INDONESIA’S CREATIVE INDUSTRY TO COMPETE IN ACE 2015 WITH CONFIDENCE

The Creative Industry fashion and craft work was believed to be strong asset for Indonesia in facing Asean Economic Forum [AEC] in 2015. In this which was known to produce creative products similar to that made by Indonesia. Malaysia was not regarded as potential direct competitor to Indonesia. “Indonesia’s creative products are more competitive than that of Malaysia, such as garments, so Indonesia is more confident in entering AEC 2015,” inspector General of the Ministry of Industry Syarif Hidayat was quoted as saying in Jakarta on Tuesday [16/9].

After opening an exhibition of creative products by 44 craftsmen in Yogyakarta until September 19, 2014 featuring batik, woven materials, leatherwork, knitted thread, silverwork, bronze work, handicraft, wayang, herbal and F&B products Syarif stated that to speak about creative industry means to discuss the wide potentials of varied cultural background. “The creative industry needed counseling and technological assistance, to make Indonesia excel in the field”, Syarif remarked.

In his written message he mentioned 15 subsectors of creative economy in the domain of the Ministry of Industry, among others fashion, handicrafts, computer service, and software industry. Culture-based traditional industry like fashion was the prevalent subsectors as contributor to national economy. Most developing countries had abundant natural and cultural resources but were not professionally managed.

In the global economic forum, developing countries were only acting as supplier of raw materials to developed countries to be processed into products of high technology whereby to manage natural resources and add value to it. Unfortunately developing countries had handicaps in developing creative economy, i.e. not having the proper mindset, bad habit and cultural obstacles. This not to mention low awareness of the importance of patenting intellectual rights.

Indonesia’s main export destination countries were the USA and some European stated which, in times of global economic slowdown might axe their shopping list and hence affected Indonesia’s export performance. Indonesia needed strategic maneuvers in product diversification to keep export high, and the Creative Industry was among the highly potential economic sectors that might contribute significantly to national economic growth. In 2013, creative economy in Indonesia grew by 5.78% on the average, higher than national economic growth of 5.76%. The Creative Industry could bring benefits not just to the creative communities but also to the nation as a whole.

Yogyakarta had high potentials for the Creative Industry and tourism, all the main propeller of economic activities. Besides, most of the creative industry was of the small-and-medium industry [IKM] category which was the bread and butter of some of the people in Yogyakarta. By location, Creative Industry in Yogyakarta was sporadic, not concentrated

“In Yogyakarta, every corner of the city had their own potential to produce marketable creative product,” Syarif said. Creative Human Resources were widespread and deep rooted in many district of the city. Batik had become the commodity icon of Yogyakarta commanding over national and international markets. Creative commodities were developing well in Yogyakarta as evident in total export value of creative commodities in June 2014 posted at USD 27 million, an increase of 13.72% against the previous USD 24 million. Compared to the same period the previous year total export was USD 22 million, an increase of 20.3%. the highest export value constituted of non-woven ready clothes, household instruments and leatherworks. (SS) 

Business News - September 19, 2014

POULTRY INDUSTRY URGED TO STRENGTHEN COMPETITIVE EDGE

Players in poultry business in Indonesia were urged to make reformation at once. If poultry business failed to reform themselves they would lose competition against their competitors in Southeast Asia. Demand for poultry products would increase in line with growing population. Countries which were already advance in the business were supported to progress further while had not progress further while countries which had not progressed would be aided that the could compete. The Asean free market was an initial test before facing free market at global level.

The Association of Indonesia Poultry Companies [GAPPI] felt that poultry business in Indonesia must consolidate to face the AEC 2015. Chairman of GAPPI Anton J Supit in Jakarta stated on Monday [15/9] that approach to the problem must not only be on the business side that to compete internationally, Indonesia’s poultry industry must enhance efficiency in marketing. “We must strengthen competitive edge” Anton said.

He rated that AEC 2015 was just ahead, it must be benefit to the maximum, this was the momentum to start international collaboration in Asean. Free Trade would eliminate trade tariff among Asean countries, open employment market and investment and easy procedure for commodity traffic.

