GOVERNMENT TIGHTENS ISSUANCE OF IMPORT APPROVAL LETTER FOR MEAT AND CATTLE IMPORT

           The government will tighten issuance of Import Approval Letter (SPP) for import of meat and cattle. For that purpose, the government will revise Regulation of Agriculture Minister No. 52/Permentan/OT.140/9/2011 on Approval Recommendation on Cattle Import and Export Into and Out of Indonesian Territory. The new requirement is scheduled to become effective in the second semester of this year.

            Syukur Iwantoro, Director General of Animal Husbandry and Animal Health of Agriculture Minister said that his party planned to add new requirement for importer who apples for SPP on meat and feeder cattle. The requirement include, amongst other, import realization performance and local cattle absorption. Other consideration is capacity of quarantine installation, slaughterhouse, and registered importer license.

            On import performance, the government will consider the ability of company in realizing export quota received last year. If a company receives quota for import of feeder cattle of 100,000 heads, but only 40,000 heads are realized, the government will consider the granting of import license.

            In determining companies who receive import quota, the Agriculture Ministry will involve the related institutions, amongst others, the Trade Ministry, Industry Ministry, and Economic Affairs Ministry. Total quota granted by the government to each importer will be based on mutual agreement of all institutions.

            Concerning quantity of SPP for meat import, in the first semester of 2012, the government has issued 21,000tons for frozen meat or 60% of 34,000 tons. For meat import, there are at least 56 companies who requested for SPP. But, from the quota granted, the realization is only 70% - 80%.

            While, SPP for import of feeder cattle for the first quarter of this year, 100% has been granted from the decided quota. The government decided import of feeder cattle in the first quarter of this year at 60,000 heads. From this amount, only around 25% that has been realized. Quota on import of feeder cattle is given to 24 feed otter companies who applied for license.

            For this year, the government decided meat demand at 484,000 tons. From this amount, 399.22 thousand tons can be fulfilled by domestic supply. Local beef cattle population to meet meat availability reaches 2.51 million heads. 39% of then are male cattle and 61% female cattle.

            So, the remaining 17,5% or 85,000 tons of meat demand must be fulfilled by import. For this year, the government decided quota on import of frozen meat at 34,000 tons and feeder cattle at 283,000 heads or equivalent to 51,000 tons of frozen meat. It means that 60% of import consists of feeder cattle and 40% consists of frozen meat.

            Joni Liano, Indonesian Meat Producers and Feedlot Association (Apfindo), told Business News that there is no problem with government’s plan to tighten issuance of SPP for import of meat and feeder cattle. Yet, however, the companies expect the government to accelerate issuance of SPP.

            So far, when a company files application for SPP, time of issuance of SPP took around 30 working days. This is because SPP processing must pass through many desks. In addition to the Directorate General of Animal Husbandry and Animal Health, SPP application must also pass through the Center for Agriculture Licensing and Investment and Agricultural Quarantine Agency. Issuance of SPP should, at the minimum, take only 15 working days.

            Unlike the government who claims that cattle import in the first quarter has only reached 25%, Apfindo calculated that the quantity of imported cattle has reached almost 60% of quota given by the government. Even, in mid March it is expected that 100& of the quota issued will be realized.

 Business News - February 29, 2012

CERTIFICATION OF WOOD LEGALITY BURDEN SMALL BUSINESS

        The Government continued to oblige holders of forest concessions to exercise certification of forest management or to obtain legalization label for logging of the forest industry in order to strengthen competitive edge of export products. Certification of management of conservation forest served as answer to demand of buyer countries who demanded logging from legal resources. The verification system for wood legality (SVLKI) also served as effort to block out entry of woods from illegal logging which had been an obstacle to expansion effort of Indonesian woods especially to European countries. With SVLK, Indonesian woods were guaranteed to be accepted in the international market.

            Indonesia and Uni Europe had agreed to foster collaboration in trading which was expected to protect Indonesian forests from destruction by looters. The agreement included certification of wood to be exported to Europe so beside prohibiting sales of illegal logging, buyers were also forbidden to buy uncertified logs. The voluntary partnership agreement (VPA) in law enforcement, management, and trading in forestry business (FLEGT) were all serious Government’s effort to fight illegal logging practices.

            The business world welcomed Government’s intention to crack down illegal logging and trading of illegal log and to promote credibility of the Indonesian forestry industry whereby to fairly compete in international trading. However, it must not happen that just for the sake of strengthening competitiveness of Indonesia’s wood products, the Government had to scarify logging companies especially of the small business (UKM) category. To put SLVK into effect did not mean to burden small business Loging operators were expecting that the execution of SLVK not be based of generalization.

