EPORT TAX FOR CPO SET ZERO PERCENT IN OCTOBER

Deputy Minister Bayu Krisnamurthi signaled that, in view of the recent CPO price development of CPO most probably the Ministry of Trade would stipulate export tax in October at Zero percent. This was based on the consideration that the export regulation which had been in effect so far the price kept moving down so export tax would be set at zero percent, he stated in Jakarta on Tuesday [23/9].

The condition was already predicted by GAPKI. As set forth by the Executive Director of GAPKI Fadhil Hasan in Jakarta on Monday [22/9] who stated that trading of vegetable oil was constantly losing steam, it affected price of Indonesia CPO. GAPKI predicted that price of CPO by end of September would be in the range of USD 700 – Rp. 750 per MT.

Meanwhile CPO export price in September 2014 was stipulated by the Ministry of Trade at USD 739 and Export Tax with reference to CPO price Rotterdam, Kuala Lumpur and Jakarta USD 810,63. In view of downturning trend through and of August till the first 2 weeks of September, GAPKI estimatedthat CPO reference price would be below USD 750 so BK for September would drop to 0%.

Today vegetable oil of the world was in a low state by demand and price. CPO was on the downturn to the lowest point in the pat 5 years. Price of palm oil was low, just like other vegetable oil especially soy based oil. Price of soy oil weakened due to over supply and excess of stock for the next few months, and golden harvest of soy in the USA.

The same was with Repesheed. Strangely price of Rapesheed weakened because of to late harvest in Canada due to high rainfall. Sunflower seed: harvest was predicted to be sooner, close to the record of last year what caused price of Sunflower seed to drop in the past few weeks.

Palm Oil: the Situation Today.

In the world market, palm oil was the determinant factor of other vegetable oils. World’s demand for vegetable oil through August dropped by 10% against July. Increased production prospect in southeast Asia and low import by China and India, competitiveness soy oil price, strengthening of Malaysia’s Runggit, weakening of world’s crude oil price and sufficient stock in buyer countries caused CPO price to sink deep.

Fallen CPO price to the bottom level in the past 5 years did not automatically jack up export, as demand was low. Export volume of CPO and by products in August 2014 dropped by 7% compared to last month from 1.84 million tons in July to become 1.72 million tons in August 2014. Indonesia’s CPO performance this year was not as bright as predicted. Global CPO price which dropped steeply was north enough to jack up export”

By year on year export of CPO and by products was posted to drop by more than 2% compared to last year [from 13.69 million tons per August 2013 to become 13.37 tons per August 2014]. Downturn of Indonesia’s export was also due to external and internal factors. Other factors at home was increase consumption and growing downstream industry.

External factors that caused CPO export to drop was economic slowdown in China and India, falling currency value against USD and emerging alternative oils that made palm oil to be mere substitute oil.

Export of CPO to China nose dived by 70% from 138 million tons next July to become 81 thousand tons in August. Among the reasons was that the Government of China was applying Particide Residue Standard. Downturn of export was also posted to African states 89%, Bangla Desh 51% and Uni Europe 24%.

This August the countries which booked export increase was only India and Pakistan. India posted increase of 17% from 407.8 thousand tons to become 409.2 thousand tons. Meanwhile Pakistan booked increase of 29% from 137.7 thousand tons in July to become 194.4 thousand tons in August.

Price of CPO in Rotterdam by August 2014 was around USD 695 – USD 815 per MT with average price of USD 753 per MT. This average price was downturn. This average price of USD 843.3 per MT in July.

CPO average price at the world market [CIF Rotterdam] was constantly eroded since seconds were of August to end of month. This September price of CPO was constantly down and in the first 2 weeks only moved around USD 680 to USD 710 per MT.

By end of the month price of CPO was predicted stagnate, even if there was increase it would nort be significant as stock of other vegetable oils was plentiful and price was competitive so price of CPO would not be up. (SS)

Business News - September 26, 2014

GOVERNMENT DETERMINED TO ENHANCE GREEN TOURISM

The tourism sector had strong resistance against crisis, and could be a new hope to economic growth. For that matter the Ministry of Tourism and Creative Economy [Kemenparekraf] was continuously developing potential of the tourism sector i.e. by enhancing sustainable tourism.

