HOUSE OF REPRESENTATIVES READY TO TAKE OVER REVISION OF WITNESS AND VICTIM PROTECTION ACT

The lengthy process of revision of Law No. 13/2006 on Witness and Victim Protection Agency (LPSK) has received the attention from Vice Chairman of the House of Representative, Priyo Budi Santoso. He explained that if the government cannot complete the revised to take over.

The House of Representatives understood the heavy responsibility of LPK as the one who carries out the mandate of the LPSK Act, which its authority is limited. The House of Representative is ready to give support if the revision is done through House of Representatives? initiative proposal. This was stated by Priyo when welcoming Chairman of LPSK, Abdul Haris Samendawaim at the House of Representatives building in Senayan, Jakarta.

In accordance with legislation, proposal for deliberation of law can be done by the government or the House of Representative for Political and Security Coordinator emphasized that the initiative proposal from Chairman of LPSK.

Member of the House of Representative, Ahmad Yani, regretted the eighty deliberation of the bill. A similar situation also occurs on Draft of Revised Criminal Procedural Code (KUHAP) which has been waiting for tens of years and has not been proposed to the House of Representative. The House of Representatives? Legislation Body (Baleg) has been ready to take a revolutionary action to make it an initiative proposal of the House of Representatives.

Chairman of LPSK said that an increasing number in criminal cased an increasing number of witnesses and victims that must be protected. Some of them are ready to become justice collaborators and whistle blowers. To implement protection, LPSK should have formed a security force. The right choice bow is to ask for police’s assistance.

Police officers are assigned rotating so that it affects effectiveness of guarding system which is sometimes confidential. Learning from the United States who has the US Marshall, some of the police or officers trained by the police are working fully for US Witness and Victim Protection Agency.

Other authority that should be strengthened through revision of LPSK Act is decision of LPSK to protect witnesses and victims should be implemented by the related institutions, but in practice, it is not like that. Another matter is the status of the Secretary General which is only at the same level with Echelon II. The consequence is that budget and civil service affairs that cannot be self-managed, but must be through the Secretary General. Performance reporting at the House of Representatives is also done through 2 commissions, for example Commission II for administrative affairs and Commission III for law enforcement affairs.

Considering the heavy work challengers of LPSK, it is expected that revision of LPSK Act can be completed by 2013. If deliberation of the bill at the government level is stagnant, it should be handed over to the House of Representatives.    

Business News - August 29, 2012 

MINERS ASSOCIATION FEAR INVESTORS MIGHT QUIT DUE TO CONTRADICTING REGULATIONS

The Indonesian Miners Association (API) fear investors might quit if the condition of mining industry in Indonesia remained to be meesy with one regulation contradicting against another; under such circumstances investors might walk away from Indonesia. There was no other way for Indonesia but the Government and Parliament should make amendments on the overlapping regulations. Some articles of Law no. 4/2009 on Mineral and Mining (Minerba) and Law no. 32/2004 on the Provincial Governments might lead to inconstitutional acts. “If there was no legal assurance investors would not take any chabces, they may run away” Tony Wenas of API told Business News sometime ago.

API responded positively to the instruction of President Susilo Bambang Yudhoyono in regard to unclear rule-of-the-game in the mining industry. API had made various analysis and arrived at the conclusion that the Law needed amendments. Meanwhile recommendations to the Ministry of Energy and Mineral Resources had been set forth repeatedly, but the situation was as yet not conducive to investments. The effort to withdraw permit from the Regencies by the Central Government was facing big obstacles. “One possible wayout was by law amendment or the Government should issue Government Regulation as Substitute to Law (Perpu) etc. One thing is sure the Government must take drastic changes” Tony Wenas was quoted as saying.

Beside controversion in Article 69a, 69b Law no. 4/2009 API also saw the potential confusion in Regulations of lower degree than Law, i.e. Government’s regulation (PP) no. 24/2012 on amendments to PP no. 23/2010 on the Execution of Mining Business Minerba Activities. “The PP no. 24 reflected the Government’s good intention in terms of extending Working Contract in the form of Mining Permit (IUP). But apparently the Regents reacted with offensive stance for Judicial Review to the Constitutional Courts” Tony Wenas remarked further.

