Wednesday, 28 October 2015


The Ministry of Industry ensures support for the steps of the Ministry of Communications and Information Technology who has set the rules regarding Local Content (TKDN) in the manufacture of 4G device. Local content in 4G devices to reach 30 percent effective January 1, 2017. The regulation on Technical Requirements of Telecommunication Tools and Equipment Based on Long Term Evolution Technology was signed by Rudiantara, Minister of Communications and Information Technology in Jakarta, on Monday (July 6). The signing was done after a coordination meeting is held with the Minister of Industry, Slaeh Husin, and trade Minister, Rachmat Gobel.

“The support we provide is in the form of revision of Regulation of Minister of Industry No.69/2014 to support this policy, “said Industry Minister, Saleh Husin, after holding the coordination meeting. He added that later, calculation of Local Content (TKDN) for smartphones is not only about the hardware, but also the software. The end goal is to reduce imports of smartphones, which have entered Indonesia.

“In 2012, Indonesia imported 70 million units of smartphones and in 2014 we scaled it down to 54 million units. So it’s down about 23 percent, and in the future we will continue to lower it down, “he said. Besides, there are already 16 brands of phones assembled in the country that has met 20 percent local content. Those brands are Polytron, Evercross, Advan, Axio, Mito, Gosco, SPC, Asiafone, Oppo, Haier, Huawei, Smarthfren, Bolt, Ivo, Lenovo, and Smasung. Total production capacity reached 23.02 million units per year.

Application Designers

Saleh husin is also confident in the ability of Indonesia’s young generation to cultivate the development of smartphone applications that can contribute to the improvement of local content. “It’s also a good chance that application designers, who are still in school and collage as well as young professionals, have the opportunity in this giant industry,” said Saleh.

Director General of Metal, Machinery, transportation Equipment and Electronics of the Ministry of Industry No.69/2014 is carried out by calculating the software and creative components. “The revision is performed gradually according to the needs of the partners of the Ministry of Communications. Now they must immediately release the use of local content-based 4G LTE, “he described.

The Ministry of Industry said that the revision of Regulation of the Minister of Industry No.69/2014 only contains general regulations related to local content for electronics and telematics industry, and calculation details (technical guidelines) will be regulated in Regulation of the Director General of Metal, Machinery, Transportation Equipment and Electronics. Besides, the revised regulation which is issued on the first occasion is the transition rules for the validation of local content certificate that has been verified by an independent surveyor.

“The next thing to be done is to accommodate the business model of information and communication technology based on software or design house. The Ministry of Industry will conduct a study within the next six months,” said Putu.

Three ministries

After the signing, the minister of Communication and Information, Rudiantara, said that the decision is the joint work of three ministries, namely the Ministry of Communication and Information Technology, the Ministry of Trade, and the Ministry of Industry. “The reason is because the stipulation and oversight of this policy should be carried out together. It also shows that the three ministries go hand in hand, so it always shows a close coordination, “he said.

He added that while waiting for the implementation in 2017, regulations that are more technical will be issued through a joint circular of the three ministers. As for the potential of added value targeted by this policy is quite large, considering that Indonesian smartphone imports reached USD 3.5 billion. “Even if the illegitimate ones are taken into account, the value reached USD 4 to 5 billion,” he said.

The rules on local content were applied to 4G device with Long Term Evolution Frequency Division Duplexing (FDD LTE) technology. While, local content for 4G device with LTE-TDD technology may come info force in 2019. (E)

Business News - July 8, 2015


Region-owned enterprises, Pasar Jaya, this year plans to gradually revitalize approximately 25 existing markets in Jakarta. In a conversation with Business News on Friday (July 3), managing Director of Pasar Jaya, Djangga Lubis, said that as a local company, it consistently carried out two missions, both business-oriented ones that provide non-profit services. Thus, it is necessary to corporate with third parties as investors who provide funding for revitalization development of the markets, for around 15 markets. Meanwhile, revitalization is also conducted on 10 public markets.

“There is also a third model, in which the government invests capital, so the revitalization of the market building is using government investment participation (PMP). Thus, stall owners and traders do not have to pay for building construction, and they just pay for maintenance services and other services, he said adding that since 2012, the government of Jakarta has been using the term “public market” as substitute for the term “modern market”, “he explained.

Earlier on Tuesday (June 30), Trade Minister Rachmat Gobel accompanying President Joko Widodo, launched a program of development / revitalization of 1000 public markets in several regions in Indonesia. In addition to launching the program of development / Revitalization of 100 markets throughout Indonesia, the President had the opportunity to lay the first stone for the construction of Manis Market in Banyumas, Central Java.

