THE PROSPECT OF NATIONAL TOURISM INDUSTRY

The Ministry of Tourism and Creative Econo­my made a statement that foreign investment in the tourism sector was permitted up to 100% provided the foreign investor was engaged with local partner so there could be sharing of knowledge in the col­laboration.

Indonesia was an attractive destination coun­try to investors as indicated by increasing performance at home recently. This was part of the concept of Hospitality Investment World [HIM Indonesia 2014 conducted by the Ministry in collaboration with Ter­rapin Singapore as agenda to offer collaboration op­portunity and investment to all tourism operators of the tourism industry.

The activity had been exercised for the third time was a forum which connected local and inter­national hotel owners, operators and hotels and ser­vice management to dissect strategy for tourism and hotel growth in Indonesia. Indonesia's competitive­ness turned stronger while international perception of Indonesia was bettered.

The World Travel and Tourism Council [WTTC] mentioned that the role of tourism was becoming more significant in global economy. In 2013 the world's tourism market was worth USD 7 trillion, while in 2014 it was expected to grow by 4.2%. In­donesia was rated as a country having successfully grabbed the momentum, so in G-20 meeting Indone­sia was acknowledged as a country of high tourism growth.

WTTC estimated this year Indonesia had the chance to book growth of international tourism by 14.2% and domestic tourism by 6.3%. Contribution of the private sector to national economy was pre­dictably 8.1%.

It was disclosed that strengthening of Indo­nesia's competitiveness attracted investors. Data of The Travel and Competitiveness Index released by WEF 2013 had it that Indonesia's competitiveness in tourism had elevated by 4 grades. In 2012 Indone­sia's ranking was 74 and in 2013 was in 70th po­sition with strength in price, natural resources, and priority of tourism.

Indonesia was rated to excel in culture cat­egory, historical heritage and natural beauty. Bettered perception of Indonesia also attracted investors to invest in Indonesia. Various efforts was done by the Government and stakeholders of tourism to promote investment of tourism in Indonesia. Increase of in­ in­vestment in tourism would have its positive impact on people's welfare as it would open employment opportunities.

Indonesia was acknowledged as a country having high growth in tourism at the G-20 meeting. By quarter I 2014 realization of investment in tou­rism had come to USD 130.13 million, with Foreign Investment [PMA] posted at USD 117.24 million and Domestic Investment I PMDNIJ amounting to USD 12.86 million.

Compared to investment realization in quar­ter 1 2013 amounting to USD 36.51 million it was an increase of 256.43%. It showed that investment in tourism was the focus of investors planning to invest in Indonesia. Indonesia excelled in the culture and heritage and rich natural resources category.

In terms of price, Indonesia was seen as a destination of high competitiveness because in terms of "value for money" was in 9th category of 140 countries surveyed by WEF. Indonesia was also rich in tourist objects not fully developed and investors were needed to develop them.

The Government should promote investment in tourism through various efforts. Development of tourism would open job opportunities and promote people's welfare. There were some promising as­pects in Indonesia's tourism like green living among the people in combination with rich natural resources and bio diversity for developing eco-tourism.

Latest survey by the Japan Bank for Inter­national Cooperation [JBIC] mentioned that Indonesia was in highest rank in terms of global businessmen's perception as investment destination country for the next 3 years or so.

In a JIBC survey which involved 488 busi­nesspeople as respondents in 2013 they were asked to choose 5 countries rated as promising high pros­pect for investment for the next 3 years. The result was that 219 respondents [44.9%] included Indone­sia as worthy of consideration

The survey outcome made Indonesia to el­evate to first position which was previously held by China. In second position was India 43.6%; third po­sition Thailand 38.5%; fourth China 37.5% and fifth Vietnam 30.3%.

Hotelier circles who were directly related to national tourism industry rated Indonesia as the most prospective budget hotel in the Asia Pacific region.

However for future development, they expected support and incentive from the Government.

