ADMINISTRATIVE ORDER COULD MINIMIZE BUDGET BROKERAGE PRACTICES

          One of the brokerage practice issue which are frequently talked about recently is budget brokerage for regional development. Budget brokerage occurs as a result of the expectation of some regional governments to get additional budget allocation from the central government by not abiding to the budget allocation procedure. Those regional governments only expect to obtain budget instantly, and this opens a chance for budget brokers to launch their opens a chance for budget brokers to launch their actions.

            Budget brokerage is hard to be detected as it gives mutual benefit. The broker will receive fee for the services he or she performed. On the other hand, the Satuan Kerja Perangkat Daerah (SKPD) also receives large amount of budget for certain projects. Executive Director of the Regional Autonomy Implementation Monitoring Committee (KPPOD), Agung Pambudi, stated this matter in Jakarta on Monday (January 16, 2012). One of the methods to detect budget line whether it involves budget broker or not, according to Agung, can be seen from Budget Allocation List (DIPA). “If there is any program that receives higher amount of budget if compared to the average rest, it should be suspected”, Agung said.

            Agung admitted that the existence of budget brokers is difficult to be proven legally. Until now, there are many budget brokers who pay a specific amount to the House of Representatives to smoothen budget distribution from central to regional government. According to him, the cause of the budget brokerage practices is complicated process of budget allocation. He explained that in the financial equilibrium system, there are not only DAU, DAK, and DBH, but there are also Dana Dekonsentrasi and Tugas Pembantuan.

            To minimize budget brokerage practices, according to Agung, there should be an administrative order whether at executive or legislative level. Administrative order should cover all lines, starting from budgeting cycle which must be valid and punctual in order to prevent dispute between the executive and the legislative bodies. And, from the aspect of budget discipline, a tender is required. If the administration is in good order, it will minimize the chance of budget brokers to launch their actions”, Agung said.

            Agung emphasized on the process of arrangement of Revised Regional Budget (APBD-P) or State Budget (APBN-P). According to him, in APBD-P, the substance is changed. But what happens is the opposite. Based on surveys performed, there are many funds which are not written in APBD-P, but have been realized. Budget brokerage is a heavy work for KPK (Corruption Eradication Commission) and BPK (Supreme Audit Agency). These two institutions must stop brokerage practices that harm the society.

            Brokerage occurs as a result of unoptimal service provision and a chance that can benefited in various public and bureaucracy services. Agung added that the brokers promise to smoothen process of budget allocation to the regions or to increase amount of the budget allocated by paying them a certain amount of fee. These brokers do not consider which regions are eligible to receive funding. They only think about personal gain. 

  
Business News, January 18, 2012 

GOVERNMENT AID FOR FISHERMAN OF RIAU ISLANDS CAME TO RP 1,365 BILLION

           The Ministry of Maritime and Fishery (KKP) extended aid to fishermen of the Riau islands (Kepri) in the form of Cultivated Fishery to the amount of Rp 1.365 billion consisting of two business packages. Assistance based on Community group amounting to Rp 150 million, 20,000 pieces of fishermen’s ID card, land certificates for fishermen consisting of 300 blocks. Two units of fiberglass boats and 5 wooden boats complete with equipments were also included in the aid package. “We have presented 45 fishermen’s boats of 2 GT capacity, and 30 units of SGT fishermen’s boats. Development aid for Rural Mina Business (PUMP) extended to the Government of the Riau province amounting to Rp 3.3 billion”. The Minister of Maritime and Fishery Sharif G. Sutardjo disclosed to Business News (30/1).

            The PUMP program being launched was divided into two parts, i.e. PUMP for hooked fishing and PUMP for Cultivated Fishing. PUMP Assistance for Hooked Fishing amounting to Rp 2 billion distributed to Groups of Shared Business (KUB) of Hooked Fishing, each group receiving aid of Rp 100 million.

            Today in Riau islands there were around 49 Shared Business Group spread out all over Riau islands.

           Assistance included also seven units of INKA MUNA boats worth Rp 10.5 billion in the hope that the aid could support development of fishery industry in Batam island and Riau islands. Aid for PUMP of cultivated fishing to be pipelined to the Provincial Government reached Rp 1,365 billion distributed to 21 groups consisting of five regencies/cities.