The launch of this people market is followed by some regions, namely Banda Aceh, Nanggroe Aceh Darussalam, which is Seutui Market; Denpasar, Bali with its Pakraman Pohgading Village Market; and Bantaeng, South Sulawesi, Terminal Agro Loka Market via video conference. Video conferencing is done by Trade minister Rachmat Gobel to regents, mayors, heads of agencies, as well as market administrators and vendors in each region witnessed by President Joko Widodo in the location of construction of Manis Market in Banyumas Regency.

“Revitalization of public markets is an elaboration of the vision and mission of the president and Vice president in Nawacita, which contains program for the development / revitalization of 5,000 public markets during 5 years,” said Trade Minister Rachmat Gobel in a report to President Joko Widodo. In 2015, 1,017 markets will be built with funds from the state budget (APBN) and revised state budget (APBN-P).

“The mechanism of the development of public markets will be implemented through Dana Tugas Pembantuan (Assistance Task Fund) for 182 markets, which are directly under the coordination of the Ministry of Trade; Special allocation Fund for 770 markets allocated directly by the ministry of Cooperatives and SMEs for of the Central Government (APBN Pusat), “said Rachmat.

The Trade Minister explained that the location of the development / Revitalization of public markets is prioritized for markets of above 25 years of age, markets which experienced fire, natural disaster, and social conflicts, underdeveloped regions, border areas, or regions which are lacking trading facilities, as well as regions that have a huge trade potential.

SNI for Public Markets

Trade Minister, Rachmat, stated that development of or revitalization of public markets must be based on “Indonesian National Standard (SNI) 8152: 2015” set for public markets. Revitalization is focused on four aspects, namely physical revitalization as an improvement and enhancement of markets to be more clean, health and comfortable physically. Management revitalization, so that the managers and traders follow standard operating procedures of services and market management more professionally. Economic Revitalization as an effort to increase revenue and traders’ access to financing and sources of products traded in the Revitalization of Economy. Public market is also a means of trading and strategic distribution points in guarding prices and controlling inflation. The fourth is social revitalization, which is expected to make as a center of social interaction and place for the surrounding communities.

Meanwhile, in order to strengthen the legal aspects of public market traders, the Ministry of Trade, individually or jointly with the Minister of terior, Minister of Cooperatives and SMEs, and Bank Rakyat Indonesia (BRI), facilitates business license for market traders and other micro & small enterprises (IUMK). “With the facilitation given, we expect that small business as well as traders will easily gain access to micro-financing,” said Rachmat. (E)

Business News - July 8, 2015


The Ministry of Public Works and Public Housing reported that national infrastructure that national infrastructure budget absorption totaled IDR 17.5 trillion, or 14.8% of the total budget of 2015 budget year amounted to IDR 118.5 trillion. Minister of Public Works and Public Housing, Basoeki Hadimoeljono, in Jakarta, Thursday (June 2), said that the 14.8% uptake is the financial realization of the first installment payment on a wide range of activities which began to be implemented. He said that for roads and bridges construction activities, there are some provinces whose uptake is above 20%. These provinces are Yogyakarta, Aceh, Jambi, Maluku, Bengkulu, West Sulawesi, Jakarta, and North Maluku.

Basuki admitted that realization of infrastructure budget absorption by the Ministry of Public Works and Public Housing has not reached the target, despite showing a significant increase in absorption by the Ministry of Public Works and Public Housing has not reached the target, despite showing a significant increase in absorption. Nevertheless, he said that so far the progress of tender process of contractual package has reached has reached 87%, or about IDR 73 trillion.

Basuki said that of the total budget of IDR 118 trillion, IDR 94.57 is allocated for project execution, and the rest (IDR 12.8 trillion) is used for self management, IDR 6.8 trillion for land procurement, and IDR 4.3 trillion for general administration. After deducted by multi-year project budget of IDR 9.1 trillion, total contractual budget of 2015 is IDR 85.47 trillion.

Although absorption is low, Ministry of Public Works and Public Housing is still proposing additional budget of IDR 9.1 trillion for land acquisition for road management in 2016. Director General of Highways of the Ministry of Public Works and Public Housing, Hediyanto W. Husaini, said that based on the indicative ceiling in 2016, the Directorate General of Highways received budget allocation of IDR 46.44 trillion, with allocation for land amounting to IDR 3.5 trillion. This figure is relatively farm from budget needs of the Directorate General of Highways to realize the target of strategic plan 2015-2019 for 2016, which amounted to IDR 79.22 trillion.

Hediyanto said that his party had proposed adjustment of indicative ceiling for the Directorate General of Highways in 2016 at IDR 9.1 trillion to become IDR 55.54 trillion. According to him, the additional budget proposed by the Directorate General of Highways is only for land acquisition. Hediyanto said that with a budget allocation of IDR 12.6 trillion, the total land acquired is estimated to reach 4,500 hectares.

