GOVERNMENT ENHANCE DEVELOPMENT OF ENERGY AND RENEWABLE ENERGY

Ex Chairman of the Renewable energy Society (METI) Rachmat Gobel underscored that the Government would focus attention on the development of New and renewable Energy, the development was part of the plan develop 35000 MW power by 2019 so it was expected to promote welfare, and constantly maintain self reliance to sustain national economic growth.

The statement was made by Rachmat Gobel on the occasion of transfer of authority to the Chairman of MEI for the period of 2015 – 2018 Suryadharma in Jakarta on Monday (6/7). Rachmat Gobel was Chairman of METI for 2012 – 2015. He stated that the Joko Widodo administration would focus attention on 5 sectors to achieve people’s welfare agriculture, maritime and fishery, energy, industry and tourism. In energy, the priority would be on renewable energy.

“The President is committed to develop new and renewable energy as integral part of the grand masterplan to develop 35,000 MW of electricity and minimize use of oil by up to 20%” he said while still referring to National Energy Policy – among others the Energy Mix plan by 2025.

Government would reduce to a great extend use of fossil energy. crude oil was projected to be reduced up to 20% while gas would be increased up to 30%. The Government would also maximize use of coal to more than 33% while biofuel would be increased to more than 5%, geo thermal to more than 5% and biomass, water force, wind force to more than 5% and liquefied oil to be more than 2%.

“Renewable energy should be pursued because soon or late fossil energy would run out. New and renewable energy would propel industry and strengthen competitiveness of domestic products at the global market,” Gobel said. he expected that in the future renewable energy would enhance efficiency if all industry lines and promote green industry. “Furthermore renewable energy would promote people’s welfare, support provincial development and strengthen national resiliency”

To strengthen Industrial Competitiveness

Trade Minister said he was optimistic that competitiveness of national industry would be stronger as need for electricity was fulfilled. The statement was made when he was accompanying President Joko Widodo inaugurating Unit G geo thermal based powerhouse in Kamojang and ground-breaking of geo thermal projects development in Bandung on Sunday (5/7).

Minister Gobel said that successful management of the energy sector was the key to promoting economic growth. Strong Industry rests on two powers: the power of electricity and manpower. “Indonesia’s commodities would be competitive at the Global market if the two powers were strong” he said. today national power capacity was 50,000 MW.

The Joko Widodo Jusuf Kalla administration projected increased capacity to 35,000 MW by 2019. “Strengthened power supply was the pre condition of promoting industry competitiveness and to increase export volume by 300% in 2019” he concluded. (SS)

Business News - July 10, 2015

TO ENABLE SUGARCANE GROWERS OBTAIN FERTILIZERS AND CREDIT

In pursuit of national self reliance in sugar, farmer were given the convenience in obtaining production facilities. This year fertilizer was a big problem to farmers. Farmers were only allowed to buy subsidized fertilizers for not more than 2 ha of land. Farmers had to seek for non-subsidized fertilizers which was hard to get at the market. Arum Sabil, Chairman of APTRI told Business News.

Control of subsidized fertilizers by the Police and the army had criminalized farmers; there were even farmers who were arrested by the Police because of being charged of abusing subsidized fertilizers. The main problem was Government’s program which allowed subsidy for fertilizers way below farmer’s need. The total need for fertilizers was 41 million tons. The proposed allocation was 15 million tons were finally stipulated at 9 million tons.

This year it was difficult for farmers to obtain Food and Energy Resiliency Credit (KKPE) for sugarcane growers. Normally it was easy for sugarcane growers to get KKPE. In the present condition it would be hard for farmers to compete at AEC. The standard Farmer’s Selling Price (HPP) of Rp8900/kg was based on the assumption that farmers used subsidized fertilizers but in reality they used non subsidized fertilizers.

Revitalization of sugarcane was exercised by way of using new premium variety, rescheduling of planting and cut-and-carry Management, which was important for increasing yields.

In first planting on technical irrigation land sugarcane growers would lose if sugarcane production was only 90 tons/ha with yield of 7% because production cost would come to Rp.11,881/kg, but if production output was 100tons.ha with yield of 12%production cost would come to Rp.6,387/kg and farmers would gain.

If ratoon of second round on the same condition of land and sugarcane production was 80tons/ha with yield 7% production cost would be Rp.11.299/kg and farmers would lose but if sugarcane production was 90 tons with yield of 12% production cost would be Rp.6.024/kg farmers would gain.

