Sunday, 14 September 2014

TODAY’S FOREST DAMAGE EXCEEDING THAT OF COLONIAL TIME



The act of deforestation in Indonesia due to “clearance sale” or concessions for plan plantation and mining in the period of the New Order up till now had exceeded the ‘achievement’ by the Dutch colonial regieme. Through the Vereenegde Oost Indiesche Companie [VOC] the Dutch Government had axed millions of hectares of forest in all of Indonesia, but the Indonesia Government since the days of the New Order till now had damaged 64 million of forest. “deforestation seemed not enough, enter the Violation of human rights on custom communities” Bondan Andriyanu Chairtman of the National Geo Data disclosed to Business News [4/8].

The easy issuance of concession permit was contradictory to the principle of Natural Resource Management [SDA], while the GDN, through the application of Spatial Geodata System would publish accurate mapping and information to all parties. The system was integrated into CSO Geodata system. “We do not wish this Republic to become a Republic of Concession permit. So easy did the Government, central or provincial to give away concession permit. Evidently plantations and mining had damaged our forest”

GDN had mapped out some regions in Kalimantan which were eroded by palm plantations and mines. Data of Ministry of Forestry has it that forest destruction had begun since the application of HPH concession regieme. The condition of forest in East Kalimantan, South Kalimantan was critical. The land being given away had reached hills and mountains. People’s communities were edged asides. Coal mines, iron mines and palm plantation prevailed. Land possession had even reached lakes and swamps,” We are trying to map out the land. Land dispute might burst out any many time. Public land overlap with plantations and mining”

The people around mining sites tend to be edged asides, and overruled by big size investors. The Government tend to stand on the side of big investors not on the people who owned land willed to them generation after generation. “The people have the right to process land and manage natural resource. Conflict potentials which was once latent now had become manifest.”

The next Government, especially when Jokowi Widodo was officially installed as Indonesia’s 7th President, must look at the mater seriously. The elected President must set up a competent body to tackle land disputes in the regions. “They must be given the chance to negotiate with investors over land utilization. Natural resources should be allocated for people’s property”

Soon the body must manage land on spatial base of complicit over natural and agricultural resources. GDN managed spatial based data on conflict. CSO included in geo data continued to build spatial based sites. GDN networking encompassed participative mapping [JKJPP], Hu Ma clubs, Sawit Watch club, agricultural Reformation Consortium [KPA], People’s Forest Consortium [KpSHK], Jatam, and Indonesia Forest Watch [FWI].

“We will invite certain ministries. We introduce directly our geordata system. Some ministries like agriculture, transportation, BPN. Could call for public participation to comment on the best system to find the best solution”

Conflicts over natural resources over the past 3 years had stolen public attention considering the intensity of occurrence. Difference in land possession among conflicting parties never came to any clarity. Many conflicts which originally hidden now busted out to the surface. “when the public know a concession zone was possessed by companies, we believe it is necessary to do mapping. The conflict potential would become part of mapping, and the people must not just stand still”

Instead of attaining food sovereignty, the nation was dominated by a regime of food corporations where big corporations prevailed in food production and trading, while small farmers were marginalized. Things were made worse by policies which ignore environmental well being and human rights.

So far the national Geo Data team had recorded hundred of conflicts of various frequencies in 98 cities/regencies in 26 provinces. Such was most disheartening because to total disputed land areas was posted at 2,043,287 hectare or more that 20,000 km2 [data Hu Ma]. besides, this year the number of agricultural conflicts kept increasing. Lost of life was posted at 21 people dead, 30 people shot, 130 people tortured and 239 people arrested by the Security Forces [Data KPA]. Large scale investments, not accompanied by change on land processing system, had been wrong. “The way we see it, conflict might continued and will never end”

The confusion in Natural Resource Management was seen in the fact that around 13,000,000 ha of land had been designated as palm concession zones [Data Sawit Watch] and the appearance of 10,935 mining permit which claimed 40 million hectares of land Indonesia. The actors involved in land dispute against communities were among others: Government institutions, companies, and Government Owned companies [BUMN] i.e PTPN Perhutani. Four types of conflict issues were: Forest and Customs communities, Land Grabbing, Plantation, Mining, coal mining and water tapping.

