TEN MINISTERS AND INSTITUTIONS BEING AUDITED TO TRIM BUREAUCRACY

The process of trimming in 16 ministries and institutions was beginning to show results. Restructuring of 3 institutions has been accomplished in terms of legal aspect, i.e. the ministry of PANRB, the state Employment Board [BKN] and state administration [LAN] while 3 other institutions were being audited and another 10 would be audited and evaluated.

Three ministries and institutions presently being audited were the ministry of internal affairs, the ministry of agriculture and ANRI. Another 10 institutions soon to be audited were the ministry of law and human rights, the ministry of forestry, the ministry of maritime and fishery, the ministry of health, the ministry of education and culture, the ministry of social affairs, the ministry of national development and planning and BPKP.

The secretary of the ministry of PANRB Tasdik Kinanto stated that this audit and evaluation had the objective of minimizing differentiation and fragmentation in each ministry respectively, whereby each unit could carry out their duties and function to the maximum according to their respective mandates “the audit was meant to check the health level of each ministry” Tasdik disclosed to business news [23/4].

The auditing plan had been approved by Vice President Boediono. The Vice President had even ordered to exercise audit on 16 institutions. The consideration for prioritizing the 16 institutions was that they managed strategic government affairs, which were related to general affairs, basic service, people’s welfare and sustainable management of natural resources.

The 16 aforementioned ministries also had strong leverage force in enhancing reformation of the bureaucracy. The auditing and evaluation plan seemed to be well underway as planned. The secretary General of the Ministry of Law and Human Rights Bambang Ratnam S state his support. “We agree and we back up the Ministry of PANRB. This audit is a strategic step to reform the bureaucracy “he said.

Meanwhile Acting Deputy of institutions division, Ministry of PANRB Rini Widianti stated that beside auditing of 16 ministries, the audit outcome from the micro aspect already done by the Ministry of PANRB must still be exercised, “In addition to that we also plan to improve the macro side to synchronize with micro.” Rini disclosed to business news. [23/4]

Auditing and evaluation was exercised on the basis of guidelines prepared by the Ministry of PANRB involving all stakeholders according to the set time frame. The Ministry of PANRB facilitated consultation whenever needed. The consultants submitted regular report to the Top Executive and Ministry of PANRB; furthermore PANRB would monitor and evaluate the executive of audit and evaluation exercised by the consultant.

In that opportunity was also elaborated the process of restructuring UPT and vertical institutions consisting of 8 stages. The first, in red color was disposition, the second, in dark yellow means under perusal, the third in light yellow means test of completeness, the fifth in light blue means discussion of related institution, the sixth was in dark pink which means technical discussion with proposal, the seventh in light pink means official notice. 

Lastly, the eighth stage in light blue which means letter of reply of the Ministry of PANRB. The process was open; it could be seen in the site of the Ministry of PANRB. The color did not denote that the organization was bad. “But the color is warning that we need to audit on ministries which had been diagnosed.”

Business New - July 26, 2013

SAFEGUARD IN OVERSEAS TRADING TO PROTECT DOMESTIC MARKET

Safeguard was one of the protective instruments in international trading which was similar to anti-dumping. The three instruments were regulated in WTO which regulated that certain imported products could be charged with extra tax if they caused injury on importer nation. Safeguard was also regulated by Indonesia law i.e. keppress no 84 year 2002on securing domestic industry against storming import and regulation of the ministry of trade no 37/2008 on certificate of origin for ported goods which were being controlled.

Based on the safeguard agreement every country had the right to take action to protect their domestic product in the event that the domestic Industry were unable to compete and suffer serious losses as result of flooding foreign products. Today’s phenomenon was acts of safeguarding increasing by intensity all over the world in the effort to protect the domestic market from the invasion of imported products. “Every country was allowed to safeguard their domestic market. That was the trend that heightened acts of safeguarding.” The deputy minister of trade Bayu Krisnamurthi was quoted as saying in Jakarta on Monday [22/4].

Bayu saw that world’s economic slowdown had increased acts of safeguarding among nations. Therefore Indonesia must step up capability clarify any case to WTO; the objective was to safeguard the domestic market from the present world economic condition, bayu called out all parties to wisely encounter all problems. Stepping up of capacity and capability was needed to overcome all problems.