          The Province of Riau consist of 2,408 islands big and small of which 30% are still nameless and unoccupied. Total land area is 252,601 sq km of which 95% are sea and around 5 percent land.

            The total area of land which were potentially productive included land for embankments in Riau islands 100.553 ha; plain water ponds 189 ha, and sea cultivation area covering 1,168,220 ha. For that matter synergy was needed between the Central Government, and regencies/cities and all community groups in Riau island” Minister Syarif said.

            The Regency of Bintan Kepri would be functioned as a Minapolitan (fishery center) to be followed by Batam City and Tanjung Pinang and Surroundings. As with Batam City, it would be dominated by hooked fishing while fishery cultivation would also be developed.

         Today there was Fish Nursery Center in Barelang, Sea Cultivation Center (BBL) in Batam, which were Technical Undertaket Units (UPT) of the Ministry of KKP.

            In a different location, the Controlling Board of Commodity Future Market (Bappepti) saw the potential of PT Pertani to manage warehousing Receipt so illumination and educational campaigns were constantly Indramayu could be beneficial to farmers. “Warehouse capacity reached three thousand tons. The infra structure included quality testing, and storage administration. Confirmation that classification had met standardization. Now warehousing could store in husked grains (gabah) and rice”. Head of Bappebti Syahrul R. Sampunjaya told Business News (30/1).

            Warehousing could hold nearly 1,500 tons of gabah today. The value was around Rp 8.5 billion. Bappepti would continue to step up Storeroom Receipt System (SRG) and synergize with PT Pertani in some regions. Beside that in Indramayu PR Pertani also had assets of storerooms in South Sumatra, South Sulawesi and some regions in East Java. “This is an indication that not only the Central Government with State Funding, but development of storerooms by Bappebti also optimized special allocated funds including Regional Budget (APBD)”.

            PT Pertani was continuously developing and functioning the Storage Receipt System today, In the future Bappepti and the Ministry of Trade were developing 15 units of storerooms. “We will see which regency had the competence to manage plantation yields whether it was rice, corn, or coffee in Aceh; or seaweed, rubber etc”. 

INFLATION IN JANUARI 2012 AT 0.76 %

              Development of prices various kinds of commodities in January 2012 in general shows an increase. Based on result of survey of National Bureau of Statistics (BPS) in 66 cities in January 2012, inflation occurs at 0.76 percent or there is increase in Consumer Price Index (IHK) from 129.91 in December 2011 to 130.90 in January 2012. Inflation rate by calendar year (January) 2012 is at 0.76 percent and inflation rate year-on-year (January 2012 against January 2011) is at 3.65 percent.

            Inflation occurs as a result of price increase of foodstuff index by 1.85 percent; food, beverages, cigarettes, and tobacco index by 0.65 percent; housing, water, electricity, gas, and fuel index by 0.54 percent; health index by 0.51 percent; educations, recreations, and sport index by 0.15 percent; and transportation, communication, and financial service index by 0.23 percent. While, clothing index this month experiences deflation at 0.08 percent.

            Commodities which experience price increase in January 2012 are, amongst other: rice, fresh fish, purebred chicken meat, purebred chicken eggs, cherry tomatoes, cooking oil, filter clove cigarettes, tariff of house rent, rice and side dishes, clove cigarettes, tariff of house contract, air transport tariff preserved fish, spinach, string beans, water spinach, cucumber, carrot, tomatoes, kue basah (deep fried, boiled or steamed cakes), soto, refined suger, white cigarettes, bricks, cement, wage of non-supervisory construction worker, household fuels, and housemaid salary. While, commodities which experience price decrease are: red chili pepper, cayenne pepper, and gold jewelry.

               Commodity group which contribute to inflation in January 2012 are: foodstuff group 0.45 percent; ready-to-eat food, beverages, cigarettes, and tobacco group 0.12 percent; housing, water, electricity, gas, and fuel group 0.12 percent; health group 0.02 percent; educations, recreations, and sports group 0.01 percent; and transportation, communication, and financial service group 0.04 percent. While, clothing group this month is relatively stable and does not contribute to national inflation.

