ALLOCATED BUDGET FOR FOOD SOVEREIGNITY INCREASED BY 0,55% IN 2016

In 2016 the Government planned to allocate budget for food sovereignity amounting to Rp.126.6 trillions in RAPBN 2016, an increase of 0.55% compare to that of 2015. Of that amount Rp.50,4 trillion were allocated through Ministrial Expenditure and Rp.76,1 trillion through non ministrial expenditure.

There were 3 ministries playing important role in prioritizing food soverignity, i.e. the Ministry of Agriculture, the Ministry of Public Works and people’s Housing and the Ministry of Maritime and Fishery. Allocation for food soverignity was at the Ministry of Agriculture Ministry of Public Works and Ministry of Maritime and Fishery. Allocated budget for the Ministry of Agriculture for 2016 was Rp.32.9 trillion fully focused on increasing productivity especially essential food.

Allocated budget for the Ministry of Public Works and People’s was Rp.6.6 trillion allocated for building irrigation network for agriculture. While allocated fund for food sovereignity at the Ministry of Maritime and Fishery was Rp.11.0 trillion prioritized for promoting production of hooked fish, nursery of fish and other fishery products.

Allocated fund for sood sovereignity through non Ministrial spending, the support for attaining food sovereignity was among others through:

1. Provision of food subsidy for 15.5 targeted families with amount of 15 kg R/T/S pipelining for 12 months, fertilizer subsidy at the volume of 9.55 million tons and seed subsidy at the volume of 116,500,000 kg consisting of hybrid and soy seed.
2. Allocated transfer to the provinces through Special Allocated Fund (DAK) for irrigation among others for rehabilitation/renovation and procurement of supporting facilities.
3. Other expenditures among others for Government’s Rice Reserves (CBP) to anticipate natural disasters and reserve food stabilization prices and food resiliency to anticipate food price turbulence with the potential of increasing people’s life burden, especially the marginal people.

Food sovereignity had its strategic meaning especially in regard to food production increase sustainably for all Indonesian people.

Thereby dependence on imported food could be suppressed or eliminated. The main objectives of development in food sovereignity in 2016 were among others:

1. To increase production of main food: paddy 76.23 million tons, corn 21,35 million tons, soy 2.03 million  tons, beed 0.59 million tons.
2.  Meningktkan produksi ikan perikanan tangkap 6,45 juta ton dan perikanan budidaya (termasuk rumput laut dan ikan hias) sebesar 19,46 juta ton.
3. To increase production of hooked fish 6.45 million tons and cultiviated fish including seaweed and display fish amounting to 19.46 million tons.
4. To increase Government’s rice reserves.
5.  Completion of 19 irrigation dam construction. (SS) 

AMKRI STILL NOT OPTIMISTIC ABOUT DEREGULATION PACKAGE

The Association of Indonesian Furniture and Crafters (AMKRI) was not too optimistic about the Economy Policy Package run by the Government considering that the reality afield was still a far cry considering that the reality afield was still a far cry from goodness. Meaning the Policy Package which consisted of some deregulation points and debirocratization would not bring any significant benefit on producers. The package would remain to be beyond expectation. This was obviously on account of certain interest of certain fraudulent interest of some big shots in the bureaucracy. An example was furniture producers who had to import cushion cloth for their products.

Producers had to face complicated bureaucracy in terms of quarantine, taxes, trading etc. “Haronized System of textile keeps changing time after time. He have to apply for new permit if HS changed. Every application needs 3 weeks to complete. This is quite troublesome to us. Not to mention the process of quarantine, harbor cost etc. And our imported cloth was accused as germ containing from abroad. In fact the raw materials contained no germs at all” Johanne Sumarno member of AMKRI Consultative Board told BusinessNews (8/10)

The Deregulation Package which was designed to jack up export finally turned counter productive. Since the era of Trade Minister Gobel, exporters were urged to jack up export. But bureaucracy made business difficult to producers. “We expect while the atmosphere is still on ‘honeymoon’ stage we have the chance to fight complications, Don’t let bureaucracy shackles us”.

In the same location, the Director of PEN Nus Nuzulia state that Government executives were not blind and not deaf. We are ready to be cursed in very meeting with businesspeople. “We listen to grievances and we are ready to make deregulations. Our Minister of Trade would announce the strategy in detail.” Nus told Business News.

Meanwhile Chairman of AMKRI Rudy Halim stated there were already investors in furniture products who relocated their workshop from Indonesia to Vietnam. There was some handicap in investment in Indonesia particularly in furniture, which was increase of workers wages. “Increase of wages can be as high as 20%. In some places in East Java the difference could be as high as Rp1 million.” Chairman of AMKRI Rudi Halim told Business News (8/10).