According to him, with a limited budget, his party will inevitably have to prioritize certain sectors and delaying will inevitably have to prioritize certain sectors and delaying others. As for the sectors, which he said would be delayed, is the increased number of national roads, especially road expansion activities. Hediyanto said that land budget next year will be much bigger than this year, which is only IDR 7.5 trillion.

This year’s land budget, which is derived from the state budget (APBN), is IDR 3.8 trillion, land capping IDR 1 trillion, and the rest is derived from funds of Public Service Agency (BLU). According to him, the government allocated huge funds for land acquisition has been the source of delays in infrastructure development.

Meanwhile, the government is advised to discuss the acceleration of budget absorption, including with the Supreme audit Agency (BPK) and the Corruption Eradication Commission (KPK), addressing delays in the preparation of changes in the nomenclature of a number of ministries. Secretary of the National Economic Committee (KEN), Aviliani, said that the government needs to create out-of-the box policies in response to the current economic slowdown to boost growth this year.

He said that capital spending in APBN-P 2015 totaled IDR 290.3 trillion, so that by the end of June 2015 it only reached 9.4%. Reallocation of oil fuel (BBM) subsidies to the productive sectors, among others, in the form state capital participation (PMN) in state-owned enterprises (SOEs), according to Aviliani, is a policy that needs to be appreciated. (E)

Business News - July 8, 2015


The Board of National Food Resiliency of the Ministry of Agriculture were focusing their program on enhancement of people’s food resiliency. The objective of the program was to strengthen procurement of diversified food based on local resources. Mei Rochjat, Secretary of the Board was quoted as saying.

Other objective was to lessen the population of hungry people; to strengthen food distribution system and stabilize food price; to promote people’s knowledge and awareness of consumption of diversified, nutritious, well balanced and safe food.

The targeted energy consumption (Kkal/Capita/day) was 2,040; protein consumption (gram/capita/day) 56.4; the score of Expected Food Pattern was 86.2; Fresh Food Safety (by lab test) seen from biological pollution content; price of harvested dry gabah at producer’s level above HPP; coefficient of food variation (rice at consumer’s level <5 1="" 89.1="" and="" expected="" food-insecure="" food="" lowed="" o:p="" of="" pattern="" people="" population="" score="">

There had been improvement in the concept of Food Resilience Program, i.e. the Lestari Food House Zone, the Food Self Reliance Zone, the People’s Food Distribution Center, Food Price Stabilization at Food Production Center and Price of Food at Consumer’s level.

The process of alignment of people’s rice barn and development of rice barn through the Special Allocated Fund for agriculture; acceleration of food diversification process and food safety.

People’s empowerment to minimize starvation-prone population; strengthening of analysis and formulation of food policy and food resiliency. The operational step to strengthen distribution and stabilize food price to support rice-corn-soy production was to continue operations of 241 farmer’s groups people’s food distribution body. People’s rice barn numbering 1.650 which existed. Information of food prices was constantly.

The Program of Food Supply and Resiliency Enhancement was continuing operations in 192 food self-reliant zones and form 25 new self reliant zones. They also enhance consolidation of food and nutrition alert system and analysis of regional food resiliency and regional vulnerability; analysis of supply and food crisis.

The acceleration of food diversification plan and food gardens in 2,894 villages and to develop new gardens in 1,300 villages. The local main food plan was only to continue development of food backyard gardens in 27 business units already developed.

To analyze food consumption pattern; promote food diversification; and to preserve fresh food.

Efforts to secure fresh food safety, according to the Directorate General of Processing and Marketing of Agricultural Products Emilia Harahap in had been verified by Central OKKPP and 26 regional OKKP. Of the 26 OKKP 9 had formed Technical Execution Units i.e. the Province of East Java, South Sulawesi, Southeast Sulawesi, North Sumatra. Lampung, NTB, Bengkulu and West Sumatra.

Undergoing the verification process were 7 OKKPD, i.e. Jakarta. Riau Islands, West Papua, Maluku, North Maluku and North Sulawesi and in the process of verification was the North Kalimantan Province.

Furthermore OKKPD at the provincial level was verifying OKKPD at regency/city level. The role of OKKPD was important for inspecting cultivators of agriculture products and to certify fresh agro products which had met the quality requirements.

To meet consumer’s demand for organic agro-products, the Director General of PPHP had set target to develop 1,000 organic agro villages. The villages which belonged to this category were villages where organic agriculture were developed signified by organic certification issued by the Organic Certification Body acknowledged by the Government.

Guidance and certification for organic products was executed in 600 villages including 250 horticulture villages and 150 plantation villages. In 2015 it was still at the stage of making guidelines, designation of farmer candidates and making modulus. In 2016 illumination was exercised including counseling and certification. In 2017 – 2020 it would be continued with marketing campaigns. (SS)

Business News - July 8, 2015


Greece finally fell into default after minute to minute of hard struggle without result. Somehow the Eurozone never gave up to find solution before referendum run on July last to breeze out hope for the market. IMF confirmed that Greece was unable to pay their €uro 1.6 billion based on the agreed schedule.

