TO WELCOME INVESTORS FROM AMERICA

             In line with promoted rating to Investment Grade by Moody’s Investor Services and Fitch ratings recently, Indonesia had broad opportunities to drum up foreign investors. Enter a team of American investors to Indonesia.

          There American investors were combined in the US-ASEAN Business Council had their commitment to increase their investment this year in tandem with investment grade rating achieved by Indonesia.

         The President of US-Asean Business Council Alexander C Feldman said the investment grade rating achieved by Indonesia gave more confidence to American companies to continue investment in Indonesia they had growing confidence in Indonesia’s investment climate. The rating testified that the economic policy put in effect was good.

            For information US Asean Business Council was a business forum of American businesspeople operating in the ASEAN region. This organization enlisted more than 100 old and new companies whi were interested in investing in Indonesia and Asean states.

          Fieldman stated that every year the US-Asean Business Council invited American companies to see business potentials in Indonesia and Asean states. This time 25 companies were invited to see business potentials in Indonesia 5 days ago. It was noteworthy that normally the length of visit was 3 days, but now extended to 5 days and involving more companies.

       Having met Vice President Boediono, the US Asean BC Delegation also visited the Indonesia Security Exchange, a number of cabinet Ministers, business associations and the Parliament. While praising Indonesia’s economic condition, they also stated their expectation for a definite and reassuring business climate whereby to enliven their spirit and zeat in business. They expressed their commitment to increase investments this year in line with Indonesia’s promoted rating to Investment Grade.

            In this case American companies were also ready in supporting Indonesia in infra structure building within the framework of the Indonesian Economic Acceleration and Expansion Development Plan (MPSEI). Development of infra structures within this plan would attract American companies to invest in Indonesia.

            In fact their expectations for legal certainty and legal assurance and involvement in infra structure building had been in line with The Government’s program, who was now in the process of promoting business climate through better regulations. Beside the two above mentioned aspects settlement of labor dispute between employer corporations and workers in industry should be settled accordingly.

         National business competitiveness based on doing business index must also be part of Government’s attention because this was related to corruption eradication plan and reformation of the bureaucracy to serve investors’ interest. Widespread news of cases of corruption lately might lead candidate investors to think twice before investing in Indonesia.

            Semesterly and annual review and monitoring of doing business index should be part of the Government’s main agenda whereby good rating might be maintained or even improved so foreign capital inflow could be increased. In times when export was under oressure of slowed down global economy, investment should compensate on lessened income from export so national growth target of above 6% could be attained.


 Business News - February 15, 2012

STATE FINANCE BILL SHOULD BE DISCUSSED THROUGHLY

             Legislation Council (Baleg) of the House of Representatives expected that amendment of Law No. 17/2003 on State Finance which is currently being discussed should produce qualified and optimal result. This bill needs to be discussed more thoroughly by all members of the Legislation Council so that important inputs from members of the Work Committee on State Finance Bill are much expected. This matter was conveyed by Vice Chairman of Legislation Council, Dimyati Natakusumah, when chairing the meeting of the Work Committee on State Finance Bill at the House of Representatives building.

            It is stated that discussion of the bill requires prudence judgment considering that it is very urgent and important. The former State Finance Law is considered unsystematic and unqualified so it is easy for people to commit violations corruption, collusion, and nepotism (KKN).

            Executive, judicative, and legislative matters are expected to have bigger role, but they are restricted by Government Regulation. Take for example, the case involving the Budget Council of the House of Representatives which still adopts the old Government Regulation in state finance management. While, in fact, Government and legislation is still governed by a Government Regulation.

            Member of the Legislation Council, Nusron Wahid, added that amendment of State Finance Law was once proposed by the House of Representatives of the 2004-2009 period. At that time, there were two crucial matters that should be prioritized, namely why the Law needs to be amended, whether its implementation is considered not in line with legal demand, or whether there is finding of the Constitutional Council about constitutional violation against the substance of Law No. 17/2003. These two matters should receive priority attention before discussion of the bill.

            Other member of the Legislation Council, Rahadi Zakaria, has a similar opinion that the bill should have a strengthening point that could ensure that it will have a long durability. Based on second meeting of the Work Committee on January 19, 2012, there are some conclusions that should be paid attention to, amongst others, the State Finance Bill must be able to realize the relevance between planning document and budget.

            The bill must be able to increase discipline on planning so that APBN (State Budget) absorption will be optimal. It should also incorporate how to limit authority of the related Finance Ministry in state finance management.

            The bill should also incorporate how to manage Non-Tax State Revenue and APBN and should have the proper time for its implementation and accountability. The definition of State Finance should be re-considered if it is related to government’s capital in state-owned enterprises. Separated state assets should be included in APBN. 