The development of tourism today was signified by change of orientation from mass tourism to alternative tourism. Market orientation from mass today more on environmental and cultural sensitiveness materializing in the form of alternative tourism.

While making environment and culture as green tourism object the Ministry also set the hotel sector as main component in tourism for developing eco-tourism. The Minister of Tourism and Creative Economy Mari Elka Pangestu stated in Jakarta on Tuesday [23/9] that green labeled hotels who had their commitment to sustainable development were recommended to have incentives to motivate them to manage hotels on eco-tourism basis.

Mari Elka disclosed that green labeled hotels in Indonesia were limited in number due to low awareness of hotel managers on the importance of sustainable development. The Minister expected that with tax exemption as incentive other hotels could be motivated to be more environmentally considerate. While conserving nature, sustainable development was also believed to enhance operational efficiency. So far Minister Mari admitted, only international level hotels applied green labeling, so broader education was necessary for businessplayers and the general public.

Minister Elka said that she was also certifying hotels. She mentioned that 1.700 started hotels spread out in all of Indonesia was prioritized for the implementation of certification by Certifying Agency for Tourism [LSUP]. Furthermore Mari explained that certification was applied on big industry units so they could be easily identified and were of international standard, while other tourism industry line would have their turn for labeling with the formation of new LSP.

The 17 LSUP which had been designated in accordance with the Regulation of the Ministry of Economy and Creative No. 1/2014 on Certification for Tourism business were mostly hotel certification agencies spread out in Java and Bali. The designation of LSUP was initial step toward standardization of companies that they might be competitive toward AEC 2014.

Mari remarked further that the Certification and standardization included 3 aspects, is product, service, and management which was regulated in business standardization through Ministerial Regulation. Besides, certification was also exercised in areas of 16 National Strategic Tourism Zones [KSPN] which was stipulated in line with tourism development plan in Indonesia.

Furthermore Mari disclosed that development of sustainable tourism could conserve the beauty, life and culture of Indonesia which was willed to the next generation. Companies in the tourism were demanded to be adaptive to environment. The chane would materialize in professions which were environmentally friendly.

She believed that it was time to strengthen the foundation of sustainable tourism by industries in many provinces in Indonesia.

The strategic Plan of building sustainable tourism was closely related to environmentally based professions, where tourism might give professions which was environment orientated. (SS)

Business News - September 26, 2014

FURNITURE TRADERS NEED ENCOURAGEMENT TO EXPLORE NEW MARKETS

Furniture and craft producers were constantly struggling to jack up export of furniture abroad in the next 4 years. This was necessary to surpass Vietnam and play catch up with China. AMKRI data had it that Indonesia’s export value for furniture was only USD 2.5 billion, an increase against the previous USD 1 billion. Compare this against export of furniture from China which totaled USD 40 billion and Vietnam USD 4 billion. This was part of the world’s total export of furniture which was over USD 124 billion.

Vice chairman of AMKRI Rudi Halim stated in Jakarta on Tuesday [23/9] that he would try to increase export value of furniture. China and Vietnam were running short of log as raw material, but they could be leading exporter of furniture exporting, Indonesian furniture producers and carpenters must expand market and seek for new buyers. Normally sales of wood and rattan by products relied on one or two fixed buyers. “A platform as such was sensitive to disturbed demand” he said.

Rudi said that it sometimes happened that during exhibition abroad, visitors buy sample products but when the exhibition was over the big order never came. Although there were no follow up order, raw materials flew in to the expo site country. It was unveiled later that there were smuggling of rattan to that country.

AMKRI set target for increased export of furniture at USD 5 billion per year which could be attained through international exhibitions.

He again reminded that Indonesia must dare to aim at high export or be outsmarted by other countries. With Government target growth of only 5% Indonesia would be left behind by China and Malaysia. AMKRI was optimistic that Indonesia could reach export target of USD 5 billion in 4 years if the Government dared to set growth target up to 20% per year. He believed that was not impossible to meet the target considering Indonesia’s enormous resources.

