IRRIGATION IMPROCEMENT BECOMES PRIORITY

           To achieve food self-sufficiency, the Agriculture Ministry formerly designated development of new paddy fields as priority. But, as the land promised by the National land Agency and the Forestry Ministry is not yet realized, starting from 2013, the priority will be on irrigation improvement. Agriculture Minister, Suswono, stated this matter.

 

           The benefit of improvement of irrigation system is productivity will directly become high. “We try to develop land whose plant index is one becoming two as this will affect the yield significantly. While, development of new paddy fields requires a long time to achieve high productivity, but it requires a long time due to land conversion.

         Bambang Soejanto, Director General of Forestry Planology of Forestry Ministry, said that the Forestry Ministry has set aside 3007,700 hectares of forest Ministry has set aside 307,700 hectares of forest that can be used for development of paddy field to support achievement of target of 10 million tons of rice surplus by 2014.

         The forest set aside is located in Central Kalimantan with a size of 178,500 hectares, East Kalimantan (9,900 hectares), and West Kalimantan support rice self-sufficiency”, said Bambang.

         According to Bambang, the setting aside of forest is obtained after macro analysis has been performed on convertible forest (HPK) that can be used for development of agricultural land.

         The above area is assured to have fulfilled criteria of agricultural land, namely non-peat, a river channel that can become source or irrigation, non-forest or bushes vegetation, and relatively flat land. The forest set aside has been in accordance with the National Level Forestry Plan (RKTN) which allocates forest areas for non-forestry activities.

        Information concerning the land has been conveyed to the Agriculture Ministry. Bambang said that he has sent a letter to the Director General of Agricultural Facilities and Infrastructures of the Ministry concerning information on the setting aside of land through letter No. S.163/Viii-REN/2012 sent on February 8, 2012. The letter contains attachment of complete map of the forest set aside.

         Bambang admitted that the area set aside still requires a field survey to obtain a more detailed data. The reason is because the area set aside is acquired from map analysis with 1:250,000.

 Business News - February 17, 2012

THE GOVERNMENT IS OVERPROTECTIVE

            Fish processing industry operators consider that the government is overprotective because it issued policy on prohibition on fish import. While, in fact, domestic fishery production is insufficient to meet demand by fish processing industry. The Ministry of Marine and Fisheries predicted that demand for raw material of fish processing industry 24.62% if compared to 2011 which is estimated at 1.99 million tons. If import prohibition continued to be applied, while domestically there is no increase of production, many fish processing there is no increase of production, many fish processing industries will be unable to continue operations.

            Reportedly, the Ministry of Marine and Fisheries will not issue any policy on fish import until first quarter of 2012. Even though it some regions will experience harvest failure, the government will not yet allow fish import. The Ministry of Marine and Fisheries stated that import will the final attempt taken if supply of demand of fish processing industry cannot be sufficed from other regions. Based on the Ministry’s observation, regions which are sensitive to harvest failure are Sumatera and some areas in the Northern Coast of Java (Pantura). In the early part of this year, there will be some companies who will import fish, but these companies are using the old contracts in carrying out import license.

            Chairman of Indonesian Fish Cannery Association (APIKI), Hendri Sutadinata, considered that the attempt taken by the government is overprotective. According to him, if policy on import prohibition is continuously carried out, national fishery industrialization will not be going smoothly. Therefore, national fishery industry operators urge the government to improve national fishery production. Without that, attempt of controlling fish import which is currently being empowered by the government will become a boomerang to fish processing industry which still depends on import.

            Hendri explained that there are two factors that cause decline in fish processing production, namely low raw material supply and application of import license. For example, mackerel fish which is an ingredient so that many companies planned to import. Low supply of raw materials domestically makes fish processing companies to import from China and India. “We ask the government not to be overprotective in banding fish import as it will cause losses to fish processing industries”, Hendri said.

          He admitted that early 2012 is a bad momentum for domestic fish processing industry. Unsupportive weather and import prohibition have made this industry to continuously complain about raw material shortage. Sardine canning industry, for example, due to declining supply of mackerel fish from local farmers, this industry is unable to operate optimally. 15 sardine cannery companies who become members of APIKI require 600 tons of mackerel fish per day because the average production capacity is 40 tons per day each factory.

            Therefore, he asked that import of mackerel fish will not be made complicated. APIKI predicted that production of fish processing industry this year could grow by 25%. The growth is due to increase of demand of processed fish domestically. Production from fish processing industry this year could reach 250,000 tons due to increase of domestic demand because beef price is expensive. But, with industry capacity which only stands at 35%-40% due to difficulty in getting raw material, it will be difficult to meet the demand. “We expect that there will be addition of raw material, as it is difficult to acquire fish from Eastern Indonesia due to long distance”, Hendri said.

 Business News - February 15, 2012

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