There was mistake on Government’s side in defining food resiliency which was focused on corporate regimes and efficiency. Such had Created various problems which wide spread globally such as small producers losing market share and various environmental damages in agriculture. Food sovereignty must be a grave issue to be highlighted by all parties. “We are sure that spatial data afield would complement information data, especially in times of dispute. Now it is up to the government, if they are serious about managing conflict, this spatial data could serve as entry point for solution in the future”. (SS)

Business New - August 8, 2014

MACRO ECONOMIC DATA SIGNALING POSITIVE MESSAGE



Marketplayers would watch on domestic macro economic data, especially inflation and trade balance. Meanwhile the external factor like political tension in East Europe and banking crisis in Portugal were still not giving any significant effect.

Firstly, economic growth in Q-2 was predictably better than Q-1 which was only 5.21%. The Idul Fitri factor was one of the cause of increasing economy.

Economic growth in Q-2 might reach 5.25% - 5.35%. The reason was that public consumption would move up due to the Lebaran factor. Direct investment would still be dynamic. Companies were running new factories and engine overhaul to jack up production output dure to Lebaran.

Moreover new investment would contribute significantly to growth in Q III and IV; this was because by that time political was showing certainty. The next Government and their economic course was getting clearer and the good prospect would invigorate investment. Economic growth in Q 2 might come to 5.3%

Secondly the Central Statistics Board [BPS] reported that inflation in July 2014 was posed at 0.93%. Meanwhile inflation rate y o y from July 2013 to July 2014 was posted at 4.53% - while inflation by calendar year was posted at 2.94%. Inflation in core component was posted at 0.52%.

Inflation in July 2014 was posed at 0.93% was contributed by food 1.94%, ready food, cigarette and tobacco 1% clothing 0.85% and transportation, communication and financial service 0.88%.

Thirdly, BPS also disclosed that Indonesia’s trade balance in June 2014 posted deficit of USD 0.3 billion. Trade balance in non oil-gas commodities posted surplus of 0.3 billion while trade balance in the oil gas sector posted surplus of 0.3 billion while trade balance in the oil gas sector posted surplus of 0.13 million tons and in non oil-gas posted surplus of 32.1 million tons.

Export in June 2014 came to USD 15.42 bullion, consisting of oil-gas was USD 12.63 billion. Import in June 2014 came to USD 15.72 billion consisting of oil gas 3.39 billion and non oil gas export USD 12.33 billion.

Accumulatively, trade balance in January-June 2014 or in Semester I-2014 posted deficit of USD 1.16 billion consisting of deficit in oil-gas USD 6.12 billion while non oil gas posted surplus of USD 4.96 billion. Accumulatively export in January-June 2014 came to USD 88.83 billion while import of the same period was posted at USD 89.98 billion.

The Moneymarket

Rupiah during initial session in Jakarta o Tuesday [5/8] strengthened by 16 points to become Rp11,727 per USD against the previous position at Rp11,743 per USD. Rupiah was still in positive zone although being overshadowed by increased interest by the Fed.

Inflation data this year at 0.93% which was below the psychological level of 1% was still supportive to Rupiah value which strengthening effect was predicated at home. However, the strengthening effect was predicated to be only temporary. For the long term, Rupiah strengthening was still was still overshadowed by Indonesia’s trade balance which posted deficit. In June 2014 Indonesia’s trade balance posted deficit of USD 305.1 million. For the long term, data of Trade balance was still negative sentiment to Rupiah.

Besides, weakening of some currencies in some developing countries would influence Rupiah value against USD. The case of default in Argentine and banking crisis in Portugal would affect Rupiah negatively. Dollar index was still consistent in maintaining strengthening trend especially after announcement of America’s bettered GDP in QII and execution of monthly Quantitative Easing at USD 25 billion last week.