For that matter the Executive Director of IMF Cristine Lagarde would report to the Board of Creditors that Greek ‘postponed payment’ which was the official word for ‘default’. Greece was entitled to receive funding in the future from global creditors if the amount due was settled.

Greek Prime Minister Alexis Tripas asked for extention of payment deadline. Around 11 hours before deadline, Athens asked for 2 year extention of international bailout deadline and financing. Realizing the consequences if the great debitor quits from the Eurozone, Euro Executives never gave up to find a way out.

Euro group stated they would discuss request for credit and rescheduling of credit. Still it was not clear to what extend agreement was arrived at. As there was friction between Athens and the capitalists of Europe after five long months of negotiation without result, relationship between the two worsened as Greece rejected the proposal and choosed to run referendum.

Such was the reason why some Asian currencies were suppressed in the past few months. The condition was felt last May when Asian currencies rushed for a high position amidst uncertain condition.

Starting with shocking outcome of Election in Britain, positive data of Uni Europe mixed with Greek anxiety over Greek unending problem, unstable US economic data and the downfall of ¥en, all the factors made investors to be more cautious.

Statement of Bill Dudley, Head of New York Federal Reserve about his doubt when the Fed would increase FFR, had accelerated momentum of Euro strengthening. Some currencies were shaky being triggered by those issues.

After arriving at highest level at 1.1446 and stable for a few days at 1.14 regionally, Euro and USD dropped drastically in two consecutive weeks. Steep downturn happened in mid-May 2015 as news spread out that Greece had used the emergency saving for paying IMF.

When Greece announced that they could not afford to pay of debt by end of May 2015, the Euro – USD pair again fell to the level below 1.10. After touching the lowest level against USD on April 2015, surprisingly Poundsterling was fortune to move up by early May 2015 when election outcome in England showed victory for the Conservative Party.

Investors were changing to poundsterling with fresh confidence. The value of Poundsterling continued to move upward as Bill Dudley made a statement on May 12, 2015 which denied expectations that the Fed would increase bank interest in the near future, combined with the news that Greece would again suffer crisis on May 13, 2015. At the same time the Governor on BoE stated that inflation in England posted negative value or -0.1%.

With all the confusing news in the USA and Europe over the first half month of May, Yen succeeded to maintain stability against USD at 118.5 and 120.0 when positive data from the USA and negative news from Europe and England by end of month buoyed USD up, Yen descended gradually.

The Moneymarket

Rupiah during inter-bank transaction on Friday day last (3/7) strengthened by 17 points to become Rp.13,308 against the previous position of Rp.13,325 per USD. Rupiah still managed to settle at positive level although moderately, as players of the money-market were still anticipating result of the Greece referendum and creditor’s respond to the referendum outcome. Weakening of USD was also on account of non-farm payrolls in June which was below market expectation.

Other economic data that served as market propeller were among others index of activities of the service sector in Spain and England and data of retail sales in the Euro region, which influenced the global moneymarket.

Market expectations that accelerated absorption of budget for infra structure development by the Government in Semester II would strengthen Indonesia’s fundamental economy increased positive sentiment for Rupiah which at the moment was notably stable.

Previously USD strengthened against Euro as Greece fell into default in debt payment to IMF. This European common currency was under pressure when Greek Finance Minister Yanis Varoufakis stated that Greece would not pay bebt installment to IMF which was due on June 30.

Greek Prime Minister Alexis Tsipras furthermore stated that the Government of Greece proposed a deal of two years credit based on the Europe Stability Mechanism in the last minute effort to prevent default and the possibility of Gexit. The statement was made a few hours before the bail out fund would end on Tuesday last week (30/6) amidst mounting anxiety over fearful Greek economic condition.

In the USA, the Conference Board Research Group based in New York stated in their monthly report that US Consumer Confidence had been on the upturn in June. Index rose from 94.6 in May to 101.4 in June, way above the market consensus of 97.4.

To end transaction in New York, Euro fell to USD 1.1144 against 1.1248 the previous session and Pound sterling slumped to USD 1.5731 against USD 1.5736 the session before. Australian Dollar inched down to USD 0.7714 against USD 0.7703. USD was worth ¥en 122.46. USD inched up to Swiss France 0.0349 against the previous 0.9264. Against Canadian Dollar, USD inched up to 1.2494 against the previous 1.2494 per USD.

Meanwhile German Kanselir Angela Merkel underscored that Germany would not discuss Greece’s new request before the execution of Referendum on July 5 2015. Nearly one out of every two Greek citizen voiced ‘No’ in the Referendum of bailout package being offered by creditors. However, the capital control policy put in effect by the Government made many voters change to ‘Yes’.