The problem of SLVK was also extremely not sensible. SVLK seemed “fixed price” for producers including small business. In Vietnam and China there was no mandatory rule for SLVK for producers of furniture so they could downsize production cost. In Indonesia high cost economy began from SLVK to loading and unloading at the seaport. “The producers in Vietnam are pragmatic not bureaucratic.”

Mandatory SLVK was spectra to furniture producers in Indonesia. SLVK was only relevant if wood raw materials for furniture was taken from conservation forest. Furniture producers in Indonesia did not take wood from the forest. SLVK was probably only applicable for the pulp industry because they used forest wood. (SS)

Business News - October 12, 2015

REDUCING RISK OF LOSSES, GOVERNMENT PROVIDES INSURANCE FOR RICE FARMING

The Financial Services Authority (OJK) in collaboration with the Ministry of Agriculture, Ministry of State-Owned Enterprises, and a consortium of Insurance companies will apply the provision of insurance for the agricultural sector to reduce farming losses due to uncertainty of season.

Chairman of the Board of Commissioners of OJK, Muliaman D. Haded, in his statement at the President’s Office on Wednesday (October 7), said that rice agriculture insurance scheme will be the first to be applied by insurance company, which 80% of the premium is paid by the government.

Through agricultural insurance it is expected that rice farming, which is frequently by the uncertainty of season, resulting in farmers being exposed to losses, would be able to reduce the losses suffered by farmers, Moreover, with such an insurance scheme, farmers become bankable. “Because usually they lose money, cannot repay the loan, but, now there is someone to bear the losses, so they can repay the loan. With their bankable status through insurance company facilities, it is expected to stabilize income of farmers,” said Muliaman.

For the first phase, the government has allocated premium funds amounting to IDR 150 billion. Fund is targeted to cover approximately one million hectares of rice farming. Agricultural insurance premiums for 6 million hectare area amounted to IDR 180,000, where IDR 150,000 is paid by the government through subsidies, and the remaining IDR 30,000 have to paid by farmers. Potential credit for farmers with this scheme is approximately IDR 6 trillion.

Deputy Commissioner for the Supervision of non-Bank Financial Industry (IKNB) of OJK, Dumoli Parded, in Jakarta (October 8) said that based on data from the Ministry of Agriculture, on a national scale the size of agricultural land affected by floods, droughts and harmful organism on average reached 1,051,228 hectare/year of the annual harvest area of about 12,886,255 hectare or 7.69%.

Furthermore, Dumoli said that agricultural GDP grew by 0.66% in 2014 compared with 2013. However, labor absorption in 2014 fell by 0.78% compared with 2013, which was around 36.05 million, as a result of increase of conversion of agricultural land to non-agriculture land and increasing urbanization due to the development of industry and services sectors.

The decline also occurred in farmer exchange rate in 2014 which decreased by 2.81% compared to 2013, which 104.95 this is caused by the fall of international prices of primary commodities, while farmers have to pay a more expensive price for their daily necessities. Likewise, the achievement of agricultural trade balance in 2014 decreased by 30.10% compared to 2013 at IDR 15.98 billion, due to decline of demand as a result of economic recession in America, Europe, and East Asia, and the fall of international prices of primary commodities. (E)

Business News - October 12, 2015

THE ACHIVEMENT OF PTSP II OF EUROPEAN UNION IN INDONESIA

In an effort to focus on improving the quality of export products according to world standards of quality to expand export access of Indonesian products, so that leading Indonesian products must be able to meet the standards and technical requirements which are accepted and recognized by all export destination countries, the Ministry of Trade participates and acts as a technical coordinator in the implementation of Trade Support Programme (TSP) II in Indonesia. TSP II is a European Union (EU) program aimed at accelerating the integration of Indonesia in international trade. The program worth around EUR 1 million has been started since the signing of the financial agreement by both parties on October 30, 2009 and will end on October 30, 2015.

“Just like TSP I, this program is also emphasized on the compliance of Indonesian export products with standards and other technical requirements, including product traceability applied by EU. We wanted Indonesian products to achieve world quality standards, “said Director General of Standardization and Consumer Protection of the Ministry of Trade, Widodo, in the opening of the Achievements and Closure Exhibition of EU-Indonesia TSP II, in Jakarta, on Wednesday (October 7).