Rupiah strengthening trend was losing steam by end of July [29/7] last year as unemployment level in the USA was announced. The impact of USD strengthening at the global money market was still felt as all Asian currencies weakened against USD. After Idul Fitri lon holiday, USD was seen to strengthen to suppress Rupiah down to Rp11.803 per USD. [257].

Perhaps a little positive sentiment was seen for Rupiah coming from BI’s policy on forex term deposit for Syariah banking. The Syariah forex term deposit was the first Syariah monetary operation instrument of BI in foreign currency. The rules for this instrument was written in BI’ Regulation No. 16/12/PBI/2014 on Syariah Monetary operations.

Generally speaking the Syariah Forex Deposit term features were based on Ju’alah Testament, i.e. ilitzam or commitment to give lwadh.ju’l or certain reward over natijah [obtained yield] determined by a certain task.

Forex Term Deposit would be released in the form of USD through auction, participated by Syariah Bank and Syariah business units who had forex reserve permit. Syariah forex Deposit term could be issued for tenure of one day up to 12 months. To such instruments BI would offer reward which would be liquidated before early redemption.

Spontaneously the Syariah banking industry welcomed issuance of this new instrument to probe deeper on Syariah financial market. This newly released instrument by BI could prevent forex from flowing out of the country and improve Syariah liquidity.

Syariah Forex banking by volume was limited but the nature was case-by-case where certain banks had limited volume or even over liquid because the outlet for forex financing of Syariah banking tend to be small. The widening choice for liquidity managing instruments was expected to enhance role of the Syariah banking sector in financing economic growth.

From the above picture presumably Rupiah exchange rate value on Tuesday afternoon [5/8] was predicated to move in the range of Rp.11,725 – Rp.11,765 per USD to continued over the week in the range of Rp.11,650 – Rp.11,700 per USD on condition that outcome of Constitutional Court in the case of Prabowo-Hatta protest would conclude in happy ending.

The Capital Market

On the first post Idul Fitri day yesterday [4/8] index of IHSG strengthened by 30 points thanks to buying rush during closing session. Local investors were doing a lot of net buying and IHSG was closed to inch up by 30.443 points [0.60%] to the level of 5,119.245. Meanwhile index of LQ45 was closed to soar up by 9.782 points [1.13%] to 878.079. Wall Street managed to rebound after being corrected the previous week in the past 2 years. Falling shares were being hunted by investors.

During closing session last Monday [4/8] index of Dow Jones rose by 78.06 points [0.47%] to the level of 1,939.18 while index of 78.06 points [0.73%] to the level of 1,939.18 while index of 78.06 points [0.72%] to the level of 4,383.89.

Last Tuesday [5/8] IHSG would predictably return to the green zone as Asian stockmarket bettered. However act of profit taking needed to be watched on while regional stockmarkets tend to move variably among others Nikkei 225 inching down by 9.09 points [0.06%] to the level of 15,465.41 and index of Straits times increased by 12.18 points [0.37%] To the level of 3,330.58

IHSG potential to increase during closing session last Tuesday [5.8] which was predicated to be in the range of 5,125 – 5,175 moreover index of shares to serve as benchmark would become more varied. In the near future, BEI would jack up BUMN index which consisted of 12 most liquid and most active BUMN emitens.

Index of BUMN would be launched in September this year. BUMN index was expected to serve as reference to investment managers to develop derivative product like the Exchange Trade Fund [ETF] or Reksadana insurance products. Index of BUMN was born as there was investors’ demand. BUMN shares had been investors’ target foreign or local as they had strong capitalization and fundamentally prospective.

So far many investors live to buy BUMN shares. If the combined index was there in would be easy for investors to collect them; besides BUMN index was a reflection of national economic growth. BEI expected that Government owned companies [BUMN] could be encourage to play at the stockmarket. Some BUMN shone bright after being listed at BEI.

Of around 20 BUMN emitents listed at BEI, only 12 shares would be chosen to be included in BUMN index. BEI would do screening based on market capitalization, trading transaction and fundamental performance. Thereby BUMN emitents would be motivated to keep on improving their fundamental performance.