Article 112d PP no. 24/2012 already clarified that extension of KK in the form of IUM was in the domain of the Ministry of Energy and Mineral Resources. Meanwhile the Regents were ignoring the PP and referred to Law no. 4/2009 instead. API was expecting the Central Government to strengthen coordination between the Government as Head of the region at the moment when Judicial Review or law amendment was underway. The Ministry of Energy and Natural Resources must also recruit mining inspectors so controlling prices afield could be more effective. As long as the number of mining inspectors for the entire mining location in nearly 500 regencies in Indonesia was only 51 (fifty one) persons, the number was not enough for handing around 4,000 mines in all regencies in Indonesia. At least the Ministry of ESDM had recruited another 3,000 persons to control all producers of minery products.

The qualification for the position was at least S-1 Degree in Minery Sciences environmental sciences or other related sciences. If the qualification were not met, it was impossible for the Government to implement good mining practices. A good inspection would result in good and proper reporting. The Report would be sent regularly to the Central Government so control could run effectively. “We have forwarded this proposal to the Government”.

Other articles of the Minerba Law needed revision, particularly Article 169. In this Article, between point (a) which stated respect for KK/KKP2B which already existed before the Minerba Law was issued, and point (b) which demanded KK/PKB2B to adjust itself with the stipulations in Minerba Law were contradictory. Even point C of this Article was in practive contradictory to the Government’s wish to increase state income from the Mining Sector. “We are at war against the Regents, because by the time we are ready for it the Government was regarded as being unable to give approval. The Regents demanded 50 thousand, 100 thousand and 200 thousand hectares of land for mining. Because the entry was Chapter 171, if the chapter was not obeyed we are not doing the work plan in the zone where the working contract as long as the KK was valid. The Regent demanded for a certain amount of USD. We have no other choice. They demanded hundred of thousands hectares which was contradictory to Chapter 53 which stated that the right of Regencies was only 15 hectares. Frankly speaking we are confused about all this”.      

Business News - August 29, 2012       

EXTERNAL FACTORS STILL OVERSHADOWS RUPIAH AND IHSG

The Moneymarket

In post Idul Fitri days, the external (global) factors was still overshadowing Rupiah curveline and local stockmarket index this week During early session on Friday last weekend (24/8) Rupiah exchange rate value was still motionless in the position of Rp 9,485 per USD. Previously Rupiah value against USD was closed to strengthen to the position of Rp 9,485 per USD (23/8) against the previous Rp 9,510 per USD.

Index of Bloomberg foreign currency showed that USD weakened against Asia’s main currencies except New Zealand’s Dollar, Australian dollar, Indian Rupee and Japanese Yen which were affected by deficit of trade balance and inched up by 0.03% to the level of 78.56 per USD. Meanwhile Rupiah was fortunate to have the blissful impact of stimulus regulation exercised by the Fed and inched up by 0.18% to the level of Rp 9,488 per USD.

Bank Indonesia was spontaneously on the alert in the market and was seen to make market intervention to maintain Rupiah stability. Outcome of the Federal Open Market Committee Meeting (FOMC) sparked a little hope for the Fed to launch OE3 which signaled Rupiah exhalation. BI was predicted to try to calm down Rupiah fluctuation amides readiness to supply USD in the market to meet the demand of USD by importers each time by end of the month.

Meanwhile Euro exchange rate value floated at above USD 1.25 on Wednesday (22/8) for the first time since early July. Euro exchange rate strengthened, driven by outcome of the Fed’s last meeting which signaled that the Central Bank would inject new stimulus. Euro was in the position of USD 1.2522, an increase against USD 1.2470.

