SHIPPING SECTOR SHOULD FOCUS ON FACING AEC 2015

The shipping industry expects the government to concentrate on preparing sea transport logistics sector to face the ASEAN Economic Community (AEC) 2015. Currently, the competitiveness of sea transport logistics encouraging increase of the share of national ship transport sector in overseas transportation (exports and imports), which is still low. So far, the government has published a Decree of Minister of Finance No. 41/2014 on the obligation to keep records of export value based on CIF value.

In order to face AEC in 2015, the shipping sector should be provided with a relaxation policy in the fiscal and monetary sector and technical rules in order to be on par with other countries in the ASEAN region. These policies are in accordance with Law No. 17/2018 on shipping. Article 57 stated that the empowerment of national sea transport industry must be done by the government. Empowerment of the shipping industry is by providing financing and taxation facilities, facilitating long-term partnership contract between the owner of the goods and the owner of the vessel and to guarantee the available of oil fuel for transportation in the waters.

Ajiph Razifwan Anwar, head of Maritime Transport of the Indonesian Transportation Society (MTI), in Jakarta, on Wednesday (October 8), considered that the government needs to encourage port efficiency and set cruise trajectory system before AEC 2015. Ajiph said that liberalization in AEC 2015 covers seven priority services sectors. To date, the airline industry is one of the services sectors, while the shipping industry is predicted to be at a later stage.

To the end, the government should immediately pursue the readiness of the shipping industry with regard to AEC, especially regarding the reduction of national logistics cost which reached 26% of GDP. According to him, Indonesia cannot just be proud of the growth of marine transport population which reached 13,000 ships, if the cost of sea transport is more expensive than other countries. He pointed out that the cost of shipment of 20 TEU containers from Jakarta to Kendari is more expensive than if the goods were transported by train to Surabaya and shipped to Kendari.  This condition is because competition among shipping operators on some routes is not impartial.

The same thing is also expressed by the Director of the National Maritime institute (NAMARIN), Siswanto Rusdi. According to Siswanto, the challenge for the shipping industry next year after the implementation of AEC will be more complex.

He revealed that NAMARIN encourage to the birth of Presidential Instruction No. 5/2005 on National Shipping Industry Empowerment. Through the Presidential Instruction, the cabotage principle is revitalized, which is then formally adopted by Law No. 17/2008 on shipping. Through this regulation, starting 2014, the national shipping industry is encourage to use domestic ships (cabotage principle). Since it was enacted in 2005, national shipping fleet increased by 3,000 units, bringing the total of national ships to more than 10,000 units. In the last five years, INSA recorded that investment to support the cabotage principle is through the purchase of 6,157 units of ships worth USD 15.4 billion.

NAMARIN, said Siswanto, also encouraged the Indonesian National Ship-owners Association (INSA) to create a breakthrough in supporting the national shipyards. Another problem in the cabotage principle that needs to be addressed by INSA is equality between all players of the shipping industry. He considered that so far, the cabotage principle is more profitable to well-established shipping companies, which number is small. INSA should encourage so that the cabotage principle involves small-scale shipping companies. Siswanto asserted that if INSA could successfully perform an internal consolidation, empower, and unite the role of the shipping industry in cabotage principle, the national shipping industry will be able to compete in AEC 2015. (E)

Business New -  October 10, 2014

SMALL BUSINESS COUNCIL URGED TO ENHANCE CREDIT EXTENTION

The small Managing Body for Cooperatives and Micro-and-small and Medium Business [LPDB-KUMKM] set target for  channeling up by 47.22% compared to last year at Rp1.8 trillion. Based on data of LPDB-KUMKM, the rolling fund was given away to around 198,565 UMKM through 628 cooperative bodies. Attainment of fund pipelining was 80% of target.

Collectability of low performing fund [KDBB] would be down pressed to as low as possible level so as not exceed tolerance level of maximum 15% according to targeted business and budget plan 2014. Last year, channeling of fund was only Rp1.8 trillion, or 93.88% of planned budget close to Rp1.93 trillion. At he same time, LPDB managed to downsize KDBB to become 0.01% - 0,04%.