          According to Ambar Tjahyono, Chairman of the Association of Indonesian Furniture and Handicraft Producers (Asmindo) in Jakarta (Friday 24/2/2012) implementation by generalization would not only disable small business and home industry. Ambar was hoping that implementation of SVLK for home industry not be equalized with industry in big scale. Certification of legalization should be given for free. “Frankly speaking small companies do mind if they had to bear the certification expenses for wood” Ambar was quoted as saying.

        For that matter Ambar proposed that cost of SLVK procedure be home by the Government. Ambar underscored that the cost of SLVK application was too high for small-and-medium business. The cost was Rp 70 million and certainly too heavy for producers of the small-and-medium (IKM) category. He elaborated that IKM played a prevalent role in Indonesia’s furniture industry as subcontractor for big exporters. Without SLVK, he said, furniture products of big companies which were partly produced by IKM subcontractors could be rejected from entering the Euro or USA market.

            Ambar explained that The Regulation of the Ministry of Forestry no 68/2011 obliged furniture producers to have SLVK previously the rule was only applicable to primary logging industry such as hardboards and processed wood.  SLVK certificates could be used as reference of legality of wood raw materials for wood based commodities marketed in Indonesia and overseas to replace recommendation of the Board of Revitalization of Forestry Industry (BRIK). Application of this SLVK certificate was to anticipate tightened screening over wood products via Uni Europe (EU FLEGHT), Japan (Konjubo) and the USA (Lacey Act). 

  Business News - February 29, 2012

TO BOLSTER UP FOMESTIC ECONOMY

          Crisis in the USA and Europe turned the Asean region into an alternative market being aimed at as target by many countries. Not just because of the positive economic growth but also because of the high population.

          Some international trade agreements including ASEAN-China Free trade Area (ACFTA) opened door widens by Asean nationals for international trading whereby every country strived to develop their products and services to the maximum.

        In Asia, even before various agreements were signed, China’s products penetrated markets of many countries, starting from simple commodities like needles and hoes to high tech products like electronics and industrial machines, automotives and industrial machines.

            It was still fresh in the mind of consumers that some years ago some motorcycles of China brand (known as Mocin) invaded the Indonesian market with their competitive pricing, although the product turned out to be a failure.

            The free market had been a global trend so like it or not Indonesia had to be part of the game. The point was that if foreign imported product kept flooding in without control, it might as well undermine the nation’s economic strategy.

           One thing was sure landslide of foreign products could bulldoze local commodities in the market; moreover China’s products were offered at prices way below that of local products as they were subsidized by their Government.

            There were too many cases already where Indonesian businesspeople changed profession from producers to traders to be exact traders of China’s products as they were desperately struggling to press down production cost in order to compete with products of China which were cheaper and better by quality.

            It came as no surprise that credit absorption for the trading sector kept expanding; this indicated that more and more producers were changing profession into traders. What was more they only had a little margin to play with, while the added value portion was already taken by producers in China.

            A case study in the province of Central Java showed that import of products from China kept increasing drastically. Latest data had it that the volume of import entering that province rose to 1,700% while export value to China only increased by 70%.

            Total import from China constituted 30% of total import in Central Java. For the most part the imported commodities were electronic goods and toys. Without serious effort, the market in this province would remain to be packed with imported goods.

            In view of such a disheartening condition the Government should control import from China to anticipate disadvantageous impact from China to anticipate disadvantageous impact of flooding goods from China, not just in Central Java but also in other provinces as the phenomenon was spreading nationwide.

          Definitely it was not enough to implement the Indonesia National Standard (SNI) rule on all imported products because even now there were already numerous producers from China who were applying for SNI. Among the thinkable measure was to make it mandatory for exporters of that country to have import ID number.

            As known, China was in fact only in 3^rd position as biggest origin of import in Central Java after Saudi Arabia and Singapore but the trend was now increasing to an alarming level.

        On the other hand national producers could in fact learn a lot about competing and strengthening competitiveness, for example by enhancing efficiency and quality whereby to outsell competitors who offered high quality and low price. Still in this case the Government’s support was needed such as in tax exemptions and eased permit application procedures.

            It was not too late for the Government of RI to control invasion of products from China or ASEAN states as long as the Government was resolute about it. Moreover the trend of growing deficit in bilateral trading between Indonesia and China kept on expanding instead of shrinking.

         Naturally the Government was in no condition to wall out foreign products being imported as long as domestic demand was there. It was now homework for the Government and businesspeople to grab the big market opportunity at home by being able to produce commodities of goods quality and affordable price as needed by local consumers.

            There would be regret if the heavy inflow of goods from abroad were getting out of control; under such circumstances it was inevitable that Indonesia would be losing competitiveness in the future, while local consumers would be more in favor of foreign products because local producers we unable to make them.

            Among the type of products of comparative advantage made by local producers were products of the creative industry such as handicrafts, fashion, film, multi-media, audio visual etc. Creative product of high artistic value were highly prospective products at home and abroad. All it takes was determination and will power to carry out the task.

Business News - February 29, 2012