According to Anton there was only one way to compete today, i.e. to be amed with competitive product because now was no longer the time to calculate on the basis of “production cost plus margin = selling price”. Such would cause inefficiency in production. Making products to be uncompetitive in the market.

Anton remarked further that toward AEC 2015 the poultry business was gradually transforming. Poultry producers preferred not to be serious about probing on the downstream industry. According to Anton, now was no longer the time for poultry breeders to stay in upstream industry. To make more profit, companies must explore the downstream industry.

He said that to operate in the downstream sector through F&B industry was the most feasible thing to do. This opportunity was not only for big capital investors and joint venture companies but also for independent breeders. A condition as such would strengthen domestic products to be more competitive in the Asean region. To enable breeders to compete internationally, Indonesia poultry companies must enhance marketing efficiency.

Meanwhile the Association of Animal Feed Producers [GPMT] rated that poultry industry in Indonesia was still not strong enough to compete in the region. The Secretary General of GPMT, Design-bto B Utomo stated that Indonesian poultry producers would have to compete in Asean among others against Thailand and Malaysia. Low competitiveness was Indonesia’s handicap, and yet in term of quality Indonesia was notably equal to other countries.

Desianto said that price of animal feed in Indonesia could be 10% to 20% higher than that in Malaysia and Thailand, And yet Malaysia had no resources of animal feed raw materialism, all were imported from abroad. But with more expensive animal feed price, Indonesia must face reality” Desianto concluded. (SS)

Business News - September 19, 2014

ABOUT OIL LIFTING PLAN IN STATE BUDGET 2015

The Government through the Ministry of Energy and Mineral Resources [ESDM] and Commission VII of House stipulated meeting outcome on basic assumption of oil-gas and electricity subsidy in State Budget 2015.

One of the stipulations was to increase lifting of oil production to 900,000 barrel per day. The target was higher than Government’s proposed 845 bph. Lifting for gas remained unchanged i.e. 1,248 million barrel per day [poepd] so the lifting figure for oil gas became 2.148 million boepd.

The oil lifting was significant because in the past years the realization was only around 735 thousand bph; but considering additional production from the newly operated Cepu block next year, it was felt that oil lifting of 900 thousand bph was attainable.

Subsidy for oil-fuel was agreed at Rp. 1,500 per liter for bio-diesel and Rp. 2,000 per liter for bioethanol. Meanwhile the subsidy for LGV was the same as Government’s proposal, i.e. Rp. 1,500 per liter. Apha oil had the same subsidy as Formula of Budget 2013. However subsidy for electricity was not discussed and to be discussed separately.

Acting Minister for ESDM/Coordinating Minister for Economy Chaerul Tanjung responded positively to the decision. Minister of Finance believed that increase of oil production could contribute positively to state’s income. By calculation, every 10,000 barrel per day increase of oil could increase Government’s income by Rp. 7 trillion; such was from nontax state’s income [BPNP] and oil-gas taxes.

About increase of domestic production target, Finance Minister Chatib left it to the ESDM Minister to pursue the target, because price of oil was also considered.

Every price reduction Indonesia Crude Oil Price by USD 1 per barrel would. Reduce budget annually around Rp. 2 trillion – Rp. 3 trillion. As known, today Indonesia was highly dependent on imported fuel to fulfill need for subsidized oil.

Such was related to the agreement between the House Budgeting Board on quota for subsidized oil next year but less than the previous assumption at 48 million KL.

In quota of 46 KL per year was inclusive of premium gas 29.45 million KL, solar oil 15.7 million KL and Kerosene 0.85 million KL. It was projected that 46 KL sufficient for meeting people’s need. Even if there was shortage of oil supply in some regions, it was caused by smuggling.

It was the Government’s duty to control oil-fuel distribution to resent smuggling. Smuggling was exercised freely and openly in Indonesia. Reduction of oil consumption quota of oil would be enhanced by increased price of subsidized oil. Most probably the Joko Widodo Government would increase oil price.