What was most expected was development of physical facilities in tourism location centers, i.e. land, sea and air transportation, good electricity and telecommunication facilities^- other supporting factors like hotel rooms with complete facilities including In­ternet and banking access.

The development of physical infra structure was needed to step up effectiveness of tourism on the arranger side or tourist side. To the tourists, dis­tance never matters, only duration of journey does. It was no use to cover a short distance when it took long time to cover it. Therefore transportation was vital, either the mode or the road condition.

Success in developing tourism would jack up national GDP and increase forex reserves. So aggres­sive promotion campaign was most important to be launched through various media including digital so­cial media.

For reference, now the Government of China was building 2 high towers in Beijing and Shanghai, 'designed to attract foreign tourist. In the future, Chi­na's economic growth would rely more on tourism than export. Indonesia should be aware of it so as not to lose momentum because there were tourist at­tractions which were not managed at best. (SS)

Business New - May 16, 2014

INDUSTRY MINISTRY WILL PREPARE WORKING COMPETENCY STANDARS ON JEWELRY INDUSTRY

The Ministry of Industry will prepare Indo­nesian National Working Competency Standards (SKKNI) considering that the industrialists in this field are often mixing the ingredients for making jewelry, but they do not use the appropriate standards. With SKKNI on jewelry industry, this problem can be ex­pected to be minimized, even in the later process of raw material mixing, there is already a standard which is applicable for Indonesia. The government will also prepare educational and training curriculum to acquire the SKKNI certification.

After opening the 7t Jakarta International Jewelry Fair 2014 in Jakarta, on Thursday (May 8), the Director General of Small and Medium Enterprises (SMEs) of the Ministry of Industry, Euis Saedah, ex­plained that, in fact, there is no problem with Indo­nesian human resources in the field of jewelry. How­ever, so far, entrepreneurs are more concerned about the ability to produce products that can be accepted by the market. While, human resource quality has es­caped their attention.

"In the field of jewelry, one problem is how to generate product design, especially for SMEs in the field of jewelry. Because large and medium-scale jew­elers, through the association, are considered able to solve their problems, both at the level of fabrication or at the level of crafting that needs finishing touch. From here, it needs more detailed ornaments.

Meanwhile, to encourage and build the aware­ness of beautiful and unique designs, since the last three years, we have held jewelry design competi­tions at vocational school level. From here, we expect them to be the forerunners who are preparing to enter the industry, or their designs will become a reference for SMEs in the jewelry business. For that, we are also working with the Jewelry Craft and Design Asso­ciation, considering that so far Indonesia has a strong potential in the field. We have an abundant number of stones and pearls. In addition to gold and silver, these areas are also part of fashion, he said.

In terms of procurement of raw materials, I have suggested that they would form an association, for example in the form of cooperatives. By entering a formal organization like that, besides being able to be a means for solving problems in the company, such as in distribution, it is also likely to have greater bar­gaining power in negotiations with large companies as raw material suppliers, in addition there is certainty of supply of raw materials needed, although we are still facing the fluctuating raw material prices", said Euis.

When opening the exhibition, Euis stated that small and medium industries (SMEs) are one of the great power and leader in the development of the na­tional economy, because SME sector is very impor­tant in creating employment growth. SMEs are also flexible and can easily adapt to the ups and downs of market demand. Because the Ministry of Industry continues to encourage the development of SMEs and the creation of new entrepreneurs to enhance competitiveness in order to deal with the ASEAN Eco­nomic Community (AEC) in 2015.

For centuries, the world has known Indonesia as an archipelagic country which stores immense nat­ural resources, ranging from spices, up to the wealth of traditions that have an implication on a variety of traditional costumes, including jewelry. Various types of precious and semi-precious stones are stored in the earth of this country. One of my goals is to form a catalog book that maps Indonesian natural resources in terms of raw and auxiliary materials, particularly for small and medium industries. Precious or semi­precious stones and jewelry, natural fibers and natu­ral dyes, and traditional foods are all available in this country.