Bayu showed as an example the case when recently the US government brought a case to WTO in regard to regulations on import of horticulture products by Indonesia and axing of quota for importing cow’s meat. Now again the USA made accusation addressed to Indonesian export products. This time, the target was frozen shrimps. Bayu explained that coalition of Gulf Shrimp Industries [COGSI] of the USA had addressed petition of anti-subsidy to Indonesia in regard to export of frozen food. The accusation was not only addressed to Indonesia but also to India, china, equador, Vietnam, Thailand, and Malaysia.

The deputy minister of trade remarked that global economic crisis had spurred on acts of safeguarding by nearly all countries of the world. The objective was to protect their respective domestic industry and win the global competition amidst shrinking market absorption capacity. He said that many countries were exercising safeguarding practices to keep their industries from closing. On the other hand, there were countries who gave incentives to their industry which was in fact prohibited by WTO.

He admitted that Indonesia had also implemented trade remedies instruments like anti-dumping and safeguard. According to Bayu Indonesia had to do safeguarding as there were certain conditions which disadvantaged the domestic industry. He claimed that Indonesia had exercised anti-dumping claims to wall out import of cheap products which threatened the domestic industry. Indonesia had also exercised safeguard in the form of import tax or import quota. So far Indonesia had never extended subsidy on the national industry.

 

Bayu reminded that economic contraction Europe and American in 2013 might generate the impact of flooding import in Indonesia. He disclosed that the USA and Europe commanded over 50% or USD 30 – USD 35 trillion of the world’s total economy which amounted to around USD 70 trillion. However, many circles predicted that this year Europe would have contraction of 1% and North American 1%- 2% or equal to GDP downturn of Rp300 billion in the two regions.

Business News - July 26, 2013

IN COMBATTING FORGERY, THE GOVERNMENT CREATES BATIK MARK SYSTEM

In an attempt to protect and provide quality assurance on the batik industry, the government created a batik mark system. In addition, the system is also intended to preserve and develop batik products in the country. Batik mark is a sign indicating the identity and characteristics of Indonesia batik, i.e. batik tulis (written batik), batik cap (printed batik), as well as a combination of written and printed batik. “Actually, the main purpose the issuance of batik mark certification is to ensure the perspective of the world”. Said Euis Saedah, Director General of Small and Medium Industry of the Ministry of Industry in Jakarta on Wednesday (4/24).

Euis explained that batik-patterned and processed textiles are Indonesian traditional wealth. Batik mark is also intended to keep the quality of batik patterned and processed textiles. Batik mark logo is useful tool for distinguishing Indonesian batik from batik produced by other countries. By doing so, it will allow foreign consumers to recognize Indonesian batik, or the buyers in the country will be more convinced of what to wear.

Minister of industry regulation No. 74/2007 on the use of Batik Mark logo for Indonesian Batik and Regulation of Director General of Small and Medium Industry No. 71/2009 on technical Guidelines for the use of batik mark logo fir Indonesian batik have also been issued. The logo is to differentiate Indonesian-made batik from batik products from other countries. Euis said that batik mark is an identity in the face of competition between identical products on the market as well as a tool in facing piracy of in Indonesian batik by foreign textile manufacturers. “We want to ensure that our products are not faked”, she said

.

She said that she will reprioritize the textile sector, including batik, to become superior products of Indonesia. Indonesia’s contribution to the textile world currently is only 2% of the export value reaching USD12.6 billion. She said that the ministry of industry was fixing the infrastructures, coats and rates in an effort to prepare the textile industry in the ASEAN free trade by 2015. These attempts are also to increase the contribution of Indonesia textiles in the world as much as 5%.

Euis questioned that when batik was designated as an Indonesia culture, within two years UNESCO will evaluate whether Indonesia is serious about taking care of batik. If not, then the predicate of batik as an Indonesian culture will be revoked. She says that there are 10 countries that continue to explore and develop batik. However, only Indonesian that has been designated as a global home of batik. Euis said that the program is intended to provide a typical characteristic of batik produced by Indonesian. Written batik will be given a gold mark sign, printed batik a white marking, while the combination of written and printed batik will be given a silver marking. Batik mark program is also aimed to protect crafters and consumers from counterfeit products.