Beside increasing productivity it would be necessary to expand sugarcane plantation area. Today total expanded to 750,000ha. Sugarcane production with premium variety was increased from 75 tons/ha to 100 tons/ha. Today’s yield which was 7.5% on the average would be increased to 10%.

On the factory side, machinery would be revitalized with carbonating and modern and automatic machines. Of the 63 sugar mills today, those which were 100 years – 184 years old were in 40 sugar mills, those which were 50-59 were in 3 sugar mills and under 25 years were in 5 sugar mills.

Machines with capacity below 2000 TCD were in 14 sugar mills, those of 2000 – 4000 TCD in 29 sugar mills, 4000-6000 TCD in 5 sugar mills, 6000 – 8000 TCD in 9 sugar mills, 8,000 – 10,000 TCD in 2 sugar mills, and above 10,000 TCD in 3 sugar mills. By productivity, sugarcane with 30 – 40 tons/ha were in 3 sugar mills, 40 – 50 tons/ha were in 3 sugar mills, 50 – 60 tons/ha were in 17 sugar mills, 60-70 tons/ha were in 12 sugar mills, 70-80 tons/ha were in 14 sugar mills, 80 – 90 tons/ha were in 4 sugar mills.

Based on productivity per ha between 1-3tons.ha was in 1 sugar mill, 3-4 tons/ha in 19 sugar mills, 4-5 tons ha in 14 SM. 

Sugar producing companies numbered 18 with 63 factories. Processing capacity was 245,900 TCD so on the average 3,900 TCD. Raw materials were obtained from own plantation and farmer’s plantation.

Working days for processing was on the average 160 days/year. Plantation areas in 2014:477,122 ha consisting of farmer’s Sugarcane 273,332 ha and company’s sugarcane 203.790 ha. Annual production potential came to 2.5 million tons of sugar/year.

Number of workers on farm was 1,326,250 family heads and off farm 28,350 people not including group workers Age of existing factories 2-184 years and climate influence on production was great.

New investment would need capital of Rp.1.5 to Rp.2 trillion on farm or off farm for capacity of 10,000 TCD or 120,000 ton of sugar/year. To start production after 4-5 years and attain BEP of 8 – 10 years after production. The land needed for plantations of 25,000 – 30,000 ha for factory with capacity of 10,000 TCD.

In the Revitalization process, sugar mill capacity was increased from 245 TCD to become 500,000 TCD. “If revitalization of sugar mills with focus on increasing capacity and yield was at least 10%and building of new sugar factories were actually realized with areal expansion plus increase of productivity and yield Indonesia could produce 7,5 tons of sugar. If the position was achieved Indonesia would be more than just reliant in sugar but would become an exporter of sugar” Arum Sail said. (SS)

Business News - July 10, 2015

NOW IS THE MOMENTUM FOR ECONOMIC REVIVAL

Ineffective controlling, the problem of economic slowdown and Rupiah depreciation which characterized national economy today, were the focus of attention of the Parliament. For that matter the Parliament again reminded the Government to take sound measures to revitalize national economic performance. This was stated by Chairman of House Setya Novanto in delivering his speech in the closing session of Fourth Plenary Meeting Parliament 2014 – 2015 in Senayan Jakarta on Tuesday (7/7).

Increasing prices of essential need during Ramadhan and Lebaran was also the Parliament’s attention. The Parliament through related commission had urged the Government to pay attention to hometown rush of people going home for Idul Firtri among others by securing sound infra structure, adequate transportation and safety-security protection for home bound or backflow routes. House reminded the Government of the need of participation by the people, law enforcers and the Government to secure Hometown rush which was orderly, convenient and safe.

About long drought that resulted in food crisis and water shortage the way it happened in East Nusa Tenggara, house urged the Government to take emergency action and categorize the problem as natural disaster.

As an expression of care and sympathy for the victims of natural disaster, Chairman of House proposed the Parliament o raise fund to be distributed to the aggrieved victims of disaster. In the past there was fund raising before for various disasters like Merapi and Sinabung volcanic eruption, the Banjarnegara landslide disaster etc.

The Chairman of House expressed his condolence for the air crash of Airforce Hercules C-130 aircraft in Medan last week which had killed a number of TNI soldiers and civilian passengers. The Chairman of House urged the Government to extend aid and best compensation for the family members of the victim. To keep disasters from happening again in the future, which was allegedly on account of aging aircrafts, the Chairman of House fully supported the Government’s plan to rejuvenate military arms and equipments.