Business News - February 10, 2012

INDONESIA – PAKISTAN TRADING POTENTIAL MAY COME TO USD 10 BILLION

              The total value of Indonesia-Pakistan trade volume had the potential to reach USD 10 billion, while today before discussion of Preferred Trade Agreement (PTA) between the nations was signed, the total value was posted at only USD 1 billion. The increase was because Indonesia’s export of CPO to Pakistan would increase after import tax was lowered based on PTA agreement between the two countries. This was disclosed by the Ministry of Trade Gita Irawan after signing of PTA between Indonesia and Pakistan with the Ambassador of the Islamic Republic of Pakistan, Sanaulah on Friday (3/2).

            The two leaders agreed that the agreement would be mutually beneficial to both nations, especially in terms of Indonesia’s export to Pakistan which would be more competitive without import tax barriers. Over the past three years, before Indonesia-Pakistan PTA was signed, Indonesia’s CPO had been unable to fill in Pakistan’s domestic market which accounted for slump of Indonesia’s export of CPO to Pakistan from USD 552 million in 2007 to USD 91.2 million in 2010”, Gita remarked.

            Meanwhile Pakistan’s Ambassador Sanaulah stated his optimism that Indonesia-Pakistan trade relation would reach USD 2 billion by end of this year with the signing of PTA agreement between the two nations. Meanwhile Gita was convinced that Indonesia’s export of CPO to Pakistan might come to USD 60 million while also more tan 400 product items would be liberated.

           Under the PTA Agreement, Indonesia had agreed to open market access for 246 tariff posts. The list included commodities needed by Pakistan like fresh fruits, textiles, garments, sports equipments like badminton and tennis rackets. Furthermore also leather products and other industrial products. Indonesia had also opened access for kinow (Mandarin) lemons and Pakistan’s oranges with zero percent import tax.

             In return, from Pakistan Indonesia got access to 287 tariff posts to enter the Pakistani market as agreed in PTA including vegetative oil and CPO Palm Stearin, RBD Palm Oil, Palm Olein, Palm Kernel Oil, sweet candies, cacao products, consumers goods including toothpaste, soap, deodorants, chemical products, household goods, rubber products, wood, glass products and electronic goods.

           Among the concessions give by Pakistan would be equal tariff for cooking oil from Indonesia (Just as Malaysia under the Indonesia – Malaysia Free trade Agreement) Indonesia’s export to Pakistan included coal products coal brackets, coal condensed goods (USD 229.5 million) CPO products and by products USD 40.6 million; synthetic fabrics Rp 40,6 million; unlayered paper worth USD 30 million. On the other hand Indonesia’s main imports from Pakistan included cotton USD 20.6 million; 85% cotton cloths worth USD 10.1 million, and woven clothes USD 6 million.


 Business News - February 8, 2012

CERAMIC INDUSTTRY DEPENDS ON GOVERNMENT’S POLICY

           National ceramic industry operators are optimistic that domestic market has quite significant potency for growth and development of national ceramic industry. Data of Indonesian Ceramic Industry Association (ASAKI) shows that ceramic sales in Indonesia in 2010 reach Rp. 17 trillion or increase 30.7% if compared to 2009 at Rp. 13 trillion. Increase in sales is supported by rapid growth of property sector which mostly absorbs ceramic. For this year, ASAKI sets target of ceramic sales in domestic market at Rp trillion or increases 17.6% from 2011.

          The target can optimistically be reached because in addition to the very big market potency, national ceramic consumption at present is low. ASAKI data stated that ceramic consumption per capita is only one square meter. While, in ASEAN countries, ceramic consumption has reached more than two square meters. Ceramic development in Indonesia, such as ceramic tiles, table wares, sanitary, or ornamental ceramics have achieved a satisfactory result, whether from the aspects of capacity, revenue acquirement, or absorption of workers so that ceramic product can be designated as leading product in accelerating national economic activities.

            Currently, Indonesia is the fifth largest ceramic tile producer in the world with a capacity of 32 million square meters so it is expected to be able to fulfill domestic demand, and is still prospective to be developed. Yet, however, it does not mean that national ceramic industry did not face any problem. One of the problems faced by national ceramic industry is low gas supply in addition to unsatisfactory infrastructure condition.

            General Chairman of ASAKI, Achmad Widjaya, stated that the target set for 2010 can be realized if the government could ensure gas supply to ceramic industry and to improve infrastructure condition. According to him, the target is much dependent on government’s policy. Producers are more focused on domestic market due to its improving condition.

             Currently, the problem faced by national ceramic industry operators is no longer competition with ceramic products imported from China, but problem of gas supply. He said that price of ceramic product made in China is already expensive so consumers choose to buy local products. But, the problem is that ceramic producers have difficulty in fulfilling domestic demand as there is no assurance of gas supply from the government. Quoting ASAKI data, volume of national ceramic production currently reaches 247 square meters per year.