The Referendum conducted by Prorata from Sunday (28/6) to Tuesday (30/6) as the Greek Government applied tight Capital Control and closed banks as negotiations failed. Before the Government put capital control in effect, 57% respondents choosed ‘No’ 30% choosed “yes” and 5% abstain.

However, after the Regulation which restricted cash drawing to €uro 60 at ATM effective on Monday (29/6), the number of citizens who choosed “Yes” increased. In the Referendum run on Tuesday (30/6) 46% choosed “No” while 37% choosed “Yes” and 17% had not decided.

The case of Greek default would predictably bring negative effect on Indonesia although only temporarily perhaps not more than one month. Indonesia had any significant bilateral business relationship with Greece.

Greece default would bring negative effect on Asian currencies including Rupiah so Rupiah would be under pressure at around Rp.13,300 – Rp.13.400 per USD.

Somehow Rupiah would not het any lower than Rp.13,500 per USD because the Government and BI would surely act although in fact there was not much that the Government could do to keep Rupiah from sinking any deeper because the Greek crisis was external factor; this was not to mention speculations that the Fed in America would increase FFR.

In fact the US Government did not like it either to see Euro fall because it might make USD to be see strong against other currencies as it might backlash on US export and worsen US export performance.

One thing was sure the Greek crisis would still be felt week especially when the new policy of the Greek Government was still in effect. Firstly all banks stopped their activities from June 28 to July 6. Secondly, bank customers were permitted to draw cash from ATM not more than €60 or USD 66 per day, per card and per account, but cardholders were permitted to draw cash using credit card or debit card abroad. Thirdly transfer or payment from a Greek bank to overseas bank was forbidden for the next week.

They also announced that the Regulation on liquidity could be extended for more than one week. One thing was sure that the faith of Greek banks was determined by the outcome of Referendum on July 5 last. Greek Prime Minister Tsipras decided to run a referendum to pocket people’s approval or rejection to the preconditions set forth by creditor countries. The referendum outcome would determine Greece status as member of the Eurozone.

Announcement of the Referendum outcome and tight liquidity brought anxiety to the people Greece and people’s trust was fading out. Long queque at the ATM and gas station was common sight in the cities of Greece. Moreover Fitch rating also demoted rating for four banks in Greece. Moreover Fitch rating also demoted rating for banks in Greece to “limited default” last Monday (29/6) as the Government commanded commercial banks to close for a week to make capital controlling.

Fitch stated that capital control including limitation to daw cash by customers was the same as “limited default” because limitation of deposit affected obligations banks senior executives. Four banks were demoted, all at CCC which means “very speculative” were National Bnak of Greece, Pireaus Bank, Euro Bank Ergesias and Alpha Bank.

The rating reflected high credit risk, because of execution of capital control or prospect of recovery in terms of default. Fitch lowered rating of same banks to below of or “Fail”.

Lowered rating reflected Fitch’s view that the banks had failed and would fail to pay before control was executed, because the banks were highly dependent on Europe Central Bank and decided not to increase liquidity because of the Government’s action.

At home in Indonesia, the external condition made it hard for Rupiah to go to below Rp.13,000,- per USD. Every effort to strengthen Rupiah lasted only for a moment because USD was still the main buyers’ target at the global market. The news of Indonesia growing by only below 5% (4.7%) in Q 1 2015 was disadvantageous to Rupiah through May 2015. The downturn was triggered by Janet Yellen’s statement that the US Central Bank would still increase FFR this year would suppress Rupiah.

The Capital Market

IHSG index rose by 12 points after fluctuating last week end (3/7). Slowly index was crawling last back to the psychological level of 5,000. IHSG inched down by 4.504 points (0.09%) to the level of 4,940.277 but bounced back again to the green zone. Negative sentiment from the global market overshadowed index movement. Meanwhile index of LQ45 strengthened by 3.536 points (0.42%) ri the level of 852,450.

Index fluctuated not long after opening session. The highest position was last week at 4, 960 and was projected to be closed at 4,970 – 4,990, Domestic investors made selective buying of premium shares while foreign investors tend to wait and see.

Most regional stockmarkets fell into the red zone being affected by negative sentiment from Wall street. Index of Nikkei 225 weakened by 68.25 points (0.33%) to 20,454.24. Index of Hang Seng inched down by 59.55 points (0.23%) to the level of 26.222.7 Index of Composite Shanghai dropped by 127.20 points (3.25%) to 3,785.57. Index of Straits Times inched up by 7.66 points (0.23%) to the level of 3,335.50.

Previously during transaction last weekend (29/6) IHSG nose dived to below 4,900. IHSG was opened to drop by 26.77 points to become 4,896.23 being affected by Greek problem. Investors responded negatively to failed negations in Greece.