Somehow Euro once fell against Japanese Yen to the level of 98.34 yen against the previous 98.84 yen. USD also weakened against ¥ slipping down to ¥ 78.53 against the previous ¥ 97.27. USD also weakened against Swiss Franc from the previous 0.9628 Franc. Greenback also fell against British Poundsterling which was traded at USD 1.5878 against the previous USD 1.5786 the day before.

Euro was under pressure when word was out that European leaders must anticipate the possibility of the Euro zone breaking up. This was the message of Finland’s Prime Minister Errki Tuomioja as released by the Daily Telegraph on Friday August 17, 2012. Tuomioja said that the Government of Finland was ready to face reality in case the Euro currency broke down with “an operational plan to face any condition” This agenda was not initiated by Finland. “But we must be ready. The Government of Finland have a set of plan if anything bad happens; But it seems that there was a consensus that a case like the Euro zone breaking up would be extremely costly for the short term or medium term, more costly than the effort to troubleshoot the crisis irself”.

Finland had the right of Veto to reject any agenda that proposed bail out for any European state. Now Europe had to solve debt crisis faced by their member countries which eventually leads to budget tightening. However this budget tightening was criticized by many circles including George Soros who said that any austerity plan would slow down economic growth and eventually make crisis even worse.

From the above picture it was clear that the future faith of Rupiah would still be under external pressure in the range of Rp 9,475 to Rp 9,525 per USD. External factors were still more prevalent compared to internal factors as clearly visible in the nation’s fundamental economy.

The Capital Market

Meanwhile index of IHSG inched down by 11.341 point or 0.27% to the level of 4,251.318. Index of LQ45 also inched flown by 2.340 points (0.33%) to the level of 715.778. The cause was negative sentiment from the Asian market on account of global sentiment. This was downpressed by selling spree of premium shares.

And yet during opening session last weekend (24/8) IHSG had lessened by 21.137 points (0.51%) to the level of 4,141.522 being affected by negative sentiment from the global market. Fading hope for stimulus coming from Federal Reserve was overshadowing market pulsation.

Players of the regional market were getting more cautious about declining world’s economy. The point was that China’s economy was losing steam and so was that of Uni Europe. Apparently indices never touched the positive territory at all. Selling spree that never ceased drove index to plunge to the lowest level at 4,125,260.

Commodity-based premium shares which once soared up being uplifted by increased commodity prices were now starting to become subject to selling spree. Selective buying crept over second layer shares. Regional stockmarkets were still weakening due to negative sentiment of the global market. The stockmarket of Hong Kong and China fell by more than one percent.

The Situation at Asian Stockmarkets by noon Last Week (14/8).

Index of Composite Shanghai weakened by 15.26 points (0.72%) to the level of 2,097.81. Index of Hang Seng dropped by 228.16 points to the level of 19,904.08 Index of Nikkei sank by 106.46 points (1.16%) to the level of 9,071.66 Index of Straits Times fell by 6.32 points (0.21%) to the level of 3,050.05.

At the New York stockmarket, wall street was corrected due to fading hope that the Federal Reserve would move fast to inject additional stimulus to market. In addition to that, economic data of China and Uni Europe showed how stagnant global economy was. Ten leading industrial sectors in S&P index were closed at negative territory, led by the material sector which fell by more than 1.7% The falling shares of Hewlett & Packard also posed as burden, but index of S&P 500 still managed to hold on at the psychological level of 1,400.

Investors still predicted additional stimulus from The Fed, especially with the slowing down of America’s economy as seen from the reported data of the local Government. But President of the Fed of St Louis branch, James Bullard said that the latest economic cata being dissected by the Central Bank was blinking signals of economic recovery.

During closing session on Thursday (23/8) index of Dow Jones dropped by 115.30 point (0.88%) to the level of 13,057.46 Index of Standard & Poor 500 weakened by 11.41 points (0.81%) to the level of 1,402.08 Index of Composite Nasdaq dropped by 20.27 points (0.66%) to the level of 3,053.40.

