CERTIFICATION OF OVERSEAS AND LOCAL COMPANIES TO BE GIVEN EQUAL TREATMENT

Foreign ecpatriats and certification of foreign business institutions was highlighted by the Legislation Board of Parliament led by Sareh Wiyono with the agenda to hear the clarification of proposal maker in the Bill of Construction Service at Parliament hall in Jakarta on Monday (29/6). Committee member Tabrani Maamun questioned the existence of foreign construction agencies in the Bill of Construction Service. Would foreign construction agencies not threat Indonesian construction agencies considering that Indonesian construction companies were not interior in terms of quality?

Meanwhile member of Legislative Committee of House questioned weather certification was applicable for domestic and foreign companies and whether domestic and foreign companies would be given equal treatment because in making the Law as legal umbrella, national interest should be first priority.

In respond to the question, Vice Chairman of Commission V of house M. said as proposal maker of the Bill explained that foreign expatriats mentioned in the Law were only in terms of expertise which was intended for transfer of technology. In terms of certification, foreign and local companies would have equal treatment. (SS) 

Business News - July 3, 2015

EAST NUSA TENGGARA TOURISM POTENTIAL TO BECOME AN ECONMIC POWERHOUSE

Vice Chairman of the Indonesian Chamber of Commerce and Industry (KADIN Indonesia) for Banking and Financial Affairs, Rosan Perkasa Roeslani, believed that East Nusa Tenggara (NTT) province needs to spur economic growth by making tourism as an economic powerhouse. Tourism sector, especially marine resource of NTT, is very rich and unique. “NTT is not only interesting in terms of maritime potential, but also the beauty of the beaches and a wealth of fisheries, including the potential of the sea which is very rich and beautiful. NTT underwater world beauty with Labuan Bajo can actually be equated with Raja Ampat in Papua. Unfortunately, what is in NTT has not been managed properly, he said in Jakarta, on Monday (June 29), after visiting Kupang, NTT.

           

Tourism development has a multiplier effect, both for development or management of regional treasury and to support the economy of the people directly. In addition, the development of tourism sector is economically cheaper than the industrial sector, which requires more investment touch. Apart from that, the development stage also requires external factors and takes place in along term.

“To build an industry, especially in the manufacturing sector, it takes time a large budget. But when the tourism sector is already available and has become ours, just consider how to prepare the supporting infrastructures and manage them well, “he said. he also reminded that based on government projections, in 2019 the tourism sector will be the largest source of foreign exchange.

Revenues from domestic and foreign tourists need to e targeted by government and private sectors in the province. Tourism supporting infrastructure also needs to be built. One is to provide International standard port that can be harbored by cruise ships from abroad. “For example, in Labuan Bajo. There is a cruise ship carrying 2,000 tourist from Europe. Unfortunately, they stay on board and use a lifeboat from the ship to do diving activities. That means that their presence does not add value to the surrounding community, as well as revenue for the local government, “he said.

The opinion was confirmed by an economist who is also Chairman of LP3E (Institute for Economic Research and Development (LP3E) of KADIN Indonesia, Didik J Rachbini. According to Didik, tourism could become a mainstay of the development of NTT. The problem is that the awareness to develop the tourism sector has not been fully owned by the stakeholders, including the community in NTT.

“Tourism can be a leading sector in the province. Unfortunately, we often forget our own advantages. He also advised stakeholders in the province, public and private, to be more active in lobbying the central government to obtain a sufficient budget for tourism development. He cited a lobby that he made when building Suramadu (Surabaya-Madura) bridge. “We are aware that if Surabaya and Madura are connected by a bridge, the economic effects of Surabaya will reach Madura. Therefore we struggled to obtain budget for the construction of Suramadu bridge, “he said.

Challenges for Infrastructure and Industry in NTT

Chairman of KADIN NTT, Abraham Paul Liyan to, saw that infrastructure and industry as a particular challenge in development in NTT. The potential of the leading sectors is not explored to the fullest due to the unconduciveness of supporting facilities. For this reason, KADIN NTT present sectoral stakeholders at national and regional levels, to observe directly and discuss the development needs in the province. “We need to get a solution and consideration of the issues in NTT, such as infrastructure, tourism, marine and fisheries industry,” said Paul.