As selling spree by investors at the stockmarket had not subsided, BEI was fluctuating quiet highly. The condition originated from domestic and overseas sentiment, moreover investors were now more prudent in investing their capital.

The psychological effect of Greek default could be more terrible than the real effect. As known, the condition of Greece today was full of political frictions. In Indonesia, the stockmarket was not too much affected by Greek case of default.

Investors needed not to worry too much about the negative effect of Greece crisis. IHSG index that fell this week was no sign that the condition of Indonesia’s stockmarket was in adverse condition.

So the domestic issue must be well managed and be observed by stockplayers. For example, the Loan-to-value policy for automotive credit would have positive impact on automotive credit would have positive impact on automotive sales at home. However the real impact would only be seen in Q III this year or by end of September.

Marketing performance was really unpredictable. Gaikindo only dared to set target for automotive sales at 1 million units and this was due to people’s low purchasing power. Basically the LTV Regulation promised ease to customers at early phase of credit. Although down payment was lowered by 5% against the previous 30%, the monthly installment increased.

The impact to investors was also seen after seeing consumer’s zest. It would be better if the LTV easing policy be accompanied by lowering of credit interest for automotives, but the impact for investors would be positive because with less down payment, people’s purchasing power would be stronger. The public must be seen whether they like low down payment with high installment, or high down payment with low installment, or high down payment with low instalment?

Transaction at the stockmarket would heighten with LTV easing for property and automotive credit. The easing was not only for KPR mortgage, but also for other consumer products including automotives which was a step to invigorate the market in the respective industry.

In the end energized automotive sector and their share transactions would propel economy to progress once more. On July 18 last, BI started to out in effect easing of LTV down payment and property credit.

For automotive credit BI had decided to lower Down Payment up to 5%. With relaxation of LTV, the automotive sector could accept acceleration of sales whereby to increase financing growth.

By April 2015, credit financing only grew by 7% (y o y). if the new LTV for automotive credit began, it was expected to turn into growth stimulus for financing, the automotive industry was slowing down in sales but still growing because sales of four wheel or two wheel vehicles was not only for new products nut also second hand products.

The potential growth for second layer shares was still open for Semester II. The sectors of trading, service and investment would be buoyed by annual cycle, i.e. the moment of Ramadhan, Lebaran and Christmas which increased household demand.

Besides, the policy for property ownerships for foreign citizens was predicted to increase demand for property.

In Semester II infra structure development by the Government and acceleration of budget absorption would begin to roll. Performance of the infra structure project would be driven by Government projects which would run and absorb fund faster. In case of mix industry the policy the policy of down payment easing would jack up sales. The consumer goods sector also had the potential to grow as investors believed that this sector was quite defensive.

Many analysts predicted that the five sectors: telecommunication, animal farming, banking, essential needs and infra structure in Q II/2015 would be positive. The five sectors were predicted inject positive sentiment to IHSG during last closing session at around 4,980 – 4,520. (SS) 

Business News - July 8, 2015


Absorption of capital expenditure in all ministries and institutions by Semester I – 2015 was on the average still below 10%. In Semester II absorption should be 15% reach month. If target was not met, APBN had failed to energize economy.

Change of nomenclature of some ministries was allegedly the cause of low capital expenditure beside poor planning, late auction process and filling of budget expenditure form (DIPA) and over-anxiety among project managers of the possibility of being accused of corruption. Other factors were long dragging bureaucracy, slow land procurement and slow analysis process of environmental effect.

Realization of Government’s capital expenditure by mid June was only Rp.23,22 trillion or around 8% of total capital expenditure of this year at Rp.290.3 trillion. Of the total budget of this year amounting to Rp.290.3 trillion, the allocated amount was for the Ministry of Public Works Rp.105.9 trillion, the Ministry of Transportation Rp.52.5 trillion, the Ministry of Energy and Mineral Resources Rp.5,9 trillion and other ministries Rp.46.4 trillion.

The rest was distributed among infra structure projects Rp.80.5 trillion, special allocated fund Rp.29.7 trillion, additional fund for the Province of Papua and West Papua Rp.3.0 trillion and inclusion of state’s capital Rp.20 trillion.

Admittedly the Government’s had not applied the punishment-and-reward policy on ministries but was still focusing attention on betterment of budget absorption. The Government should not rush to liquidate upfront loading for project not being financed.

This year the find for natural resources projects was high so transfer to province was prioritized. In terms of per-Ministry realization, budget realization of the Ministry of Public Works was only Rp.15.53 trillion or 13,12% of total budget in APBN 2015 at Rp.118 trillion.

Apparently fund absorption of ministries was slow last year because they could only realize expenditure by May. Other cause was change of nomenclature among Ministries and slow filling of Project form. Budget absorption was targeted at 21% by June. The Ministry of Public Works was committed to speed up absorption of capital expenditure per Semester II or July. The strategy adopted was to accelerate auction process and sign a contract of projects already tendered.