She said that currently, handicraft and batik industry center has issued 106 batik mark certificates and the number continues to increase, although it still requires socialization. Euis set 10 small and medium batik industries to get batik mark certificates this year. She said that batik growth continues to increase. Last year the growth was 12%. This figure is much higher than the growth of the textile industry. However, she admitted that she was restless with cheap batik from china. Therefore, it will tighten supervision. While, regarding the cost required for the issuance of certificate by the handicraft and batik industry center, batik producers are imposed with Rp. 1.7 million administrative costs.

Business News - July 26, 2013

ECONOMY STILL SUSTAINED BY DIRECT INVESTMENT

There were four factors which constituted the growth assets of a nation, namely public consumption, government’s spending, direct physical investment and international trading [import & export] in the past two years when the world’s economy was sullen, the import-export factor could not be expected too much. 

In fact there was one factor to pin hope on, i.e. government’s expenditure, but whatever the reason, realization of government’s expenditure was allays below the planned budget. Many people were wondering how such could happen: plenty of money, but not spent. The answer was perhaps poor managerial capability of the governors, but in general it was truly puzzling.

Were the high ranking government officials afraid of law enforcement actions by the ant graft bodies so the governors refuse to take lead in project management in their respective office? That was probably the answer, but the fact was nearly every year there was surplus of money, which was unspent budget.

In the case then public consumption could be the source to pin hope on. Now the people are purchasing power especially that of the emerging middle class was at the peak of strength. Whatever the consumer goods, from expensive to cheap items, were bought by the people because they could afford it. It came as no surprise that domestic consumption still constituted the highest of state’s asset.

Not ignorable was the contribution of direct investment, because it had its direct impact on economy. Direct investment had its broad impact from factory building and expansion, opening of employment opportunities, promotion of welfare and reduction of poverty.

Thanks fully foreign perception of Indonesia’s economic prospect was today still positive. Indonesia’s rating of investment grade was a motivation for investors to invest their capital in Indonesia. The latest news was that foreign capital in Indonesia made their highest quarterly record in the past 3 months of this year. The attainment underscored investor’s growing interest in the emerging middle class in Indonesia.

The investment coordinating board [BKPM] reported that the total foreign investment in Indonesia over the period of January-march this year rose by 27.2% to Rp65.5 trillion, which was an increase of 22.9% in quarter IV of 2012, when foreign investment came to Rp56.8 trillion.

BKPM’s report had it that domestic investors invested their capital of Rp27.5 trillion over the same period. In the previous year, the amount was posted at Rp19.7 trillion total investment in quarter l 2013 in Indonesia rose by 23.8% to become Rp93 trillion.

Date of foreign investment [PMA] signaled that foreign investors were willing cast aside the grievances that Indonesia was getting more protective was and was not doing enough renovation of bad infra structure. In the future, many analyst and economist rated that inflow of PMA would keep increasing was expecting it to reach USD 30 – 35 billion USD.

The condition generated optimism about attainment of 2013 investment which would meet target of Rp390.3 trillion against the previous year amounting to Rp313.2 trillion. It was noteworthy that now investment orientation was shifting from plantation sector to manufacturing.

Certainly the shift was a positive thing because with the downturn of primary commodity price in the world market. Dependency on natural resources and plantation commodities must be reduced. On the contrary, the manufacturing industry must be jacked up because they created better stability and all the ensuring positive impact.

Since 2004 last, the government and business world were losing steam in developing the national manufacturing industry and tend to expand business in natural resources. Now that commodity price slumped, many companies were having setback in business so they were led “back to the straight path” and turn to manufacturing.

There was a growing interest among foreign investors in Indonesia since Fitch ratings and moody’s investor’s service promoted Indonesia’s rating from sovereign credit to investment grade by and of 2011 and early 2012.strong consumer’s demand, stable economic growth amidst economic slowdown in the western states, and abundant natural resources enhanced investors zest.

According to Mc Kinsey Global Institute report of September 2012, increased income would increase Indonesia consumers to 90 million in 2030. The figure outnumbered that of any country except china and India meaning business in Indonesia was still highly prospective.

However the World Bank still warned Indonesia in their “Indonesia economic quarterly” that it seemed investment would be hampered by failures in regulations, wrong policy making and uncertain condition toward general election of 2014.