           Achmad admitted that since the past three years, national ceramic producers have been complaining about limited gas supply, whether from the aspect of quantity or quality. Gas is used to burn feldspar and silica sand which are the main raw materials. He explained that national industry, including ceramic industry, this year is haunted by problem of shortage of supply of gas as fuel. National industry’s demand for gas reaches 1,500 millions metric standard cubic feet per day (MMSCFD), but only around 800 MMSCFD that has been fulfilled.


 Business News, February 8, 2012

NIK NUMBERING MAKES CONTROL OVER CUSTOMS PROCEDURES EASY

             In spite of rejections from companies, especially from importers and exporters on the implementation of Custom Identification Number (NIK), it seemed that the Government was determined to put in effect NIK by mid January 2012 according to the set schedule. The Director General of Tax and Customs, the Ministry of Finance noted that so far 16,539 companies were already in possession of NIK as pre requirement for running import-export activities. Hence more than 90% import-export companies had been harnessed in the registration program and were already in possession of NIK.

       Deputy to the Coordinating Minister of Trade and Industry Edy Putra Irawady said in Jakarta (Friday 13/1/2012) that NIK was registration guideline of exporters-importers including PPJIK (center of employment service) and transportation operators in accordance with the Regulation of the Ministry of Finance no 63/PMK.042/2012 of Custom Registration. According to Eddy, the data was most representative, representing users of Customs services. The indicator was ratio between companies holing NIK and customs-related business players who were still active at the moment.

            Edy stated that there was no substantial reason for postponing NIK implementation considering that data was representative enough. He elaborated that before the application of NIK, the Government was already in possession of exporters data, i.e. through export Identification Number (AEP). However, in line with Government’s policy to jack up export, APE was stopped and renewed through NIK. “We seek for cooperation from exporters and importers. This NIK was put in effect because we want to be orderly and easy to control customs activities” Edy said.

            According to Edy, implementation of NIK was already in accordance with the rule, because illumination had been made for all related parties and stakeholders. Illumination and information on NIK had been made for 30 days in Jakarta and other main cities all over Indonesia. Furthermore publicizing was also conveyed through website of the Director of Customs and portal of Indonesia National Single Window (INSW) and advertised in several national print media.

            However, the Government stated that they were ready to open a dialogue. The Government, according to Edy, had promised to facilitate business people with NIK service. The Directorate of Customs had set up service posts (posko) in all KPP Customs offices to settle problems related to customs. This was necessary so fiscal policy adopted by the Government would be right on target. The way it had been, he said, that the fiscal policy adopted by the Government had created no maximum result. Edy was sure that the application of NIK could prevent blackmarket  importers and exporters. The implementation of NIK ownership was also needed by the Government for the sake of transparent documentation and custom verification.

            Edy stated that implementation of registration of custom through NIK had in fact been done since July of 2011 and supposedly end by December 2011, but checking of NIK in relation to export-import was only exercised by January 19, 2012. If there was any exporter or transporter who was still not in possession of NIK, there was still time before the NIK stipulation was implemented in the Computer Service System (SKP) for export in January 19, 2012 or 19 days since January 1, 2012.


 Business News, January 18, 2012

ADMINISTRATIVE ORDER COULD MINIMIZE BUDGET BROKERAGE PRACTICES

          One of the brokerage practice issue which are frequently talked about recently is budget brokerage for regional development. Budget brokerage occurs as a result of the expectation of some regional governments to get additional budget allocation from the central government by not abiding to the budget allocation procedure. Those regional governments only expect to obtain budget instantly, and this opens a chance for budget brokers to launch their opens a chance for budget brokers to launch their actions.

            Budget brokerage is hard to be detected as it gives mutual benefit. The broker will receive fee for the services he or she performed. On the other hand, the Satuan Kerja Perangkat Daerah (SKPD) also receives large amount of budget for certain projects. Executive Director of the Regional Autonomy Implementation Monitoring Committee (KPPOD), Agung Pambudi, stated this matter in Jakarta on Monday (January 16, 2012). One of the methods to detect budget line whether it involves budget broker or not, according to Agung, can be seen from Budget Allocation List (DIPA). “If there is any program that receives higher amount of budget if compared to the average rest, it should be suspected”, Agung said.

            Agung admitted that the existence of budget brokers is difficult to be proven legally. Until now, there are many budget brokers who pay a specific amount to the House of Representatives to smoothen budget distribution from central to regional government. According to him, the cause of the budget brokerage practices is complicated process of budget allocation. He explained that in the financial equilibrium system, there are not only DAU, DAK, and DBH, but there are also Dana Dekonsentrasi and Tugas Pembantuan.

