etc.

OJK data had it that there were 31 financial conglomerate in Indonesia, many of them linked to foreign companies. Management and risk-based controlling over financial conglomerates by integrated controllers would be soon be the same as control by OJK on banks. Evaluation would be based on financial aspects i.e. capital adequacy ratio and liquidity, risk management standard and good corporate governance. This was designed to narrow differences of regulation between holding company and subsidiary companies.

Regulation and integrated control over financial groups had been internationally. During global economic crisis of 2008, many conglomerate of global scale fell. And yet those financial institutions contributed significantly to world’s economy.

It must be borne in mind that conglomerate of the financial industry was inevitable and became a must so they need to encouraged and supported to invigorate economy. Moreover, conglomeration in the financial industry must be motivated to succeed because failure would mean high cost.

OJK was today controlling bank financial system and non-bank financial institutions with total asset of more than Rp9,000 trillion. 78% of asset in originated from the banking system, the rest from 708 non bank financial institutions. The amount was exclusive of BJPS Social Insurance Management Board in 2015 next and micro-and-small and medium financial institutions [LKM] totaling 26,000.

So establishment of the subsidiary companies by banks was to accommodate the increasing market demand. To kep the need for financial services from being served by foreign companies, domestic banks were beginning to involved other financial institutions.

The conglomeration of 16 banks in Indonesia commanded over 70% of total asset of the financial industry. For example BNI had 5 subsidiary companies. For that matter banks which were ready and able were expected to build the Financial Center or Financial Supermarkets to meet the need for products, services and financial services the integrated way. Such was also to anticipate the MEA as per January 2016 where the financial sector would be included.

Normally players of the finance industry responded positively to OJK’s step to regulate and control conglomeration of financial institutions. This was to anticipate cases of blank investments due to lack of regulation and control in the financial sector. OJK must also observe implementation of rules on financial institutions.

About building of the Financial Center, it was a must which was inevitable. Again it was demanded by market mechanism where products, as well as complex and integrated financial services were needed. Therefore it was felt necessary top develop bodies like Financial Center or Financial Supermarket by banks which were ready to need the need for products or financial services the integrated way.

Naturally there would be benefits offered by Financial Centers to stakeholders. To BI and OJK the benefits were:

Firstly, to help and control the integrated way management process for the financial industry whereby to develop well and sustainably and to be able to contribute to national economy in the best possible way.

Secondly to accelerate the application of standardization system and Good Corporate governance which was more effective because they were controlled by the mother bank.

The benefit for financial and banking industry was to motivate the financial-banking industry to grow simultaneously and sustainably by effective management system. Furthermore to assist the Government in promoting national economy through active participation of all industry players and to increase state’s financial income from tax and/or dividend which were higher thanks to performance of the financial group.

Lastly to the consumers to allow convenience to the people in the process of financial inclusion and to offer products and financial and banking services comprehensively and integratedly as well as more efficient and competitive by price. (SS)   

Business New - April 21, 2014 

BI: NOTHING TO WORRY ABOUT POST ELECTION MONEYMARKET SLUMP

Slump of the moneymarket like IHSG and Rupiah after the Legislative Election was not unusual and it was not something to worry about. This was the opinion of Bank Indonesia Senior Deputy Governor Mirza Adityaswara. “That’s the was with moneymarkets. To go up and down is something very natural. Yesterday before the election there was rush for profit taking, I think there is nothing extraordinaring about it and there is nothing to worry about” Mirza stated on Friday [11/4].

Now the urgent matter was how to maintain Indonesia’s fundamental economy to keep it well-guarded. “The most important thing is how the keep our fundamental economy data in good shape, trade balance in February scoring surplus. Hopefully it would be surplus by March. Inflation normally cools down in April when harvest is good. So there is nothing to worry about,” Mirza said.

According to Mirza, today marketplayers were waiting for certain which of the coalition parties would flank the leading parties. “The moneymarket moves by expectation. Before election the moneymarket goes up, after the election it goes down, so let’s sell. Soon after July 9 things would get clearer. We have made reformations in the election of 1999, 2004 and 2009 and now still continuing.”

So Mirza said, the marketplayers would see whether reformation continue or be accelerated and that’s what made them enthusiastic. Soon they would analyze what coalition was. One thing to be feared was if the ratio figures were bad. But once election was tested, fluctuation was something usual. (SS)

Business New - April 16, 2014

SMALL BUSINESS ADVISED TO PROBE ON EXPORT MARKET

National businesspeople called out small-and­-medium business [UKM] at home not to be over-as­tounded by local market potential which was reputa­bly enormous. Apparently many local businesspeople seemed to have high expectation of local market potentials. Moreover to consider people's increasing purchasing power in the regions for buying household needs.

No doubt at national scale, household consumption was high so it was most regretful if they were untapped and be benefited by foreign producers. Today Indonesia was planning to promote marketing of 10 commodities from domestic resources, which were fresh food, processed food, culinary products, cosmetics, footwear, household instruments, garments, textile, utensils, an jamu herbals.