Legislation of some Bills Still Due

During Session IV the Parliament tried to accomplish legislation of some Bills which was priority for 2015. Some efforts had been made through various meetings or technical visits to seek for input from stakeholders in the process of making Law which was adaptive, responsive and aspirative to organized to concentrate more on the 2015 schedule as there was still carry over task from previous year to be accomplished soonest.

During session IV, House was making revision for National Legislation Program (Prolegnas) 2015 among others Bill on Anti Corruption Committee (KPK), Bill on Book Keeping system, and Bill on changing Bill on Food Resiliency with Bill on Animal, Fish and Plantation Quarantine and to replace Bill on Central-local Financial balancing and Bill on Tax stamps.

House had also ratified 3 Bills, i.e. Bill on Saving for People’s Housing, Bill on Guaranteeing, and Bill for Prohibition of Alcoholic Drinks. Besides there were 6 Bills now at the stage of harmonization at House Legislation Board, i.e. Bill on Land Affairs, Bill on Construction Service. Bill on Tobacco, Bill on Culture, Bill on Fishermen Protection and Empowerment, Fish Cultivating and Salt Embankments.

Meanwhile the Government forwarded to House 4 Bills, i.e. Bill on Branding, Bill on KUHP Book of Law, Bill on Patrnting, and Bill on State’s Non-Tax Income. The Parliament had stipulated instruments. The four Bills would be dissected during convention time to be held on August 14 2015 next. (SS)

Business News - July 10, 2015

THE HOVERNMENT AGAIN DISTRIBUTES MACHINERY INCENTIVE FUND

In order to improve industry competitiveness especially textile and textile product (TPT) industry, machinery/equipment, which is older than 20 years, is absolutely necessary to be rejuvenated or restructured by machinery/equipment with more modern technology. The government through the Ministry of Industry considers it necessary to provide stimulus through restructuring of machinery/equipment in the textile industry in order to encourage the industry to improve its competitiveness through investments in more modern machinery/ equipment.

Harjanto, Director General of Chemical, Textile and Miscellaneous Industry of the Ministry of Industry, in Jakarta, on Wednesday (July 8), said that this year the Ministry of Industry re-allocates incentives for textile machinery revitalization program. However, Harjanto asserted that those who receive incentives are companies that never received a similar program. He asserted that incentive recipient is not the same company. The reason is that incentives should be distributed evenly to industry players. To that end, the Ministry of Industry will conduct strict selection of companies that submit request for machinery revitalization.

In addition to prioritizing textile manufacturers who have never received incentive, there will be four other stages that must be met by incentive recipients. Unfortunately, Harjanto did not explain in detail about the four stages. Last year, machinery revitalization funds budgeted by the government was absorbed by 80 companies. Harjanto predicts that the same thing happened this year. Jut like year, the Ministry of Industry does not limit the number of companies that will apply for incentive. To be sure, companies that receive incentives are limited to a maximum amount of IDR 3 billion.

Harjanto added that one of the requirements to get incentive is that machinery procurement must be new machinery. Until June 2015, the number of companies that receive incentives totaled 40 companies with absorption value of IDR 34 billion. However, Harjanto did not remember exactly the name of the company that received the incentives.

He said that to boost economic growth this year, the government did offer a lot of incentives. Cost relief to rejuvenate production machinery is also provided to small and medium enterprises (SMEs). He stated that the incentives are in the form of rebates of up to 45% for every SME. The scheme is the government provides funding for SMEs which will restructure their production machinery and equipment. To get the fund, small business must submit proposal directly to the government.

Each SME will receive different amount of incentives. The amount of incentives is tailored to the company’s scale in labor absorption. However, he could not specify the procedure for the submission of proposal for incentives. The Ministry of Industry could not yet explain the details of the budget prepared by the government. Cleary, this policy is still under discussion and will be issued in the near future.

According to him, this is an offensive strategy of the SME sector, especially in facing the ASEAN Economic Community and to support economic growth. He considered that these incentives are also important considering that currently there are around 3.4 million units of SME in Indonesia. He was optimistic that the incentives will facilitate small business to develop their business. Benefits, more workers absorbed, and increased exports.

It is said that the growth prospects of the textile industry will improve in the future, because domestic market demand and consumption continues to increase. Moreover, the textile industry’s market share is currently only about 2% of the world textile market. So, the opportunity of expanding the world market is still very large. Export market opportunities are open for industries that are able generate high quality products as well as up-to-date design with rapid supply capability. The average value of exports continues to increase, although in terms of volume it is decreasing. It shows that Indonesian products are constantly experiencing quality improvement. So, Indonesian textile products are no longer a low-end product manufacturer, but a high-end one. (E)

Business News - July 10, 2015