The Minister of Cooperatives of UKM Sjarifuddin Hasan stated in Jakarta on Tuesday [30/9] asked KUMKM players to maximize People’s Credit Program and the Council for the Rolling Fund as main facilities to access financing. Meaning there was no extra post to spend when trying to access financing to LPDB of KUR program. Hence KUMKM could increase their business capacity swiftly as the administrative process was simple.

By the discipline the fund returned could be used by the same players; many other UMKM needed financing but had no access to financing. He stated that if the opportunity of financing was not grabbed it would disadvantage players of the real sector or the Government. Many business line of different scale which be benefited by KUMKM.

Interest wise, the two financing system were equally light, especially to micro businessplayers who wished to access KUR financing with maximum credit of Rp20 million. the interest was only around 0.9% per month. LPDP interest to cooperatives [KSP] was 9.5% descended and retail interest of 6.5% alo descended.

Data of the Ministry of Cooperatives [Kemenkop] had that the rolling fund pipelined by LPDB-KUMKM had been absorbed to the amount of Rp1.59 trillion or 60/26% of the targeted Rp2.6 trillion. Sjarifuddin mentioned that to meet target of 2014, LPDB-KUMK had taken the necessary measures. Among them was acceleration of process for candidate partner who applied credit of Rp863.136 million.

Kemenkop and UKM had rescheduled technical visit in the period of September – November 2012 to candidate partners with total applied amount of Rp1.795 trillion. They also had allocated fund for cooperatives and UKM next year amounting to Rp2.75 trillion. As planned, pipelining of fund in 2015 was allocated for UMKM directly or indirectly through cooperatives and non cooperatives based on executing and channeling platform. The composition was set a 60% through cooperatives and 40% non cooperatives.

The Minister disclosed that LPDB-KUMKM today collaborated with various counterparts like: the Council of Prosecutors, BPK and KPK with the objective to smoothen collection process so NPL could be minimized. i.e. 15%. LPDB-KUMKM had shown their good performance and obtained Certificate as best BLU in managing special fund by the Ministry of Finance with score 76.33 and manage to excel over other BLU of the same type. Besides LPDB-KUMKM also had rating of 7.15 by KPK survey 2012 against integrity of public service. Such was in line with the Management’s commitment in attaining Good Government Governance [GGG] and corruption preventer. (SS)

Business New - October 3, 2014

The Ministry of Industry : DOMESTIC STEEL PRODUCERS STILL UNABLE TO MEET LOCAL DEMAND

The Ministry of Industry stated that domestic supply of iron and steel had not fulfilled all of the domestic need, so some steel products still had to be imported. Many policies had to be applied so as not to hold back industrial activities which needed imported raw materials. Other problems was products that must be made by different specification or could not be produced at home.

Budi Irmawan, Director of Iron-steel Basic Metal Industry, Ministry of Industry stated in Jakarta on Tuesday [30/9] that national downstream industry was growing faster than upstream industry causing under supply in domestic raw materials for intermediate industry. A condition as such was one of the causes of storming import, so solution must be sought after without disregarding national interest in broadest sense of the word. Budi said that he had to make sure that all potentials of steel industry could be maximized.

Budi stated that in case of light steel like BJLS sheets, the domestic production output was only able to cover half the demand. He mentioned that BJLS production at home was only 600.000 tons or half the need amounting to 1.2 million tons. Meanwhile BJLAS aluminium sheets could meet market need better that BJLS. BJLASW production at home came to 51,000 tons. The average demand for this type of steel was around 480,000 tons over the year.

Budi remarked further that in the application of MP3 EI Plan until 20125 it was estimated that the need for raw steel would increase by 19.2 tons while domestic industry could only supply 5.4 million tons. Data of the Ministry of industry had it that the number of steel plants was 325 units in 2012 producing 1.2 million tons of sponge iron an raw steel consisting of steel slab 1.2 million tons and steel billets 4.2 million tons.

As a whole, total raw steel production came to 5.4 million tons in 2012 while national steel consumption came to 9.2 million tons which means 3.8 million tons must be imported. Import of iron and steel including upstream products, intermediate and downstream came to USD 13.4 billion, increasing against previous year by USD 10.7 billion or equal to 22 million tons of iron steel.