However, the Indonesian Chamber of Commerce KADIN warned national businessplayers, especially UKM, not to be enchanted by the domestic market and be keen eyed enough to look at overseas market opportunities. Achmad Widjaja of the Perma­nent Committee of KADIN, Product Standardization Division stated in Jakarta on Thursday 110/41 great market potentials at home did not mean that market­ers only focused attention inward. The point was that toward the AEC era next year, competition would heighten. Overseas producers were eyeing on Indo­nesia's market opportunities.

Widjaja did not deny that market maximizing at home was an important thing especially in antici­pation of various global crisis trends that happened. He reminded that various circles predicted growth of market demand in 2014 would increase against previ­ous year. The growth would be especially in basic needs, textile industry and electronics. Such was on account of contraction in many countries and many producer countries were stepping up export in high amount to all the world.

           

Indonesia was one of the favorite export des­tinations among exporter countries. Achmad stated that if the domestic industry was unable to supply, national trade deficit would widen. For that matter he urged the Government to grab the market opportunity by producing highly competitive products.

Meanwhile the Ministry of Cooperatives and UMKM set target for export of small-and-medium business to reach 20% of total export in 2015 to keep imported products from flooding the domestic market especially in consumers' product. Most of the export-orientated products were handicraft products like footwear, leatherwork, and electronic spare parts. Beside handicraft products other products, there were other products being developed based on export stan­dards like food, fruits and vegetables.

The product was expected to compete against same product from China and Thailand which already penetrated the market sooner. However, there were some points to be observed that the products ex­ported could compete against same products of other countries. To step up business capacity UKM play­ers could benefit from the People's Business Cred­it [UKM] and rolling fund to be channeled through LPDB. Syamsuddin rated that chandelling of PLDP was right as NPL as only below 25%, which means there had been fund used for productive purpose. UKM players were also being guided to step up their skill and capacity for better performance. (SS)

Business New - April 16, 2014

GOVERNMENT EASED SNI REGULATION TOWARD SNI CERTIFICATION FOR TOYS

Toward application of the Regulation of the Ministry of Industry No. 24/M-IND/PER/4/2013 on the implementation of Indonesia National Standard [SNI] for toys dated October 12, 2013 and effec­tive per May 12, 2014, the Ministry of Industry had relaxed application of SNI quality standardization es­pecially for IKM small industry. Making his statement in Jakarta on Thursday [10/4] the Ministry of Indus­try M.S. Hidayat disclosed the fact considering that today there were still around 200 IKM toy producers at home who had handicaps in applying SNI certifica­tion for toys.

"Therefore we are relaxing this regulation by suspending deadline for 200 producers [IKM small in­dustry] to enable them sell their products before this regulation was in effect. Soon under guidance of the Directorate of IKM, Ministry of Industry, while being told to sell out their products, producers would be given training facilitation, including financial aid to en­able them meet SNI requirements. We put this regula­tion in effect so all local producers as well as importer of toys could comply with the Regulations issued last year" Minister Hidayat was quoted as saying.

In Law No.3 /2014 on Industry 2014 on In­dustry Article 58 it was stated for maximum effec­tiveness of SNI application, technical specification of product and guideline for product application became most important. The Minister had his commitment to procure, upgrade, and develop laboratory facilities for testing and standardization of products in industrial growth centers and to procure testing facilities for small and medium industry. Article 110 I 21 stated that the facilities as mentioned were given to small and medium industry applying SNI including technical specification, financing and compulsory guidelines. There were also Articles which regulated that the fa­cilities were to be given to small industry as compo­nent in the production process.

Previously Deputy Minister of Trade Bayu Krisnamurthi explained the objective of this rule application was, beside protecting the domestic in­dustry also to educate producers and users of toys to use toys which did not require physical movement of players but only to concentrate on the monitor screen this was related to children's behavior.

Data showed that each year import of toys was around USD 70 million to USD 75 million 90% of which was from China. Meanwhile export by Au­gust 2013 was posted at USD 60 million and up till now posted at USD 90 million. Hence there was still surplus in toys trading amounting to around USD 15 million. Meanwhile of the total domestic toy production, only 30% to 40% were national toy products.

Bayu remarked further that 90% of the toys were made of plastic, so it was expected that by ap­plication of this regulation, there would be natural auto selection of products: toys which were not SNI certified could not be circulated in Indonesia. Among the SNI requirements were toys must not have sharp edges and it must be formalin free.

Manual of toys must not be separated from the toy itself. Toys must not be given to children un­der 3 years of age. One of the objectives of the regu­lation was to prevent impact on small-and-medium business which was numerous. In consequence of this regulation, there would be per-shipment inspec­tion [PSI] of cargo during loading and unloading.

Until April, the Government would still be pub­licizing and educating the public about this SNI cer­tification and by May this year' the regulation would be fully in effect. By that time the Government would be making inspection on circulated products based on SNI certification rules. (SS)

Business New - April 16, 2014