            To minimize budget brokerage practices, according to Agung, there should be an administrative order whether at executive or legislative level. Administrative order should cover all lines, starting from budgeting cycle which must be valid and punctual in order to prevent dispute between the executive and the legislative bodies. And, from the aspect of budget discipline, a tender is required. If the administration is in good order, it will minimize the chance of budget brokers to launch their actions”, Agung said.

            Agung emphasized on the process of arrangement of Revised Regional Budget (APBD-P) or State Budget (APBN-P). According to him, in APBD-P, the substance is changed. But what happens is the opposite. Based on surveys performed, there are many funds which are not written in APBD-P, but have been realized. Budget brokerage is a heavy work for KPK (Corruption Eradication Commission) and BPK (Supreme Audit Agency). These two institutions must stop brokerage practices that harm the society.

            Brokerage occurs as a result of unoptimal service provision and a chance that can benefited in various public and bureaucracy services. Agung added that the brokers promise to smoothen process of budget allocation to the regions or to increase amount of the budget allocated by paying them a certain amount of fee. These brokers do not consider which regions are eligible to receive funding. They only think about personal gain. 

  
Business News, January 18, 2012 

GOVERNMENT AID FOR FISHERMAN OF RIAU ISLANDS CAME TO RP 1,365 BILLION

           The Ministry of Maritime and Fishery (KKP) extended aid to fishermen of the Riau islands (Kepri) in the form of Cultivated Fishery to the amount of Rp 1.365 billion consisting of two business packages. Assistance based on Community group amounting to Rp 150 million, 20,000 pieces of fishermen’s ID card, land certificates for fishermen consisting of 300 blocks. Two units of fiberglass boats and 5 wooden boats complete with equipments were also included in the aid package. “We have presented 45 fishermen’s boats of 2 GT capacity, and 30 units of SGT fishermen’s boats. Development aid for Rural Mina Business (PUMP) extended to the Government of the Riau province amounting to Rp 3.3 billion”. The Minister of Maritime and Fishery Sharif G. Sutardjo disclosed to Business News (30/1).

            The PUMP program being launched was divided into two parts, i.e. PUMP for hooked fishing and PUMP for Cultivated Fishing. PUMP Assistance for Hooked Fishing amounting to Rp 2 billion distributed to Groups of Shared Business (KUB) of Hooked Fishing, each group receiving aid of Rp 100 million.

            Today in Riau islands there were around 49 Shared Business Group spread out all over Riau islands.

           Assistance included also seven units of INKA MUNA boats worth Rp 10.5 billion in the hope that the aid could support development of fishery industry in Batam island and Riau islands. Aid for PUMP of cultivated fishing to be pipelined to the Provincial Government reached Rp 1,365 billion distributed to 21 groups consisting of five regencies/cities.

          The Province of Riau consist of 2,408 islands big and small of which 30% are still nameless and unoccupied. Total land area is 252,601 sq km of which 95% are sea and around 5 percent land.

            The total area of land which were potentially productive included land for embankments in Riau islands 100.553 ha; plain water ponds 189 ha, and sea cultivation area covering 1,168,220 ha. For that matter synergy was needed between the Central Government, and regencies/cities and all community groups in Riau island” Minister Syarif said.

            The Regency of Bintan Kepri would be functioned as a Minapolitan (fishery center) to be followed by Batam City and Tanjung Pinang and Surroundings. As with Batam City, it would be dominated by hooked fishing while fishery cultivation would also be developed.

         Today there was Fish Nursery Center in Barelang, Sea Cultivation Center (BBL) in Batam, which were Technical Undertaket Units (UPT) of the Ministry of KKP.

            In a different location, the Controlling Board of Commodity Future Market (Bappepti) saw the potential of PT Pertani to manage warehousing Receipt so illumination and educational campaigns were constantly Indramayu could be beneficial to farmers. “Warehouse capacity reached three thousand tons. The infra structure included quality testing, and storage administration. Confirmation that classification had met standardization. Now warehousing could store in husked grains (gabah) and rice”. Head of Bappebti Syahrul R. Sampunjaya told Business News (30/1).

            Warehousing could hold nearly 1,500 tons of gabah today. The value was around Rp 8.5 billion. Bappepti would continue to step up Storeroom Receipt System (SRG) and synergize with PT Pertani in some regions. Beside that in Indramayu PR Pertani also had assets of storerooms in South Sumatra, South Sulawesi and some regions in East Java. “This is an indication that not only the Central Government with State Funding, but development of storerooms by Bappebti also optimized special allocated funds including Regional Budget (APBD)”.

            PT Pertani was continuously developing and functioning the Storage Receipt System today, In the future Bappepti and the Ministry of Trade were developing 15 units of storerooms. “We will see which regency had the competence to manage plantation yields whether it was rice, corn, or coffee in Aceh; or seaweed, rubber etc”.