What is done by the Indonesian Goldsmiths and Jewelers Association (APEPI) by continuously implementing this exhibition is part of a long process to build a tough and independent precious stones and jewelry industry in Indonesia. Therefore, I expect public support for large industry players, profession­als in the field of jewelry, technology and marketing, as well as other stakeholders, to carry out the duty of fostering the precious stones and jewelry industry. (E)

Business New - May 14, 2014

MINISTER OF PUBLIC WORKS: TRANS SUMATRA TOLL ROAD PROJECT NOT FEASIBKE THIS YEAR

The Minister of Public Works Djoko Kirmanto was pessimistic that the Trans Sumatra Toll Road project could be realized during the administration of President Susilo Bambang Yudhoyono because PT Hutama Karya [PerseroJ as BUMN which was sup­posed to undertake the 2,700 km toll road project was still waiting for the green light for permit.

However, Djoko said that he was proposing the President to issue a Presidential Regulation [Per­presJ which assigned BUMN to run this toll road proj­ect. "The Perpres is being forwarded to be signed by the present Government," Djoko told the press on the occasion of inaugurating a number of echelon I officials at the Ministry in Jakarta on Friday [9/5].

The Perpres would serve as underlying re­quirements in appointing the BUMN who would run the project. "The Perpres is only a guideline in ap­pointing the BUMN who would undertake the project, not the appointment procedure itself," Djoko clarified.

As the issuance of Perpres was still in pro­cess, Djoko was not in a position to start the project this year, even appointment of BUMN was most un­likely to be done in President SBY's administration. "It is very unlikely, not even to appoint the under­taker, even the land is not there," Djoko stated.

Furthermore Djoko disclosed that appoint­ment of project executor was exercised by the Minis­try of PU, but there were proposals that appointment be done at higher level, which was Perpres. "If the Law said it should be the Minister of Public Works it's because he is responsible. But there were recom­mendations it should be commanded by higher level for support of other institutions and that's no prob­lem. What matters is that the appointed contractor is the right one. Perpres would sort it out" Djoko con­cluded. (SS)

Business New - May 14, 2014

RUPIAH AND IHSG STAND A CHANCE TO STRENGTHEN

Bank Indonesia's decision last week [8/5] to maintain BI benchmark rate at 7.5% was responded well by marketplayers as it was already in line with market expectation. BI' announcement that revised economic growth this year would be around 5.3% - 5.5% was well accepted by the market as it was rational and objective.

Now investors were also watching the Fed's maneuvers under Janet Yellen which signaled to con­tinue moderately tight monetary policy. There seemed no fundamental change in US economy and therefore promised better certainty in spite of overshadowing Ukraina factor.

At home, toward announcement of electory outcome and Presidential candidating by political par­ties there was expectation for positive sentiment for Rupiah and IHSG.

The Moneymarket

Rupiah value against USD strengthened dur­ing transaction on Thursday [8/5]. Data of Bloomberg Dollar Index had it that Rupiah inched up by 0.13% to Rp.11,563 per USD. All day Rupiah moved in the range of Rp.11,563 – Rp.11,634 per USD. During ear­ly session, Rupiah was open to inch up by Rp.11,575 per USD against previous closing at Rp.11,578 per USD.

Somehow Rupiah on Friday [9/5] weakened by 8 points to become Rp.11,570 against previous po­sition at Rp.11,562 per USD. In general Rupiah was transacted the varied way against USD on Friday morn­ing [9/5] last. Of 11 Asian currencies, 5 strengthened against USD, the strongest being Peso. The other five currencies, Rupiah being supressed most by 0.13% to Rp.11,577 per USD.

Predictably BI's mid-rate against USD last weekend [9/5] was in the range of Rp.11,550 –Rp.11,600. Rupiah's course was in paralel with IHSG which was also descending. Meaning Rupiah was still in the red zone; even BI's fixed rate was not strong enough to uplift Rupiah. Normally Rupiah tend to weaken especially when marketplayers saw no change in bank interest which means no stimulant for Rupiah.