Based on studies conducted by TSP II in 2010, the program is focused on five Indonesia’s potential sectors that have a relatively small share of imports in the EU. The sectors are agro food products, fisheries, electronics, furniture, and natural cosmetics. Widodo said the creation of Export Quality Infrastructure (EQI) Roadmap and Guidelines. This Roadmap is an export quality infrastructure development plan to be a world class EQI that must be realized jointly by the ministries and institutions, as well as other relevant stakeholders.

“By having a world class EQI, quality certificates issued by Indonesia’s conformity assessment body will always be accepted and recognized by the notified bodies, and there is no refusal from export destination countries. Thus, access to Indonesian export products will be more easy and smooth, “said Widodo.

Meanwhile, the Food and Drug Supervisory Agency (BPOM) laboratory is very competent in testing the safety of food products. BPOM is also committed to make efforts to increase of Indonesian products. “In line with the assessment results of TSP II expert team, several BPOM laboratories are believed to play a strategic and competent role in implementing food safety assessment, especially testing of aflatoxin contamination in nutmeg.

“BPOM is ready to facilitate food assessment, especially nutmeg, which is to be exported to the European Union,” said Head of BPOM, Roy Sparringa. Besides, National Quality Assurance (NQA) as part of the implementation of EQI Roadmap must be followed up with the same commitment. Because it involves various sectors, the Coordinating Ministry for Economic Affairs will be the driving force, with BPOM and the Ministry of Trade as the technical coordinator, respectively for food and non-food affairs.

“I am optimistic that the implementation of NQA will improve the quality of Indonesian products, both for domestic and export markets,” said Head of BPOM. In a continued effort to improve the quality standard of export products, because consumers today have an awareness of quality products manufactured by considering health, safety, security, environment, and social, demands on producers and exporters in improving product quality is also higher.

TSP II responded to this by establishing Indonesia Technical Requirement Information System (INATRIMS/inatrims.kemendag.go.id) containing information on standards and technical requirements of export destinations. The information is focused on 10 Indonesia’s main export products, namely textiles, electronics, rubber and rubber products, palm oil, forest products, footwear, automotive, shrimp, coca, and coffee; and 10 potential export products, namely leather and leather products, medical equipment, medicines, medicinal plants, processed foods, essential oils, fish, crafts, jewelry, spices, and non-paper stationary products.

Currently, INATRISM has covered information on the EU market, China, and South Korea, and will be followed by United Arab Emirates, United States and other countries. TSP II is focused on seven relevant ministries/agencies, namely the Ministry of Trade, Ministry of Industry, Ministry of Maritime Affairs and Fisheries, Ministry of Agriculture, Food and Drug Supervisory Agency, the National Standardization Agency, the National Accreditation Committee, and Indonesian Institute of Sciences.

The Achievements and Closure Exhibition of UE-Indonesia TSP II held in October 6-7, 2015 was also filled with presentations of achievements of TSP II by beneficiaries. On of the achievements listed are the National Data Sharing System (DSS) which is managed by the Ministry of Maritime Affairs and Fisheries. DDS provides centralized, consistent, and transparent data to prevent and combat Unreported II-legal Unregulated (IUU) Fishing. This system is easily accessible by competent authorities, at both central and provincial government level.

Ambassador-designate of European Union to Indonesia and Brunei Darussalam, Vincent Guerend, expressed his pride of the achievements of TSP II, especially on matters relating to EQI. Vincent is proud that TSP II is able to support work priorities of the government to overcome some trade barriers between Indonesia and the European Union. For example in the fisheries sector, TSP II helps strengthen DSS for the implementation of capture fisheries certification in 32 ports, so as to balance the strictness of EU regulation on IUU.

The development of marine and fisheries sector is one of the main priorities of the government. “The success story can also be seen in nutmeg commodity of Siau, North Sulawesi, where TSP II not only supports the legal system and quality control of nutmeg, but also implements a pilot project at the stage of production and post-harvest handling,” said Vincent. Other success stories of TSP II were also presented in the exhibition, which is about EQI Roadmap and Guidelines for Strategic Improvement of Indonesian Export; National Quality Assurance to Enhance Export Quality Products; Strengthened Policy Framework Ensures Compliance with EU Requirements; Best Practices Lead to more Effective and more Efficient Accreditation at KAN; Improving Export Access through INATRIMS; Improved Nutmeg Quality for Better Acceptance in EU Market; Improved Quality of Cocoa Beans and It’s Derivatives Expands Access to EU Market; Strengthened Catch Certification System by Support of Data Sharing System; National Residue Monitoring Plan (NRMP) to Secure Access to EU Market for Fishery Products; and improved KIM LIPI Capabilities Guarantees International Trust. (E)

Business News - October 12, 2015