In addition, the challenges ahead of the implementation of AEC 2015 in December, according to him, can generate special problems for local SMEs. According to him, many local SMEs in the field of fisheries, maritime, and tourism are very potential to advance to a higher level. “Because of the presence of foreign investors in the AEC 2015 should be anticipates. Central and local government should provide a solution for them,” he said. (E)

Business News - July 3, 2015

THIRTEEN MDGSS INDICATORS ATTAINED IN 2015

In the effort to support MDGs attainments in Indonesia in the past 2015 agenda, the BKSAP of house had formed an MDGs Working Committee consisting of trans-fractional house members and trans commissional members under BKSAP with the objective to enhance awareness of House members on MDGs issues and how to attain them. The Committee also played the role of parliamentary diplomatic linkage to support the Government in attaining MDGs goals. This was disclosed by the Public Relations Dept. of House on Monday (29/6).

The Committee actively monitored and gave input and recommendations and make sure that the budgeting policy and legislation was supportive to the pursuit of MDGs in Indonesia. Focus Group discussion was held on May 27 2015 at the BKSAPO meeting room, at Parliament Hall. Present as speaker was Nina Sardjunadi of BAPPENAS and special envoy of MDGs and Torrefy Soetikno of the Ministry of Foreign Affairs.

On that occasion Nina Sardjunadi disclosed that of 63 indicators targeted by MDGs, 13 indicators were attained for 2015. However 14 other indicators needed hard world to pursue target of 2015. Other indicators which were still un attained was to lessen death toll of mothers and infants, cases of HIV/AIDSW and import to GDP ratio.

The Ministry of foreign Affairs represented by Toffery Soetikno explained some points to be done by Parliament for MDGS i.e. to enhance implementation of global development agenda, monitoring of all execution process, to foster synergy of national and regional development agenda, to voice global development agenda at international forum and to mobilize domestic resources.

In FGD, chairman of BKSAP Dr. Nurhayati Ali Assegaf asked the two institutions to coordinate and involve the Parliament. However to learn a lesson from past experience it was important to publicize MDGs target and the indicators, considering there were still many regions who were not aware what MDGs was all about.

Chairman of BKSAP of House also reminded BAPPENAS and the Ministry of foreign Affairs to respond to the agenda of Sustainable Development Goals whereby to keep up with national development priority and to change the name of Global Development Agenda to be better understood by the public.

Agenda of the Working Committee which was executed was to appoint Chairman of the Committee and to discus future agenda. It was decided at the meeting that Chairman, Vice Chairman and Secretary of the Committee would be form the Demokrat Party fraction, the PDI-P and the Golkar Party.

As final outcome of the MDGs committee meeting, a recommendation would be set up a further steps to be taken by the Government to meet unattained goals. Among the programs set was Technical Visit scheduled for September 2015.

Besides the MDGs would also scheme up a workplan i.e. to make a 7-minute Documentary film of the activities entitled “The role of Parliamentarians in Accelerating the Achievement of MDGs goals” There would also be a guidebook on Sustainable Development Goals and other information materials. The MDGS were the focal point in MFD’s affairs in the respective electoral areas. (SS)

Business News - July 3, 2015

INDONESIA’S PAPER INDUSTRY RATING SETTLES AT THE SAME LEVEL

To be blessed with natural resources and forest 135 million hectares wide did not make Indonesia the Number One player in pulp industry in the world today. Indonesia was only able to settle at number 9 position next to America, china and Brazil.

To quote data of the Ministry of Industry, the volume of pulp and paper industry 2013 was 7.9 million tons to fulfill the need for pulp and paper amounting to 35.3 million m3 and the volume must be increased considering that the need for raw materials in 2017 next would increase at least 27.5% to become 45 million m3.

However the President Director of PT Riau Andalan Pulp and Paper (RAPP) Tony Wenas in Jakarta stated in Tuesday (30/6) that Indonesia still had the potential to be a world player in pulp industry. the reason was that Indonesia’s tropical climate was most supportive to raw materials supply. He said that of the total forest area in Indonesia 70 millions ha could be used as industrial forest. Today there were 70 million ha of industrial Forest but only 3.5 million ha was managed.