Incidentally this time Rupiah downturn was in parrallel with Yuan which would bring impact on trade balance. Moreover with the political crisis in Thai­land which might depreciate Baht. The Constitutional Court of Thailand's verdict on Prime Minister Yingluck Shinawarta seemed no ideal wayout of the crisis.

The Court's verdict had led Thailand to a hori­zontal conflict spit the nation into two blocks. The Court's decision was like a two sided blade which were equally injurious.

The Court's verdict to oust PM Yingluck, ac­cusing him of power abuse resulted in heightened conflict fueled by disappointment among Yingluclk's supporters, on the other hand the verdict to free him disappointed the opposition front.

Although legal solution was necessary, the outburst that happened after verdict of the legal con­stitution was given clearly proved that Thailand was in need of a political solution instead of just legal way-out. Apparently the political elite of Thailand were too late to realize that the unrest had flared up to burn all the elements of life in Thailand.

The head-on confrontation between the two fronts in Thailand needed an approach which could melt down political grudge after Thaknsin Shinawarta was ousted by military coup d'etat. Effort of the op­position to bring the case into the domain of law was regarded by pro-Yingluck group as legalized ousting.

Somehow the complicated situation in Thai­land still needed legal solution. The only thing was that solution was incomplete without political solu­tion and power disassembling. The Constitutional Court had to face a crucial dilemma because whatever the decision, Thailand remained to be in a vacuum condi­tion.

The vacuum condition in Thailand's politics needed The Third Way to refer to Prof. Anthony Giddens, expert in social democracy. Thailand even needed three ways, i.e. the legal way, politics and meta politics toward one point of power deconstruc­tion. It was time to fully elaborate Thailand's social asset which was supported by royal charisma to end political vacuum.

Last week [8/5] BI decided to keep bench­mark rate at 7.5%. The monetary authority also main­tained lending rate and deposit facility at 7.5% and 5.7% respectively.

The decision was based on the development of global economic condition, especially deficit in current transaction and inflation. To policy was still to keep inflation on the track, i.e. 4.5% +1- 1% and 4% +1-1% in 2015. Inflation was seen to be on the downturn. . Inflation in quarter I /2014 was 7,32% don against previous quarter at 8.38%. Eased infla­tion was due to eased inflation in volatile food and core inflation.

Maintained BI rate was also expected to nar­row deficit to the targeted 3% of GDP this year. Defi­cit in quarter I was posted at 2.06%, down against quarter IV at 2.12% due to contraction of non oil-gas import and moderation of economic process; also re­duced deficit of service balance sheet.

BI had also revised down economic growth this year from around 5.5% -5.9% to 5.1% - to 5.1% -5.5% taking into consideration realization of eco­nomic growth and estimation on the external side, commodity prices, and effect of the Minerba Law. Revision was necessary because of downturn in real export, namely goods and services.

When BI estimated economic growth would be at 5.5% - 5.9%, export of goods and services was predicted to grow by 8.1% - 8.5%. However, in view of the present condition, export of goods and services was only projected to grow at 1.5% - 1.9%. On the other hand BI estimated Household Consump­tion could grow by 5.1% - 5.5%, higher than the previous estimate at 4.9% - 5.3%. investment could still grow at around 4.8% - 5.2%.

There were at least 3 basic factors used as reference by BI among others economic slowdown in China, downturn of commodity prices and the Minerba Law. To cover up economic slowdown, BI claimed that the Household consumption sector and investment could grow to sustain economic growth of quarter I / 2014.

The only thing was that BI was beginning to watch on increasing import of consumer goods to­ward Ramadhan fasting month and Idul Fitri. The rea­son was that increased import would expand deficit. Usually toward Ramadhan import tend to increase, especially oil-gas and non oil-gas.

The same condition happened in the years before. DTB would also be affected by repatriation, in addition to some global risk which affected cur­rent transaction. Apparently Rupiah would be station­ary at around Rp.11,550 – Rp.11,650 per USD and to strengthen again this week at Rp.11 ,450 – Rp.11,600 per USD still strengthened by election factor.

