Wednesday, 19 August 2015


Bank Indonesia together with the Central Government Provincial Government conducted a coordinative meeting to enhance maritime-based economic development on May 2015 last in Ambon, Maluku.

The Coordinative meeting synchronized visions in maritime affairs to be materialized in synergic steps which might accelerate awakening of Maritime Economy in Indonesia. The objective was to strengthen national resiliency and step up national economy capacity higher, inclusive and sustainable growth.

The Meeting was attended by Governor of Bank Indonesia Agus D.W. Martowardjo, Coordinating Minister in Maritime Affairs D. Indroyono Soesilo, Minister of Internal Affairs Tjahjo Kumolo, Minister of Transportation Ignatius Jonan, Director General of Coastline and small Island, Ministry of Maritime and Fishery Sudirman Saad, Governor of the Maluku Province Said Assegaf, Deputy Governor of North Maluku Muhmmad Natsir Thaib, Regional Secretary of Papua Hary Dosinaen, and Regional Secretary of West Papua Nataniel D. Madacan.

The Coordinative Meeting also followed up point of Similar Meeting held on August 11, 2014 in Manado, on the importance of acceleration of economic development based on maritime development concept. This time the coordinative meeting was followed up by open discussion with the he objective to explain the synergy of policy and at the same time seek for some input from the people. The meeting agreed on some input important commitment to speed up development of maritime economy in Indonesia through synergic and consistent action which was right and measurable.

Firstly, to underscore the road map of maritime development which was integrated based on comparative advantage of Indonesia’s maritime characteristics, i.e. marine bio-diversity, geo-tectonic position, nusantara concept and zoning, transportation traffic, and international sea lanes and to enhance monitoring and coordination of maritime-based economy.

Secondly to enhance effort to strengthen financing, either bank or non bank, among others by building marine-based UMKN clusters and to develop various models of business financing including nalys of Big Companies – UMKM relationship of mutual benefit, to encourage aggressive approach to financial resources to strengthen non-bank financing.

Thirdly, to enhance execution of policies for the short term within permissive circumstances among other to mitigate short term effects of policies in fishery and to procure fishermen’s especially to ward Idul Fitri.

Fourthly, to increase productivity of maritime and fishery economy, by cracking down illegal unreported and unregulated fishing, betterment of conducive business climate and enhancement of scientific innovations.

Fifthly, to speed up development of infra structure axis shipping industry. development of marine infra structure and marine connectivity would be prioritized among others by building sea toll system, deep seaports and logistics and to secure power supply in the borderline zones.

Sixthly, to enhance role of Provincial Government the synergic was in supporting execution of various marine-based economic development Attendant’s of the Coordinative Meeting also agreed they must foster coordination in ensuring effectiveness of policies according to their respective authority.

Noteworthy was the fact that one he day before, May 24, 2015, bank Indonesia Board of Governors conducted an internal meeting with the related Department Heads and BI Branch office heads of East Indonesia to discuss issues in maritime business and finance in the Regions.

BI felt that maritime-based economy was the right step in meeting harder economic challenges. Indonesia’s economic growth had been slowing down in the past few years and was posted at 4.7% in Q 1/2015.

The slowdown was on account of external sentiment, i.e. global economic recovery happening at the wrong speed which made commodity prices descend.

In response to the condition, the effort to develop marine-based economy was a good break through toward building a sound economic structure as propeller of inclusive growth.

However, a synergy policy was needed to accelerate marine-based economic development so Indonesia could maintain a sustainable growth.

By estimate, the entire marine economy sector had the potential higher than even Indonesia GDP. The potential was visible in the total sea area which was 5.9 million sq. km, the islands numbering 17,504 with excellence in geo physics, geo-economy and geo-culture. However, tapping of the potentials was still at minimum as indicated by volume of fish export which was still low and marine based industry which was still below expectation. Besides, the sea was still perceived as separator instead of potential resource.

Development of marine based economy was expected not just to propel economic growth but also people economic growth but also people’s welfare as a whole.

To build sound connectivity would smoothen distribution of goods and services to support economic growth which would have its impact on price stabilization process. It would minimize inter-provincial imbalance in East Indonesia.

It takes a comprehensive and well focused strategy to build maritime based economy which would strengthen national competitiveness, sustainability and promote people’s welfare.

Meanwhile the four cornerstones of marine development were strengthening of maritime sovereignty, management of natural resources, infra structure development, human resources development and good command of marine-related technology. The discussions at the Coordinative Meeting indicated that each party had understanding and readiness to act to build marine based economy.

In shipping industry as one of the subsectors of maritime industry, the Government admitted that of the entire shipliners in Indonesia, 50% were aging ships. Shipliner operators had difficulty in renovating their ships since the banks in Indonesia were not opening access to financing services for buying new ships.

Request for credit by shipliners was being re addressed to bank. The process was not running smoothly since most banks did not perceive shipping as something profitable although financing for them was commonplace abroad.

If the Government whished to implement the Sea Connectivity Program, it would be advisable to support players of the program, it would with tax incentive whereby to strengthen their capacity and competitiveness. In this case it was the task of the Ministry of Finance to reduce taxes while persuading banks to extend credit for ship rejuvenation program.

Respond was spontaneous, this year the total investment needed for national dockyard development was estimated at Rp.5 to 10 trillions, credit had been applied for last year in line with the release of some Government incentives. The investment could be realized if market trust in domestic products could ber enhanced.

Last year, the Government had facilitated four fiscal incentives for dockyards outside Batam, i.e. Value Added Tax not being imposed, import tax (BMDTP) for components related to other industries to be borne by the Government, exemption of import tax for components and some tax allowances to be given.

The four incentives were expected to spur on development of dockyards outside Batam. The dockyard industry remained to be given incentives according to Free Trade Zone rules. Thereafter, the domestic industry was given market opportunity to ensure return on investment.

For investment in the dockyard industry, priority should be given to local investors. If the portion of foreign investors were too high, the local market would not be enjoyed by local investors.

In realizing the ambition of Indonesia becoming a marine state, shipping companies should be supported with credit facilities for buying new ships, today the ships were obsolete and aging, more than half of them needed overhaul or replacement.

The ideal life cycle of a ship was 20 to 25 years. Therefore ships which had passed that age limit should better be grounded or replaced. Data had it that to promote sea connectivity, Indonesia needed at least 14,306 commercial ships and around 260 pioneer ships.

Therefore the Government cq the Ministry of Transportation should maximize effort to persuade banks to extend credit by banks in Indonesia in 2014 came to Rp.3,600 trillion but only 2,36% or Rp.85 trillion was extended to the maritime sector.

In their Bank Business Plan (RBB) 2015 the Financial Service Authority (OJK) mobilized at least 22 sterling banks to enter this sector. So it was right for the Government to extend credit to shipping companies for rejuvenating their ships. This was needed by players of the maritime sector in supporting the sea connectivity system which needed many ships.

That’s banks were not extending credit to the maritime sector was because personnel of the banking sector were not familiar with the maritime sector. For that matter national banks should train their staff to widen their horizons so they could have a good command of maritime business and serve them sell. (SS)

Business News - June 5, 2015

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