So far the contract package already auctioned was only 21% of total contract at the Ministry amounting to Rp.65 trillion. The low realization of capital expenditure was also happening in the Ministry of Transportation who had realized 7% of allocated budget of Rp.52.5 trillion because the budget rose nearly twice against last year.

Somehow budget absorption might increase fast because of some railway project contract. By end Semester 1 absorption of capital expenditure might come to 10%. By Semester II the Ministry of Transportation accelerated it by starting auction and offering of goods through e-procurement.

The Ministry of Energy had only absorbed 7% of total budget of Rp.14.915 trillion. Budget absorption of infra structure projects of the Ministry normally took place in October till year end. Somehow the Ministry of Energy had set up a special team for acceleration of projects. By the role of this team the Ministry was optimistic that budget absorption this year would be 90% against last year which was only 50.6%.

Slow budget absorption was being attended to by the TEPRA Evaluation Team which regularly monitored debottlenecking afield and pinpoint the obstacle. TEPRA would constantly enhance realization of capital expenditure.

Noteworthy was the Government’s statement that this year realization of budget absorption was not any faster than previous year but it would be of better quality. It was predicted that capital expenditure this year would be around 85% - 90% and would soar up by Q III and Q IV.

TEPRA must persuade Ministries to realize capital expenditure as per Semester II to promote economic growth. All ministries must have accomplished project administration up to auction stage by end of June. If infra structure budget of APBN-P budget was absorbed 100% it would contribute 0.6% to economic growth.

For that matter TEPRA must work to the maximum in making decisions to solve project obstacles. TEPRA should more than just monitor and identify obstacles but must also decided if there was any bottlenecking afield. In fact the Government should have known the nomenclature problem, bureaucracy, land clearing and environmental analysis. Still the Government was optimistic about budget absorption.

House circles rated that the Government version of reasoning that change of nomenclature was the cause of slow capital expenditure was unacceptable. Change of ministries’ nomenclature had been proposed since cabinet was formed, meaning there was no problem and operators could start to work.

The reason was that nearly all ministries did not absorb budget to the maximum due to slow process of tender. There was over anxiety among ministries in regard procurement of goods due to more stringent control by BPK or KPK.

So breakthrough was needed to speed up absorption of capital goods. Firstly, transfer of fund to the regions must be made sooner. It would be unwise to make budget liquidation for the provinces more difficult, the most important thing was accountability of spending management. As with ministries programs which was not ready, reallocation of programs was needed but it was advisable to consult the Ministry of Finance first.

Thirdly, ensure legal protection to a program; this was necessary because many mandate holders of budget (KPA) and commitment making officials (PPK) were afraid they could be charged for corruption in case of any fraudulence happening at the downstream. In that case it was necessary to make MoU with the Law enforcers and KPK to clarify the matter. Fourthly in was necessary to put negative appraisal for Ministries who were slow in absorbing budget.

Although not too sizable, only around 13.5% of total APBN-P 2015, the role of capital expenditure was high in propelling economy. If they could be spent on time, slow economic growth could be stopped and growth could be spurred on.

Capital expenditure was meant for financing various infra-structure line dams, ponds and irrigation-and energy like powerhouses. The public had high expectations for the Jokowi administration in making changes. When he increased price of oil in November 2014, one of his reasons was to re allocate funding from consumptive to productive sectors.

To increase oil price means to axe subsidy for oil which was previously enjoyed by the public, subsidy for oil in APBN-2015 nearly touched Rp300 trillion. Having axed subsidy for oil President Jokowi had a little room for financing infra-structure.

Too bad that by June 2015 capital expenditure was posted at only 8%. Among businessplayers there were rumors that President Jokowi was rated as over-promising but under delivery. Acceleration of Government’s budget absorption would be the key factor In uplifting public confidence in the Jokowi Government.

In spite of the global factor and low performance of the business sector, negative sentiment from marketplayers on the Government was not to be ignored. Most of the Ministries of the Working Cabinet was rated as not capable of performing. They normally did the Blusukan for its own sake but failed to come up with any effective strategy that brings results.

To spur on economic growth, Provincial governments must be encouraged to liquidate budget sooner. Today, most of the Governors had not liquidated fund for projects and tender was not even staged. Fund for the Central Government transferred to the province were piling up in provincial banks. Like the central Government, the provinces were rushing for fund for Q-4 projects.

Chances for Indonesia’s economy to grow above 5% this year was great. The Government held the key. The Government was resolved to keep people’s purchasing power high by “Keep buying strategy” supported by fiscal as instrument. The strategy included tax cuts and incentives for investment to balance economic slowdown.