The same was disclosed by Djamaluddin Tanoto, as Executive Committee of the Association of Indonesia Iron and Steel [IISIA]. He admitted that not all of demand for iron and steel was fulfilled by domestic products. Most of import was for the automotive industry. Generally domestic steel could not meet the specification of automotive industry, as they needed of high quality standard with thickness of less than 1 milimeter.

Somehow demand for construction steel or infra structure were mostly met by domestic supply. The proportion of supply of steel for export and domestic was 50:50 worth total capacity of 12 million tons per year. IISIA wished domestic steel producers to consume more local iron ore and local. The absorption was for blast furnace for producing iron. (SS)

Business New - October 3, 2014

INDONESIA TO PLAY CATCH UP WITH OTHER COUNTRIES IN MARITIME DEVELOPMENT

Ratification of the Bill on Maritime Affairs was underscoring off roadmap for making significant leap toward sustainable exploration of marine resources. For the next 5 years all the endeavors would put Indonesia in equal position with other countries in the world. “To harness marine potentials as far as over 300 miles is progressive step to the Jokowi-JK government” the Director General of Sea, Coastline and Small islands, Ministry of KPP Sudirman Saad disclosed to Business News [29/9].

The effort to put Indonesia in equal position with other countries like Malaysia and Singapore was an urgent matter. Singapore and Malaysia had already mapped out zones at the bottom of the ocean, while Indonesia had not gone that far. What Malaysia and Singapore did was attributed to International Sea Expert Hasyim Djalal. To draw zones at sea bottom signified effort to build the maritime sector. “At that time Mr Hasyim Djalal held the position of Chairman of the International Seabed Authority. At that time we were not too concerned about it but now with the Bill on Maritime Affairs we can begin to map out the sea bottom.”

At the beginning the Ministry of KPP was skeptical about passing of the Maritime Law considering that the momentum coincided with the Plenary Meeting of House. Monitoring by the Director General of KP3K Sudirman Saad unveiled that finalization of the substance of Bill was not in parallel with synchronization by Commission IV of House. “After the Friday sholat [26/9] the meeting agreed on the substance. The meeting continued at sunset; probably the faith would be the same as the Pilkada Bill, the final verdict at 2 o’clock in the morning”

One of the key substance agreed was underscoring Indonesia as an archipelago. This was most relevant, moreover to refer to the International Sea Law Convention 1982. Beside sea by territory, Indonesia could also manage jurisdiction Law and Sea Bottom zones. At Ministrial level there was already agreement and all the substance of Bill. At last minute, KKP did not have any obstacle on crucial Articles. Other substance was stipulation above 12 miles including all the authority. “In case of the Java sea, the Arafura sea, the Tomini gulf was stipulated by Presidential Regulation and space planning at sea would be our authority. For example in Southern Java right could be 12 miles. But in Java sea, water width could be 40 miles or more and there was enclave. All the potentials must be safeguarded by strengthening of space planning.”

Elected President Joko Widodo and Vice President Jusuf Kalla had for long been building maritime vision. This was a signal to maximize exploration of sea resources. Effort at sea was also in line with Jokowi-JK vision. In the end, the Maritime Law served as strengthener of Indonesia’s position as the world’s maritime axis. “Let’s just watch the drama of House’s Plenary Meeting, because the Maritime Bill is number eight by order. We could draw trans-regional zoning. The Java sea zone would be legalized by the Government’s Regulation”

Other substance was substance was zoning of straits and gulf, protection of marine resources based on Blue Economy. The conservation content and management and bio life at sea was in line international agenda.  During the 12^th convention of World’s bio diversity in early October next in Pyong Chang South Korea, there was agenda for that subject. Sea conservation would strengthen Indonesia’s important role in the world’s forum. “When zoning was stipulated, we can read the chess board. Not just fish potentials but also mineral and gas potentials and also conservation. All would realize the vision of the elected President that Indonesia is the world’s maritime axis. The Marine Bill is the roadmap”

Meanwhile the Director General of P2HP, Ministry of Maritime and Fishery Saut Hutagalung that the policy of Jokowi-JK Saut Hutagalung was crystallizing into marine-based development without disregarding green economy on land. Land based development had been contributing significantly to national development, but to fulfill need from land alone would be difficult in the future. Indonesia’s nature to be an archipelago country offered enormous potential. “To become a leading maritime country is materializing well,” Saut Hutagalung told Business News [29/9].