And yet he said, the need for fibre as raw materials for pulp and paper in 2050 would increase by 237% to become 2.7 billion m3 from the present 800 million m3.

Meanwhile players of pulp and paper industry were pessimistic that this year would score performance as realization in Q 1/2015 dropped by 30% - 40% compared to same period the previous year. Vice Chairman of APKI Rusli said that the cause of slump of performance of industry was low global demand and also economic slowdown in China.

Data of the Ministry of Industry showed that the need for paper at global level was 394 million tons which grew by 24.4% to Become 490 million tons by 2020. Paper consumption of the world was predicted to grow by 2.1% on the average while in developing countries market the growth was 4.1% and in advanced countries 0.5%.

According to Rusli, Government’s effort to uplift the image of wod industry by SVLK certification had not been fruitfull had sad that the SFI Certificate was better acknowledge today. The Regulation of the Ministry of Trade No. 64/2012 on Export of Forestry products required that wood be back up by SVLK Certificate.

The rule was mandatory for processed wood especially pulp and paper to ensure the legality, but the Regulation was felt as a hindrance to export of paper. Indonesia was one of the most acclaimed producer of pulp in the world being in the position of no 9 and in paper the position was number 6. In Asia the position was number three in terms of volume.

Rusli stated that with attainment in Q 1 Apki predicted that paper production would drop by 30% in 2015. The trend of lessening use of paper known as Paperless Culture was another reason. Last year utilization of paper was around 80%. This originated from production capacity of 13 million tons but realization was only 10.4 million tons. (SS)

Business News - July 3, 2015

MASS DISMISSAL HAUNT WORKERS IN ADVERSE ECONOMIC CONDITION

The Indonesian Chamber of Commerce (KADIN) had asked the Government and all stakeholders of national economy to sit together to seek for way-out from the adverse economic condition today which suppressed the real sector. Chairman of KADIN Suryo Bambang Sulisto stated in Jakarta on Tuesday (30/6) admitted he was most anxious about the condition of the real sector today. If the real sector was injured there could be mass dismissal of workers or even closing of companies.

He disclosed that surely companies diod not wish to dismiss their employees; so he urged the Government to review some policies such as high tax imposition on certain sectors and increase of electricity tariff. “We must strive hard to prevent dismissals.”

Economic slowdown had forced some companies to plan to dismiss their workers after Idul Fitri. As known, Indonesia’s economic growth through Q 1/2015 was only 4.71%, slower than that of last year at 5.14%.

Suryo that many companies still held piles of goods at the warehouse. On the other hand companies still had to pay salaries as workers were still active in production. Somehow the company did not wish to instantly fire workers but tried to cut working hours among others by starting holiday sooner at H-10 Idul Fitri an this was at company’s initiative.

Meanwhile the Ministry of Labor denied rumors that some companies were doing mass dismissal. The Director of Industrial Relationship of the Ministry of Labor Sahat Sinurat said that the rumors of workers dismissal in Tangerang and some cities in West Java were not cases of dismissals. “The workers still bear the status of employees but they had to stay at home, it happened in convection and footwear sector” Sahat said.

Sahat explained that workers being domesticated was different from workers being fired. They still receive basic salary but did not get fringe benefits. They were being domesticated because of over production of goods, workers had to stop working only temporarily.

Sahat reported that he had no received any report of workers mass dismissals. Before dismissing workers it was mandatory for workers to the local Labor Dept, who would report to the Ministry of Labor. Mass dismissals could only be agreed upon if dismissal was agreed upon by both parties, i.e. employer and employees.

Sahat underscored that no companies had reported to the Ministry do far. He said that by the time AEC was in effect this year end, workers of the Asean states were challenged to grab positions by certification. In the future it would be hard for workers to find jobs without skill, competence and competitiveness. (SS)

Business News - July 3, 2015

TREND OF COMMODITY PRICES ON THE DOWNTURN

Plantation commodity prices was determinant factor in the success of plantation business. Commodity prices would determine the amount of income from stakeholders in the supply chain like farmers, plantation enterprises, middlemen, Cooperatives, Joint Enterprises Units, Processing and Marketing, Industry/Semi Finished Goods Processing factories, exporters and the Government.