For information, based on BEI statistical data, of 10 biggest capital in the stockmarket 5 were BUMN emitents, they were : PT Bank Rakyat Indonesia Tbk [BBRI], PT Telekomunikasi Indonesia Tbk [TLKM], PT Bank Mandiri Tbk, PT PGAS, and PT Semen Indonesia Tbk [SMGR]. (SS)

Business New - August 8, 2014

SOLUTIONS TO BUILDING REGIONAL ECONOMY



Just like the years before, after Idul Fitri 2014 city dwellers who rushed for their hometowns were returning to the big cities, but holding hands with friend or relative who tried to live a better life in Jakarta or other big cities. This was known as urbanization that happened after every Lebaran.

Massive exodus of people from villages to cities was never ending, especially during backflow rush after Idul Fitri.

Economic discrepancy between regions and big cities was reckoned as the main cause of urbanization. Big cities like Jakarta, Surabaya and Bandung were the main destinations, and people moved from villages to cities in search of a better life.

Urbanization in big cities posed big problem for the Municipality; the villages where the migrants came from were economically unpromising and they saw that cities were the hub of development so it was only natural that migrants were tempted to gamble for life in cities.

Empirically urbanization was always in parallel with development. Today development in cities especially Jakarta was blooming and posed as magnet to migrants; so the blame should not be put on the migration itself but rather on Central Government’s policy for allowing uneven distribution of property.

It showed that the regional autonomy program was improper; the program could have been accomplished by downsizing migration and tapping the respective potentials to suppress urbanization flow while regional development could be exercised. From many years of experience there were 3 thinkable solutions to minimize urbanization :

Firstly to forbid villagers to migrate to the cities had been exercised today, but the result had been at minimum because it sounds authoritarian.

Secondly to balance up development between villages and cities, where today villages were still reliant on the agricultural sector, while in fact development should be on the overall including the industry, manufacturing, service and infra-structure sectors.

Thirdly, to develop small towns in the regions as new development centers. In fact city development in the regions hade been made easy with Regional Autonomy Program, so the Provincial Government had greater authority to build their respective regions.

Data of the Ministry of Manpower and Transmigrations [Kemnakertranss] had it that migrations all of Indonesia during every Idul Fitri was around 1 million people. The destination cities were among others Jakarta, Bandung, Surabaya, Medan, Batam, and Semarang.

The Ministry had captured the essence of urbanization phenomenon in Indonesia, among the fact was that newcomers were not armed with skill capital to earn a living in the cities; so the excess if urbanization must be anticipated to prevent unemployment and social outburst in the cities.

The menakertrans was opinion that possible way top anticipate urbanization was to encourage provincial authorities to develop growth centers in the rural areas. The Ministry had fostered collaboration with local Governments to overcome unemployment in their respective places.

To do so, governors must develop the labor sector whereby to employ as many people as possible. Accordingly they should actively drum up investors whereby to start business and increase employment opportunities. Besides, various infra structure development must be enhanced by involving as many people as possible.

Besides, all parties must actively enhance alternative programs like entrepreneurship, labor intensive projects, and technological application to promote economic development in other Indonesia regions. Support for entrepreneurs by provincial authorities could be by way of facilitating training programs for starters.

By promoting entrepreneurship it was expected that job opportunities could be opened. The Ministry of Labor and Transportations also supported development of 132 productive village spread out in 33 provinces in Indonesia.

To arm migrating workforce with skill, the Ministry offered job seekers to make the best of available workshops and training centers available in all of Indonesia, where job seekers could learn and step up competence.

Other solution was to build economy and industry centers in the regions through the MP3 El Masterplan. Serious implementation by the Central Government and sound support by local Government to MP3 El Program through 6 economic corridors might help to keep rural people from migrating to the cities.

Politically the MP3EI program was intended to speed up even outspreading of development all over the country based on each respective local characteristics of the region. To illustrate, the Bali and Nusa Tenggara provinces were prioritized for tourism.

About urbanization, noteworthy was the statement of Finance Minister Chatib Basri who stated that urbanization as socio-economic problem could be overcome by modernizing agriculture. Urbanization was a problem that happened all over the world because of discrepancy in wages level between rural and urban areas.