He said that it was not just a matter of fulfillment of raw materials, but more maximized promotional support by the Government. In respond to that Dir. Gen Panggah Susanto admitted the shortage of raw materials was still the fearful factor in fast growing furniture industry. Indonesia’s imported raw materials was from Brazil and New Zealand.

AMKRI data had it that the average growth of furniture industry came to 14% per year. At the same time imported wood for furniture broke through 20,000 ton/year of which 30% was bought in the USA. For that matter Panggah proposed that the Dir.Gen. of Plantation of the Ministry of Forestry be involved as member of Shareholders Commissioner. Technically, he said, the Ministry of Industry supported the pursuit of export target through renovation of industrial equipments worth Rp400 billion this year but the amount was not fully used.

He again underscored the importance of Indonesia furniture producers to understand US market preference to increase Indonesia’s share in US market. He said that the market for outdoor furniture was big enough in the USA considering that during summer or in some tropical areas many restaurants, hotels or houses were using their outdoor areas as patio for outdoor restaurants and recreation centers. (SS)

Business News - September 26, 2014

MANDATORY SNI ON TYRES STRENGTHEN COMPETITIVENESS

Tyre producers in Indonesia were optimistic that mandatory implementation of the Indonesia Standard of Quality Certification [SNI] for vehicle tyres would strengthen competitiveness of national tyres when AEC was effective in 2015. As known, the Ministry of Industry had set deadline for tyre producers to immediately obtain SNI certificate not later than February 2015. The policy was written in the Regulation of the Ministry of Industry No 68/2014 effective as per August 11 2014 on the application of SNI for tyres.

The regulation stated that tyres could still be produced with reference to SNI 2002 not later than 8^th week of 2015. This rule applied to substitute tyre or Original Equipment Manufacture [OEM]. Tyre producers represented by the Association of Indonesia Tyre Producers [APBI] rated Permenperin No.68/2014 was more stringent compared to the previous regulations. The regulation helped to strengthen Indonesia made tyres in AEC 2015. “We are optimistic that this policy would strengthen Indonesia’s competitiveness in Asean market, Azis Pane, Chairman of APBI stated on Monday [22/9].

Azis believed that Permenperin No. 58/2014 could protect domestic tyres if implemented seriously. All foreign products interning Indonesia must meet SNI standard of qualification which was different from the standard abroad. Azis stated that imported goods without SNI were forbidden to enter Indonesia. Uncertified products already entered must be deported or destroyed.

Azis saw that smuggled cars had stormed the domestic market in the past few years. The number came to 50% of total tyres circulating in the market. A condition as such was unfair to domestic tyre industry, because consumers tend to buy smuggled goods which were 15% cheaper. In this case Indonesian tyre producers as members of APBI urged the Government to implement Safeguard to wall out illegal tyres.

Azis said that illegal tyres were freely circulated in Sumatra, Kalimantan and Sulawesi which were areas easily penetrated by smuggled goods. He was expecting that the Ministry of Trade and the Customs Dept, Ministry of Finance tightened control over traffic of goods. The smuggler’s modus of operandi was falsifying customs documents. Legal tyres were mostly from India and China, they even bore SNI logo to device consumers.

Data of the Ministry of Industry 2013 had it that total value of imported tyres came to USD 24.31 million; tyres for agricultural and forestry tyres USD 9.18 million and import of other tyres USD 518.57 million. soaring import of illegal tyres happened since the USA stopped Generalized System of Preference [GSP]. The moment the Regulation was applied tyre producers from India and China threw their excess of production to Indonesia.

Meanwhile on the export side APBI noted that through January-May 2014 sales of auto tyres was posted at 19.46 million units, down by 1.42% against same period in 2013. Azis saw that national tyre market in 2014 was losing steam and triggered loss. Sales of tyres sank deep as world’s rubber price dropped. Upon entering Semester II-2014, Azis predicted that national trye industry would have to face hard challenges at home and abroad. (SS)

Business News - September 26, 2014