Originally the government proposed quota for subsidized oil amounting to 48 million KL by assuming increase of total vehicles and no restrictions of subsidized oil consumption. The proposal was based on the consideration that by next year there would be 1,2 millions of new cars and 9 million new motorcycles on the road.

Consumption of subsidized oil could be reduced if the new Government take radical measures such as increasing price of subsidized oil to Rp. 3,000 per liter which would drastically reduce consumption.

Reduced consumption of subsidized oil would jack up state’s revenues because size of subsidy was lessened. The saved fund could be used for executing the Indonesia Educated Card [KIP] and Indonesia Healthy Card [KIS] plan.

KIP and KIS would enlighten the burdens of life of the low class people when price of subsidized oil was increased next year. Part of the cash could even be spent on buying non subsidized oil to support people’s daily activities.

Reduced subsidy would lessen budget portion for health in APBN State Budget which would jack up national economic growth and promote people’s welfare. Under the management of a professional cabinet, the best achievement could be expected and benefited by all. (SS)

Business News - September 19, 2014

Indonesia Chamber Commerce And Industry: FRANCHISE BUSINESS PROMOTE THE NATIONAL ECONOMY

The business are optimistic that franchise business will still be growing. With the improvement of purchasing power of the middle class, franchise business becomes very potential. Thus, the franchise business operators support the ministry of Trade, which seeks to assist and encourage owners of business opportunity to able to implement a franchise system in running their business. Mentoring programs that have been implemented by the Ministry of Trade since 2012 has been proven successful in encouraging the growth of Indonesian local franchise.

Business operators who are members to the Chamber of Commerce and industry (KADIN Indonesia) expect the new government under the leadership of Jokowi-Jusuf Kalla to give attention to the development of local franchises. Amir Karamoy, Chairman of the Standing Committee on Franchising, Licensing and Partnership, of KADIN Indonesia, in Jakarta, on Wednesday (September 17) said that his party hoped that the new government will be able to encourage franchise development in the country and to continue support commitment that has been implemented by the current administration.

Amir said that there are there factors that make a franchise business promote economic activities in the country. First, like two sides of a coin, franchise business will encourage labor absorption and make a number of entrepreneurs to continue growing. Second, franchise business is included in the creative economy sector. This is because every franchise business starts as a business idea based on creativity and requires creativity and intelligence. Third, franchise system will encourage the growth and development of small and medium enterprises at local level.

Even though the development of franchise business in Indonesia is quite rapid, many people are still skeptical about its legal certainty. Currently, legal certainty to run a franchise business has been much better than before 1997. This can be seen from the issuance of a number of laws to protect franchise business operators.

In terms of the business sector, the growth of the franchise business in Indonesia is particularly evident in the food and fast food sectors. This development was mainly supported by the application of a cell or pyramid system. Through this system, business operators as the franchisee is required to development its business through a master franchise it receives by way of searching or appointing other franchise for further expansion. With this kind of mode, the network in the franchise business will continue to expand on an ongoing basis.

Meanwhile, the Indonesian franchise association (AFI) predicted that the number of national business that are able to develop franchise business is still relatively low this year or are less than five business. Chairman of AFI, Anang Sukandar, said that if there are any business that do business with the partnership system, it usually leads to a business opportunity rather than a pure franchise business.

Anang said that business who have obtained a Franchise Registration Certificate (STPW) can not necessarily be classified as a franchise business. The biggest issue, which is difficult to be met, is especially in terms of the uniqueness of the business. The uniqueness is not only based on the business time chat can be opened 24 hours, picking and delivery, or having a special taste. Therefore, it is not uniqueness, but only something which can be done by anyone.

Citing data from the Ministry of Trade in 2013, of 125 companies who have obtained STPW, franchisor in the country is only 2.4% or about 3 businesses, while foreign franchisor controls up to 60%. In terms of types of business, food/beverage business is the largest (49.6%), followed by retail (24%), and education (20.8%). These areas are still largely dominated by foreign branded products. (E)

Business News - September 19, 2014