Indonesia consisted of 30% land and 70% sea. Geographically Indonesia is flanked by 2 continents: Asia and Australia and 2 Oceans i.e. the Indian Ocean and Pacific. “All are invaluable asset and capital for development.”

All parties must support Jokowi-JK resolution to enhance maritime development. One aspect of crystallization of the policy was the plan to built Sea Toll. Regardless of the policy was a historical momentum. To be gratified of Indonesia being an archipelago country. “When Jokowi – JK will be installed as President and Vice President on 20 October next, we are constantly inspired to control, command and manage the sea.” (SS)

Business New - October 3, 2014

INFLATION IN SEPTEMBER AT 0.27 PERCENT

The development of commodity prices, in general, in September 2014 showed an increase. Based on the monitoring result of Central Bureau of Statistics (BPS) in 82 cities in September 2014, there was an inflation of 0.27 percent, or an increase in the Consumer Price Index (CPI) from 113.58 in August 2014 to 113.89 in September 2014. Inflation rate by calendar year (January-September) 2014 was 3.71 percent and inflation rate year-on-year (September 2014 to September 2013) at 4.53 percent.

Inflation occurred due to price increase as shown by the increase in indexes of some expenditure groups, namely: processed foods, beverages, cigarettes and tobacco 0.51 percent; housing, water, electricity, gas and fuel 0.77 percent; health group 0.29 percent; and education, recreation and sports 0.68 percent. Meanwhile, the groups which experienced a decreased of index are: foodstuffs 0.17 percent; clothing group 0.17 percent; and transportation, communications, and financial services 0.24 percent.

Some commodities whose prices increased in September 2014, include: red chili, household fuel, electricity tariff, rice, academy/university tuition, purebred chicken meat, noodles, rice with side dishes, clove cigarettes, filter cigarettes, house contract rates, house rent rates, domestic servants wages, junior high school tuition, and high school tuition. Meanwhile, commodities whose prices decline include: red onions, fresh fish, air transports rates, gold jewelry, beef, spinach, stink beans, oranges, inter-city transport fares, and gasoline.

In September 2014, expenditure groups that contributed to inflation include: processed foods, beverages, cigarettes, and tobacco 0.09 percent; housing, water, electricity, gas, and fuel 0.19 percent; health group 0.01 percent; and education, recreation, and sports 0.05 percent. Meanwhile, expenditure groups that contribute to deflation include: foodstuffs 0.02 percent; clothing group 0.02 percent; clothing group 0.01 percent; and transportation, communication, and financial services 0.04 percent.

 
Foodstuffs in September 2014, experienced a 0.17 percent deflation, or a decline of index from 120.12 in August 2014 to 119.92 in September 2014.

Of 11 subgroups in foodstuffs group, 7 subgroups experienced inflation and 4 subgroups experienced deflation. Subgroups that experienced that highest inflation are subgroups of spices 0.95 percent, and the lowest is experienced by subgroup of meat and products thereof t 0.03 percent. Meanwhile, subgroup that experienced the highest deflation was vegetable subgroup at 1.70 percent, and the lowest was experienced by subgroup of fats and oils at 0.39 percent.

This group, in September 2014, contributed 0.02 percent to deflation. Dominant contributors to deflation include: red onions 0.06 percent; fresh fish 0.03 percent; beef, spinach, stink beans at 0.01 percent respectively. Meanwhile, commodities that are the major contributors to inflation include: red chili 0.09 percent; rice 0.02 percent; and purebred chicken meat 0.01 percent.

In September 2014, there was an inflation of 0.27 percent with Consumer Price Index (CPI) at 113.89. Of 82 cities of CPI, 64 cities experienced inflation and 18 cities experienced deflation. The highest inflation occurred in Pangkal Pinang at 1.29 percent with a CPI of 114.82, and lowest occurred in Gorontalo at 0.03 percent with a CPI of 109.62. while, deflation occurred in Tual at 0.89 percent with a CPI at 117.57, and the lowest occurred in Kudus and Manado at 0.03 percent, respectively with a CPI of 119.09 and 110.90, respectively. (E)

Business New - October 3, 2014