The Capital Market                               

Last Thursday [8/5] index oh IHSG closed transaction to inch down by 1.180 points [0.02%] to the level of 4,860.860.889. Meanwhile index of LQ45 inched up by 1.480 points to the level of 821.565. Index was only able to reach its highest level at 4.889.052 before finally slipping off to the red zone.

There were acts of profit taking during an­nouncement of BI benchmark rate. BI finally decided to maintain benchmark rate at 7,.5%. This was rated as in line with inflation expectation. The stable condi­tion made marketplayers hunt shares to push IHSG back to positive direction although only momentary. Foreign investors were among the most active in re­leasing shares, they were seen to make foreign net sell worth Rp.136 billion all over the market.

Janet Yellen's speech once brought positive sentiment to regional marketplayers. US stockmarket was also zealous as indicated by index of Dow Jones which once rose by 104 points or 0.2% to 16,580.84 as the highest record since April 30. Shares of AT & T and Walt Disney took the lead in increase of premium shares. However index of S&P inched down on 0.2% while index of Nasdaq also inched down by 0.4% being suppressed by shares of the energy and utility sector.

                    

Index of Nasdaq had fallen to its lowest level for 3 consecutive days since last month. Early last week Nasdaq strengthened thanks to technologic! shares and reduced joblessness, but act of selling of energy and utility shares which ascended early last week, dragged the two reference indices to the nega­tive territory.

This week New York stockmarket was pre­dicted to stay good because labor toward announce­ment of joblessness claim dropped by 26,000 to be­come 319,000 last week against 325,000 the week before. For 4 weeks increasing by 324,750 against 320,250 the previous week. This was related to the statement that the employment market had fully re­covered after winter. Marketplayers could see US economy growing fast.

Asian stockmarkets closed transaction com­pactly at green zone. Index of Nikkei 225 went up by 130.33 points [0.93%] to 14,163.78 and index of Hang Seng rose by 90.86 points [0.42%] to the level of 21,837.12 - while index of Composite Shanghai strengthened by 5.19 points [0.26%] to the level of 2,015.27 and index of Straits Times grew by 7.91 points [0.24%] to 3,244.34.

During early session last Friday [9/5/2014] at BEI IHSG progressed by 117 points [0.24%] to 4,872 the lowest level being 4,865.2 and highest 4,878.703; 122 shares posted upturn, 52 shares down, 70 shares stagnated and 297 shares totally inactive. Total transaction value had not reached Rp.1 trillion at Rp596.4 billion. Foreign investors booked buyings worth Rp.151.1 billion and sales Rp.98.8 bil­lion. All in all, foreigners booked net buying worth Rp.52.2 billion.

So far BEI already booked foreign capital en­tering Indonesia at Rp.30 trillion since early 2014. The so many foreign capital flowing in showed that Indonesia's stockmartket was growing. Foreign net buy early this year till last week had reached Rp.30 trillion.

Today IHSG was second highest in ASEAN next to the Philippines. Increase by year-to-date was posted at 14%. Market capitalization also increased constantly. Indonesia's stockmarket was today de­veloping. To maintain it, various measures had been taken such as running Investors Day 2014.

As per this week, investors must observe shares of the banking sector. As known, credit growth as per quarter I 2014 slowed down against previous quarter in line with domestic change. Credit growth to the economic sector slowed down from 21.4% in quarter IV 2013 to 19.1% in quarter I 2014. BI kept coordinating with OJK to balanced up economic growth.

Previously OJK already underscored they would give notice to banks having credit growth above 20%. BI and OJK feared that if banks were too aggressive in extending credit it affected liquidity. Banks were asked to be more prudent in responding to macro economic condition.

From the above picture, last week predict­ably IHSG would be closed in the range of 4,890 - 4,940 and to continue this week in the range of 4,900 5,000 as investors were satisfied with the announcement of election outcome. (SS)

Business New - May 14, 2014