              Foodstuff group in January 2012 experiences inflation at 1.85 percent or increase of index from 152.76 in December 2011 to 155.59 in January 2012.

        From 11 sub-groups under foodstuff group, 10 sub-groups experience inflation while 1 sub-group experiences deflation. Sub-groups experiencing the highest inflation are vegetable sub-group at 3.69 percent, and the inflation is experienced by legumes sub-group at 0.03 percent. While, spices sub-group this month experiences deflation at 5.13 percent.

            This group in January 2012 contributes 0.45 percent to inflation. Commodities which dominantly contribute to inflation are, amongst other, rice 0.18 percent; fresh fish 0.11 percent; purebred chicken meat 0.09 percent; purebred chicken eggs 0.04 percent, cherry tomatoes and cooking oil 0.03 percent, respectively; preserved fish, spinach, string beans, water spinach, cucumber, carrot, and tomatoes 0.01 percent, respectively. While, commodities which dominantly contribute to deflation to deflation are red chill pepper 0.08 percent and cayenne pepper 0.02 percent.

           In January 2012, inflation occurs at a rate of 0.76 percent with Consumer Price Index (IHK) at 130.90. From 66 cities of IHK, 62 cities experience inflation and 4 cities experience deflation. The highest inflation occurs in Banjarmasin at 2.92 percent with IHK at 139.35, and the lowest occurs in Banda Aceh at 0.02 percent with IHK at 127.15. While, the highest deflation occurs in Sorong at 0.38 percent with IHK at 145.47 and the lowest occurs in Manado at 0.13 percent with IHK at 125.94.  

INDONESIAN CHAMBER OF COMMERCE AND INDUSTRY (KADIN) PREVENTS IJON PRACTICES IN THE REGIONS

           The Indonesian Chamber of Commerce and Industry (Kadin) expects the government to prevent ijon transaction on some commodities in many regions, including paddy, rattan, and other as the transaction is unprofitable to farmers for a long-term. Ijon practices occur when farmers sell their plants directly before harvest to buyer. The would-be buyer gives an advanced payment. And, at harvest time, farmers must give the harvest to the buyer. Kadin attempted to prevent such practices. One of the attempts is by encouraging banks to open branches in the regions so that farmers could rely on credit facility, General Chairman of Kadin, Suryo Bambang Sulisto (SBS), told Business News.

              Kadin also sees that ijon practices also occur on rattan farmers in some regions, including in Cirebon, Solo, Kalimantan, Sulawesi, and other. Many foreign buyers, including buyers from China, are actively seeking to buy rattan. As many of this commodity is used in China for making home appliances, including furniture. Due to ijon practices, local industry will be distorted as many of the rattan has been sold to foreign buyers.

            Kadin cannot say that ijon practice is illegal. But, this is very situational meaning that farmers are frequently left with no choice. When they need money, there are lured by buyers who give them advanced payment.

            Kadin also expects the government to review ministerial regulations concerning prohibition on rattan export. If there is an indication of overproduction, the government must revise the regulations. Moreover, there are many foreign consumers who have shifted to synthetic rattan. If they fail to obtain natural rattan, they shifted to the synthetic one. This condition distorts our farmers and the national economy.

          The government must continuously protect the national industry in connection to expansion of work opportunity. If there is a overproduction, the government must revoke the policy on prohibition on rattan export.

               Some observers consider that there is an unsynchronistic matter concerning prohibition on rattan export. The Industry Ministry is led by M.S. Hidayat who is former general chairman of Kadin. While, kadin under the chairmanship of SBS is contra export prohibition policy. But the fact is that the Industry Minister prohibits export, but Kadin disagrees on the policy, an observer whose name is unwilling to be mentioned, told Businees News.

             If there is a intense and directed communication, this matter could be prevented. A former leader must be able to maintain the vision and mission of a large organization like Kadin. I have concern that there will no more populist policies in Kadin.  

PLANTATION REVITALIZATION TO BE ACCELERATED

            Plantation revitalization of last year, even though it has been attempted by hard work, only 45,035 hectares or 9% of target that has been achieved. While in fact, rejuvenation of farmers? Oil palm and rubber plantations have been urgent as many of the plants have been old and unproductive. While, cacao rejuvenation has been included in the National Cacao Movement, only the second-year maintenance that require plantation revitalization credit. Gamal Nasir, Director General of Plantation of Agriculture Ministry, told Business News.