Indonesia had to face strong competition from other export-oriented countries by the time workers’ wages, at minimum regional wages was having significant increase.

Minimum regional wags increased by 18% in all of Indonesia by 2013. In some cities and regencies the increase could even be as high as 50%. The World Bank’s warning must be responded properly by the government so continuity of economic development could be well underway.

So far Japan was the biggest PMA investor Indonesia in the first quarter with total investment in the automotive sector amounting to USD 1.2 billion. Next was South Korea with total investment of USD 800 million and the third place was Singapore with investment of USD 600 billion.

By sector, over that period invested foreign capital including miner industry totaled USD 1.4 billion, chemical and pharmaceutical industry totaled USD 1.2 billion and the metal, heavy industry and electronic industry came to USD 1.0 billion.

From the above picture, Indonesia had reason to be confident that the 6.2% - 6.5% growth would be attained, relying on direct physical investment as main contributor after domestic consumption. Investment was estimated to contribute around 35% while domestic consumption contributed 60%; government spending constituted 10%. Meanwhile contribution from overseas trading [export minus import] by net the percentage was negative, around 5 %.

 

Business New - July 26, 2013

BILL ON BUREAUCRACY REFORMATION DUE BEFORE ELECTION

A number of bills which would serve as pillars of reformation of the bureaucracy must be passed over the period of the next 12 months before election. The bill consisted of among others: bill on state civilian apparatus [Asn], bill on government administration [Adpem] and bill on government internal control system [SPIP]. The bill was supposed to be free from political interference toward presidential election of 2014. “The political climate is getting hot lately. Whoever is elected as president he should given assurance that corruption eradication and reformation of the bureaucracy would be prioritized” Erry Riyana, head of the independent team of bureaucracy reformation disclosed to disclosed to business news [23/4]. 

As soon as the Bills were passed into law, whoever was elected as president would not easily adopt off-track policy. The case was not as simple as Government Regulation [PP] or presidential regulation [perpres] where the president could easily make changes. The future president was expected to be a reformist figure, so reformation of the bureaucracy would be a priority. “Reformation of the bureaucracy must be constantly carried out, but the fruits could not be benefited in a short time"

Implementation a reformation of the bureaucracy in some ministries was still nothing but paperwork. “The implementation is still beyond people’s expectation and it’s very disheartening”

The objective of the reformation itself was mainly to establish a clean bureaucracy which served. However to change the mindset a culture of civil servant was not easy. Therefore Erry he urged all executives at the ministries to be more daring and stringent to make breakthroughs within the existing corridors toward achieving reformation of the bureaucracy.

 

In public services for example, there must be a clear standard operating procedure whice was consistently implemented. Discipline among civil servants [PNS] must be enforced without any psychological barriers. This must be put in effect starting from recruitment of CPNS, promotion, until person. “Apply punish and reward consistently.”

About some cases of civil servant at the tax dept who were could red handed recently, Erry responded just lightly. “They are fraudulent people, there are always such people in any institution.” It did not mean they could be ignored they should be sanctioned according to the rules, so the disease would not infect other personnel. By hard sanction a deterrent effect would be made to other employees, so they need not to commit the same mistake.

The recommendation made by the deputy minister of PANREB Eko Prasojo about the principle of chain effect in accountability must be supported. A leader must be accountable for the mistakes done by his subordinates; other personnel of the same unit must share the sanction.

Civilians must refer to the culture among military circles. “The subordinate commits mistake, the leader must be responsible”

Although there were cases of felonious employees like Gayus Tambunan, so far only the ministry of finance had exercised reformation of the bureaucracy the integrated and specified way. The ministry of finance had changed standard of operation procedures [SOP]. Services had shown significant improvement, discipline and working ethos of employees turned better, and targets were met at the ministry.

Other problem of reformation was the so many regulations in effect which were not synchronous with one another. So many law, PP and perpress which were not synchronous and even contradicted. The same was with permen, kepmen, perda etc. all must be harmonized so the underlying regulations could be made clear. “The vice President as Chairman of the Reformation Committee must see this. A structural and earnest reformation must be exercised within the circles of law enforces, prosecutors and police force, so law enforcement could run smoothly and properly.”

Business New - July 26, 2013 

HAPPY EID MUBARAK 1434 H