The effort to promote agricultural sector could not be done by restricting import but by modernizing agriculture to increase farmer’s income. If productivity and wages were increased it would prevent villagers from migrating to the cities.

Today urbanization was happening because workers’ income was better than farmers’ income, and productivity of the industrial sector was better than the agricultural center. Urbanization was a phenomenon that happened even in developed countries and reformation of the agricultural sectors was to reduce burden of the big cities. (SS)

Business New - August 8, 2014

POLICY ON THE RESTRICTIONS OF SUBSIDIZED DIESEL HARMED FARMERS



The government’s policy restricting sale of subsidized diesel in some areas, including the reduction of allocation of subsidized diesel for Lembaga Penyalur Nelayan (SPBB/SPBN/SPDN/APMS) by 20%, is considered more burdensome to local fishermen, especially small-scale fishermen. This policy will cause thousands of fishing boats in the fishing centers to be threatened. It is feared that turmoil may occur among fishermen in various regions in Indonesia .

Riyono, Secretary General of the Union of Prosperous Farmers and Fishermen of Indonesia, in Jakarta on Wednesday (August 6), believed that the government’s policy to limit subsidized diesel for fishermen would be every detrimental. Because 50% of operational needs of fishermen is to buy fuel. It is said that the policy on the restrictions of subsidized diesel quota for fishermen will not be in accordance with the present condition where Indonesian fishermen are still marginalized.

Instead of helping so that the fuel quota is not broken, according to him, the restriction of subsidized diesel for fishermen generates other impact in the fishing industry. First, reduced supply in the fish market and traditional fish auctions. Second, said Riyono, it can spread to the destruction of the marine ecosystems by traditional fishermen catching fish using bombs and dismantling coral reef in shallow waters because of not being able to sail into deep waters.

This decision can be taken considering that traditional fishermen need to think of strategies to save fuel, but on the other hand they must obtain fish. According to Riyono, the government actually should not impose restrictions on subsidized diesel quota for fishermen. Quota restrictions should be imposed on users other than farmers, and other industrial sectors which absorb more diesel, such as mining and plantations sector.

The same thing was also expressed by Chairman of the Board of Trustees of the Unitary Indonesian Traditional Fishermen (KNTI), Riza Demanik. According to Riza, it would be more effective if the diesel, which is normally distributed for vessels above 30 GT, is transferred to small fishing boats with an average capacity of under 30 GT can easily, both in quality and quantity, access subsidized diesel. In addition, the government is also required to build infrastructure and provide capital assistance to small fishermen as a compensation for the reduction of diesel allocation.

Riza believed that there should be socialization, infrastructure development for fishermen, capital support to increase production activity. However, Riza stated that local small-scale fishermen will support government efforts to control the consumption of subsidized fuel as long as it does not diminish, let alone eliminates the right of small fishermen communities. In an efforts to promoted the effectiveness and efficiency of use of subsidized fuel Indonesia and rescue trade deficit, fishermen provide support to subsidized fuel retriction.

Based on Law Number 12/2014 on Revised State Budget (APBN-P) 2014, the government and the House agreed to cut subsidized fuel quota from 48 million kiloliters (kl) to 46 million kl. To maintain the consumption of subsidized fuel to be not more than the quota, the Downstream Oil and Gas Regulatory Agency (BPH Migas) had issued Circular Letter No. 937/07/Ka BPH/2014 dated July 24, 2014, on Subsidized Fuel Consumption Control.

In the Circular Letter, there are four steps to be taken as a control measure, namely, the removal of subsidized diesel in Central Jakarta from August 1; Limitation on time of sales subsidized diesel in all fuel stations (SPBU) in Java, Sumatra, Borneo, and Bali starting on August 4, 2014, which will be limited from 18:00 until 08:00 a.m. West Indonesia Time; allocation of subsidized diesel for Lembaga Penyalur Nelayan is also reduced, and the distributions is prioritized for fishing vessels of less than 30GT. And, starting from August 6, 2014, sales of premium gasoline in all fuel stations located in the toll roads is removed. (E)

Business New - August 8, 2014