            The problem of plantation revitalization is the banks which require land certificate, while a major of part of farmers do not have land certificates. Farmers inability to register their land to obtain certification is due to problem of limited fund.

            Other problem is land area which is overlapping with mining area, forestry area, and other. And, Provincial Spatial Planning (RTRWP) which is not yet complete is also a problem. Many regions which are potential for plantation revitalization are hampered by these two problem, Gamal said.

            Technical requirements imposed by banks cause difficulty to farmers. And, the partner company who will become guarantor is facing complicated banking requirements. If the pattern is a non-partnership one where farmers directly requested credit through farmers cooperatives, bank are uninterested.

            Banks consider that plantation revitalization credit, just like other agricultural credits, commonly possesses high risk. There should be a special institution who guarantees credit given to farmers such as in Thailand and France so the banks undoubtedly willing to disburse credit to farmers, he said.

           Plantation revitalization in 2011 reaches 45,000 hectares with total number of farmers of 28,900 household heads and total credit Rp 2.9 trillions. For plantation revitalization in 2012, Rp 19 trillions. For plantation revitalization in 2012, Rp 19 billion dana pengawalan is provided for 147,728 hectare area.

            This year, the Directorate General of Plantation tries to make a breakthrough, namely by making tries to make a breakthrough. Namely by making agreement with the National Land Agency so that land certification for plantation revitalization program can be included in PRONA (national program) for mass certification.

            Banks who have stated their commitment to support plantation revitalization program are required to make general guidelines for all their branches.

            Banks are also asked to willing to finance continued maintenance for farmers being the participants pants of National Cacao Movement. For non-partner-ship program, the government will provide guarantee cost in addition to interest subsidy so that banks will be willing to disburse money without very dependent on business partner.

        General Chairman of Indonesian Palm Oil Association, Joefly J. Bachroeny, stated that at present, businessmen who become guarantors for plantation revitalization are facing very heavy requirements.

            The requirements for plantation revitalization credit were very prudent. There must be a location permit and land certificate. If one of these requirements is not completed, credit will not be disbursed.

            Anizar Simanjuntak, General Chairman of Indonesian Oil Palm Farmers Association urges the government to soon implement mass certification for oil palm farmers at reasonable price. Without this, our discussion on plantation revitalization will be in vain as the basic requirements cannot be fulfilled, she said.    

COFFEE EXPORTERS HAVE STARTED TO EYE DOMESTIC MARKET

           National coffee exporters joined under the Indonesian Coffee Exporters Association (AEKI) started to eye the domestic market which is very potential for coffee trade. In addition to the increasing demand for coffee trade. In addition to the increasing demand for coffee, sluggishness of the export market is one of the factors that stimulate coffee exporters to focus more on domestic market. AEKI reported that realization of coffee export in 2011 declines to 250,000 tons from 2010 at 443,000 tons. Decline in the volume of coffee export is because national coffee production in 2011 declines by around 550,000 tons from 600,000 tons in 2010 due to bad weather.

            General Chairman of AEKI, Suyanto Husein, said that decline in the volume of coffee export is also because production in coffee producing countries which is almost complete. And, currently, price of coffee domestically tends to be higher than price in the export market. Suyanto reported that average coffee price in International Coffee Organization (ICO) reaches USD 192.66 per ton. One pound is equivalent to 0.45 kilograms (kg).

          The price declines by 16.6% from highest average price throughout 2011 that reaches USD 231.24 per pound. Even though export is declining, according to Suyanto, the percentage is still higher than businessmen’ estimates. “Businessmen once predicted that coffee export in 2011 will only reach 300,000 tons or declines from 2010 at 443,000 tons”, Suyanto said.

          Suyanto was optimistic that the domestic market will increase in line with domestic demand for coffee which increases, or around 240,000 – 250,000 tons. The increase has been going on continuously since 2009. According to him, increase in coffee demand is due to an increasing number of new coffee shops. In addition to that, he also said that the selling price domestically is higher than selling price in export market. He explained that the present composition is: production 550,000 tons and export 320 tons. And, the remaining is distributed to domestic industries.