The measure was taken to cope with global economic slowdown and domestic griefs due to negative perceptions of Government performance. By jacking up domestic consumption, national economy could be expected to grow.

What’s more, the Government had to make sure that funding realization could be made sooner in the second half of this year. Sound infra structure would not only help to keep economy rolling, but it would open employment opportunities for the people.

Not less important, was that realization of infra structure could mean operation facelift for the Government to regain public trust. (SS)

Business News - July 8, 2015

Sunday, 11 October 2015


Foreign ecpatriats and certification of foreign business institutions was highlighted by the Legislation Board of Parliament led by Sareh Wiyono with the agenda to hear the clarification of proposal maker in the Bill of Construction Service at Parliament hall in Jakarta on Monday (29/6). Committee member Tabrani Maamun questioned the existence of foreign construction agencies in the Bill of Construction Service. Would foreign construction agencies not threat Indonesian construction agencies considering that Indonesian construction companies were not interior in terms of quality?

Meanwhile member of Legislative Committee of House questioned weather certification was applicable for domestic and foreign companies and whether domestic and foreign companies would be given equal treatment because in making the Law as legal umbrella, national interest should be first priority.

In respond to the question, Vice Chairman of Commission V of house M. said as proposal maker of the Bill explained that foreign expatriats mentioned in the Law were only in terms of expertise which was intended for transfer of technology. In terms of certification, foreign and local companies would have equal treatment. (SS) 

Business News - July 3, 2015


Vice Chairman of the Indonesian Chamber of Commerce and Industry (KADIN Indonesia) for Banking and Financial Affairs, Rosan Perkasa Roeslani, believed that East Nusa Tenggara (NTT) province needs to spur economic growth by making tourism as an economic powerhouse. Tourism sector, especially marine resource of NTT, is very rich and unique. “NTT is not only interesting in terms of maritime potential, but also the beauty of the beaches and a wealth of fisheries, including the potential of the sea which is very rich and beautiful. NTT underwater world beauty with Labuan Bajo can actually be equated with Raja Ampat in Papua. Unfortunately, what is in NTT has not been managed properly, he said in Jakarta, on Monday (June 29), after visiting Kupang, NTT.
Tourism development has a multiplier effect, both for development or management of regional treasury and to support the economy of the people directly. In addition, the development of tourism sector is economically cheaper than the industrial sector, which requires more investment touch. Apart from that, the development stage also requires external factors and takes place in along term.

“To build an industry, especially in the manufacturing sector, it takes time a large budget. But when the tourism sector is already available and has become ours, just consider how to prepare the supporting infrastructures and manage them well, “he said. he also reminded that based on government projections, in 2019 the tourism sector will be the largest source of foreign exchange.

Revenues from domestic and foreign tourists need to e targeted by government and private sectors in the province. Tourism supporting infrastructure also needs to be built. One is to provide International standard port that can be harbored by cruise ships from abroad. “For example, in Labuan Bajo. There is a cruise ship carrying 2,000 tourist from Europe. Unfortunately, they stay on board and use a lifeboat from the ship to do diving activities. That means that their presence does not add value to the surrounding community, as well as revenue for the local government, “he said.

The opinion was confirmed by an economist who is also Chairman of LP3E (Institute for Economic Research and Development (LP3E) of KADIN Indonesia, Didik J Rachbini. According to Didik, tourism could become a mainstay of the development of NTT. The problem is that the awareness to develop the tourism sector has not been fully owned by the stakeholders, including the community in NTT.

“Tourism can be a leading sector in the province. Unfortunately, we often forget our own advantages. He also advised stakeholders in the province, public and private, to be more active in lobbying the central government to obtain a sufficient budget for tourism development. He cited a lobby that he made when building Suramadu (Surabaya-Madura) bridge. “We are aware that if Surabaya and Madura are connected by a bridge, the economic effects of Surabaya will reach Madura. Therefore we struggled to obtain budget for the construction of Suramadu bridge, “he said.

Challenges for Infrastructure and Industry in NTT

Chairman of KADIN NTT, Abraham Paul Liyan to, saw that infrastructure and industry as a particular challenge in development in NTT. The potential of the leading sectors is not explored to the fullest due to the unconduciveness of supporting facilities. For this reason, KADIN NTT present sectoral stakeholders at national and regional levels, to observe directly and discuss the development needs in the province. “We need to get a solution and consideration of the issues in NTT, such as infrastructure, tourism, marine and fisheries industry,” said Paul.

In addition, the challenges ahead of the implementation of AEC 2015 in December, according to him, can generate special problems for local SMEs. According to him, many local SMEs in the field of fisheries, maritime, and tourism are very potential to advance to a higher level. “Because of the presence of foreign investors in the AEC 2015 should be anticipates. Central and local government should provide a solution for them,” he said. (E)

Business News - July 3, 2015