Commodity price was determined by supply and demand. Change of supply was determined by various factors which moved dynamically even in the security exchange which was price former body and herger; all the factors changed constantly fday by day.

According to Sinung Hendratno, a researcher of PT Nusantara Plantation Research through 2004 – 2014 commodity prices fluctuated dynamically with downturning trend since February 2011 for rubber and palm, down since January 2011 then relatively stable for sugar, down since September 2012 and notably stable for tea, up since May 2012 fir cacao and up since November 2012 and relatively stable and notably high level for coffee.

In 2013 world rubber production was posted at 12.04 tons with Thailand as biggest producer (34.5%); Indonesia (25.5%) Vietnam (7.9%), China (7.2%), India (7%) Malaysia (6.8%) and other countries 11.2%. Consumption 11.36 million tons, the biggest consumer being China (36.5%), India (5.8%), USA (8%) Japan (6.3%) Indonesia (4.3%), Thailand (4.6%), Malaysia (3.8%), Brazil (3.5%), South Korea (3.5%), Germany (2.2%) and other countries (18.4%).

In 2013 production of CPO came to 56.12 million tons with main producer being Indonesia (51%) then Malaysia (34%), Thailand (3%) and other countries (12%) while consumption totaled 57.2 million tons, the biggest consumer being India (15.3%) Indonesia (14%), EU (11%) China (11%), Malaysia (4%), Nigeria (3%), and other countries (37%).

Sugar production was 177.56 million tons the biggest producer being Brazil (21.8%); India (14.9%). EU (9.5%). China (8.5%), Thailand (5.8%), Mexico (3.5%), Russia (2.8%), Pakistan (2.7%), Indonesia (1.2%) and other countries (24.6%) while consumption came to 171.38 million tons with the biggest consumer being India (15.3%), EU (11%), China (9.4%), Brazil (7.2%), Indonesia (3.1%), Mexico (2.9%), Pakistan (2.7%) and other countries (42%).

Tea production was posted at 4.82 million Kenya 16%, India 15%, Vietnam 5%, Argentine 4%, Indonesia 3%, Uganda 2% and other countries 20%. Consumption came to 5.03 million tons the biggest being Russia 9%, England 7%, USA 7%, Pakistan 7%, Kenya 6%, Egypt 6%, Iran 5%, Marroko 3%, Germany 3%, Holland 2% and other countries 42%.

Cacao production was 4.45 million tons, the biggest producer being Ivory Coast 40%, Ghana 21%, Indonesia 10%, Nigeria 5%. Brazil 5%, Kamerun 4%, Equador 5%, other countries 10%. The world’s consumption was 4.26 million tons, the biggest producer being Holland 13%, Ivory Coast 12%, USA 10%, Germany 10%, Indonesia 7%, Malaysia 6%, Brazil 6%, Ghana 5% and other countries 31%.

Total coffee production was 152.51 million bags, the biggest producer being Brazil 35.7%, Vietnam 19.7%, Kolombia 7.9%, Indonesia 6.3%, Ethopia, 4.3%, India 3.4% and other countries 22.7%, while the world’s consumption of coffee was 142.42 million bags with the biggest consumption being EU 29.9%, USA 17.1%, Brazil 14.1%, Japan 5.3%. Canada 2.7% and countries 30.9%.

Basically the price of plantation commodity Indonesia was related to commodity prices in the world market. Therefore the many factors that influenced supply and demand at the world market whether in consumer or producer countries would determine prices in Indonesia.

The determinant factors that influenced demand in consumer countries were economic growth and policy in fiscal, monetary, the real sector, downstream industry and trading; population increase, low employment rate; purchasing manager index and inflation. The factors that influenced supply in producer countries were policies for production and investment in plantation commodity, inflation in producer countries, inflation in producer countries and trading in producer countries.