          He admitted that at present, coffee trade in international market is not so buoyant. ICO reported that volume of coffee trade in October 2011 only reaches 7.1 million bags or equivalent to 426,551 tons. This rate declines by 3.65% from trade volume in September 2011 at 7.37 bags or equivalent to 442,712 tons. This substantially affects Indonesia’s coffee trade. Sluggishness of international coffee trade is also reflected in the decline of coffee export from Indonesia.

            Sutanto, quoting a report released by ICO, stated that the reason of the decline in coffee production that the reason of the decline in coffee production in Indonesia is also worsening weather in coffee plantation centers. Besides Indonesia, production decline also occurs in India which experiences similar problem. A similar problem is also experienced by Vietnam whose coffee production declines by up to 5% in 2011.

             

          Similar condition also hits some Latin American countries, such as Mexico and Central America whose production declines by around 4.6% from 19.2 million bags to 18.4 million bags. With the production decline, production target fro 2011 set by the Agriculture Ministry will certainly be missed. Coffee production only reaches 550,000 tons or below the target at 690,000 tons.

FORESTRY MINISTRY INVOLVES PRIVATE PARTIES IN ENVIROMENTAL CONSEVATION

              Environmental conservation, such as tiger conservation, requires a very large amount of fund while the Forestry Ministry budget is very limited. Therefore, public partnership conservation is part of conservation attempt. Darori, Director General of Forest Protection and Nature Conservation of the Forestry Ministry, said.

          So far, partnership program has been frequently performed in rehabilitation and planting, while in conservation it is low, including in tiger conservation. Conservation of the and protected animals require a large amount of fund. Therefore, the government invites private sector to set aside their CSR (Corporate Social Responsibility) fund for conservation activity, Darori said.

            At present, total CSR fund of companies in Indonesia is estimated to reach Rp 20 trillions, while Rp 1 trillion for conservation attempt has already been very helpful. The involvement of private sector in Bukit Barisan Selatan National Park, which is tiger conservation by Artha Graha Group who is also the management of Tambling recreational part and construction of tiger observation pen by Asia Pulp and Paper (APP) Group in Siak, Riau.

            Preserved forest area managed by Tambling Wildlife Nature Conservation has successfully maintained Indonesia’s biodiversity assets, such as Sumatera tigers and elephants.

            In addition to that, tiger conservation attempt is also performed collaboratively with non-governmental institutions such as Forum Harimau Kita, Wildlife Conservation Society, WWF Indonesia, Taman Safari Indonesia, Fauna & Flora International, Zoological Society of London, and conservation activists or other conservation donor organizations.

              Public partnership conservation is one of the attempts to preserve protected species during low budget. For tiger conservation attempt, there is budget available through PPA at USD 10.8 millions, and Indonesia receives Rp 300 billions for protecting and increasing their population two times by 2024.

               Indonesia is still seeking a way for tiger conservation which is beneficial to humans. For this purpose, a tiger park will be constructed and it will require a large sixe of area. We are seeking for 300 hectare area for conservation of Sumatera tiger and for protecting them from hunters. This area could become an eco-tourism site that could absorb local workers, said Darori.

           Meanwhile, to support national conservation activity, the Forestry Ministry receives assistance from Australia Zoo who will construct the first Wildlife Hospital in Way Kambas National Park, Lampung. The mechanism is like this: we lend them 5 Way Kambas elephants and they build the hospital, the first foundation stone will be laid on January 31, he said.

              Several partnerships in management of conservation area and national park with private sector that have been going on are construction of rhinoceros pen in Ujung Kulon, tiger release facility in Bukti Barisan Selatan National Park, and Jalak Bali bird conservation in Bali Barat National Park.

            We will also offer the management of Komodo National Park to private sector, he said. The government opens partnership with foreign private parties who will contribute in the management of conservation area and national park. Indonesia has around 50 national parks.

            With many partnerships in conservation management with private, parties, the country will be benefited as it will enjoy foreign exchange revenue from national park tourism activity. But, Darori could not yet calculate the amount of the potential foreign revenue. We have just started and are on investment stage. Probably in the next 5 years we will receive large amount of foreign exchange revenue.