Study unveiled that in year 2015 price of rubber was at low level, with fluctuation: USD 1,41 – USD 1,58.kg.CPO was at low medium level with fluctuation USD 1,66 – US 1,85 .kg, sugar was at middle zone with fluctuation USD 0.26 – 0.32/kg tea was at middle zone with fluctuation USD 2.7 – 3.1/.kg, cacao was in middle in zone with fluctuation USD 2.63 – USD 2.98/kg; Robusta coffe at the medium high zone at USD 1.94 – USD 2.16 kg and Arabica coffee at middle zone with fluctuation USD 4.5 USD 4.7/kg. (SS)

Business News - July 3, 2015

ALL OF A SUDDEN GOVERNMENT REGULATION APPEARS TO MAKE A MESS OF BUSINESS

Productive businesspeople who in the process of importing goods suddenly had to cancel order and pay cancellation fee. Such was absolutely unexpected condition and very shocking to Indonesian importers. Just when transactions were in the middle of procedure, all of a sudden Government Regulation appears to forbid importers buying steel from Krakatau Steel. “We and our counterpart abroad are bound by contract. They demand cancellation fee and by the rule we have to pay them. The amount of cancellation fee is of no small magnitude. We have to bears loss.” A businessplayer expressed his grievances to Business News (30/6).

All of a sudden without illumination or pre warning about Tax Importing Due for Trading Safeguarding (BMTP) on Iron and Steel products HS.7210.61.11.00 through the Regulation of the Ministry of Finance No.137.1/PMK/011/2014. The recommendation was based on investigation by the Committee for Indonesia Trading (KPPI) by request of PT NS Blue Scope and PT Sunrise Steel.

The consideration was based on investigation and analysis by the Indonesia Commerce Safeguarding (KPPI) who had discovered that applicants were suffering severe losses with imported iron and steel not based on Guidelines HS.7210.61.11.00 In view of that matter KPI recommended application of BMTP.

The recommendation was only based on the interest of applicants (PT NS Blue Scope and PT Sunrise Steel) not on national interest because the stipulations did not involve other stakeholders so it was suspected to be a move toward monopoly and kartel. “The threat of loss was only based on the perspective of the two companies (Blue Scope and Sunrise Steel). KPPI should not have examined he two companies but supposedly more on the overall. There were indications of disguised conspiracy.”

It was just like a act of monopoly by the two companies. Interest of the two companies could not be the underlying reason for making a Law. Implementation of PMK No.137.1/PMK/011/2014 on BMTP for import iron and steel from date of ratification was only 7 days. This was unfair because importers of iron and steel were not given enough time like other PMK. PMK No.137.1/PMK 001/2014 as ratified on July 15, 2014 and was put in effect on July 22, 2014” there were indications of irrational ways and game playing by personals”.

There was not enough time given to overseas exporters to have clarification, among others exporters from Vietnam and Korea. (Article 79 PP 34 year 2011 on KADI and KPPI) During investigation, KPPI must conduct hearing session to enable exporters, producers, applicants of the Domestic Industry, importers, the Government and certain exporter countries and concerned parties to set forth their evident, views, and responses. “The Government had broken the rules”.

There had been no overall illumination on PMK No.137.1/PMK/011/2014 on the imposition of BMTP Tax on iron and steel to all stakeholders especially importers of iron and steel of non HS.7210.61.11.00 in some cities; illumination was only in Jakarta. Even that was only based on information from Head of the Indonesia Anti Dumping Committee (KADI) which means the Government had violated the Rules in PP 34 Article 82 verse (1) KPPI must inform about temporary safeguarding action as intended in PP34 year 2011 on KADI and KPPI Article 81 verse (7) to applicants of Domestic Industry and association of importers. Administratively the action was wrong. “There was no adaptation period of 3 months to enable importers to coordinate with buyer.”

Implementation of PMK No.137.1/PMK/011/2014 on the imposition of Import Tax on Iron and Steel products had injured the spirit and understanding of ASEAN which was zero percent (0%) for iron and steel products until December 2015 within the ATIGA Framework accommodated in PMK No. 208/PMK.011/2012 on the Stipulation of Import Tarif within the framework of ASEAN Trade in Good Agreement. “We have signed a contract agreement with an exporter company from Vietnam but with the implementation of PMK No.137.1/PMK/011 2014 had obliged us to cancel contact with buyer. The consequences is that we have to pay compensation fee which is quite sizable”. (SS)

Business News - July 3, 2015