Although certainty of Quantitative Easing (QE) realization was still miles away, investors were over expectant and optimistic and such had jacked up index. The Europe stockmarket which were vigorous during opening session on Thursday (23/8) was the proof of iit. Asian stockmarket was even bolstered up in the past two weeks. The trigger was hope for liquidity injection of the third phase. Although Quantitative easing was part of the speech of The Fed’s Governor Ben Bernanke at Jackson Hole, no one could really be sure what was going to happen next.

Back to the local BEI Indonesia Security Exchange Market; index was fluctuative, hopping thinly between red and green zone. Buying spree was not too overwhelming, some investors were still on vacation so the marketplace was not too merry today. Index moved back and forth between green and red, somehow gradually index managed to drift back to the green zone thanks to act of selective buying.

Still in the mood of long Lebaran holiday, foreign investors were making the best of the moment by buying shares. Meanwhile local investors were still on holiday. The high price of commodities had uplifted commodity based shares high enough; meanwhile selling spree was still happening in industry-based shares.

Shares of the banking sector was projected to be convincing in Semester II this year. This was thanks to performance of the banking industry which grew quite satisfactorily in Semester I-2012. Apparently profit of the banking sector was notably growing thanks to progress in credit pipelining.

The condition indicated that Bank Indonesia’s regulation which increased minimum amount of Down Payment for Credit of Automotive and Mortgage (KPR) was rated as having no significant impact on the performance of industry. It was believed that the condition would make investor’s trust in the banking sector remain high in the future, especially in case of first layer shares or premium shares.

Besides, economic data was also rated as satisfactory in Semester II this year as one of the propelling factors of industry performance. Particularly in terms of first strata shares, and shares of the banking sector were dependent on foreign fund that entered the capital market. Besides shares of the banking sector, shares of the commodity sector were also noteworthy. The high price of commodity succeeded in uplifting commode based shares to considerable high level. Meanwhile shares based on various industry tend to be avoided.

All in all this week index of BEI was projected to move in the range of 4,145 – 4,175 with the tendency to strengthen at limited pace.

Business News - August 29, 2012

General Chairman of Indonesia Electronic Producers Association: INVESTMENT IN LOCAL NON-HITECH ELECTRONIC INDUSTRY SHOULD BE LISTED ON NEGATIVE INVESTMENT LIST

General Chairman of Indonesian Electronic Producers Association (Gabel), Alam Surjaputra, when contacted by Business News, stated that Gabel proposed electronic products not to use high technology, like iron, fans, and other and they should be manufactured by local industry. For industries whose products are not produced by using high technology, but manually, should be listed on Negative Investment List (DNI). Therefore, Indonesia will be oriented toward an era of increase of national industrialization.

If the government not make rule from now, it is concerned that in the globalization era where large industries are also producing low-technology products, there will be no more opportunity for the domestic industry to improve. Indonesia will become a market of electronic products produced by foreign companies.

To promote growth of domestic industry in the framework of establishment of new industry or expansion, the government is demanded to give incentive in the from of tax allowance. While, to prevent domestic industry from relocating abroad, the government should create a conducive investment climate, law enforcement, and maintain security and political and economic stability.

Why do Chinese electronic industries continue to exist? All Chinese electronic industries, whether large, medium, or small industries, whether they have existed for a long time or the newly established ones, are required to provide an after-sales service comprehensively. During the Japanese electronic product era, all electronic products circulating were using foreign brands. In this new era, the government and the society must be aware that Chinese companies investing in Indonesia are large-scale companies. Competition will be tighter, not only in terms of after-sales service and financing, but also in various aspects, because in the globalization era there will be no boundary among countries, and import duty tariff will become 0%, so the challenge will be heavier.

In 1970, Japan started to sell electronic products by using Japanese brands, while local brands are almost non-existent. In the 1990s, there was competition among brands of other countries entering the local market. Since early 1990s, many electronic industries were already full manufacturing. In 1998 when there was a social unrest, electronic industries suffered from the consequences, and industries that have reached full manufacturing faced difficulty in maintaining their businesses.

After that, Chinese electronic products started to enter the Indonesian market. But, consumers must be smart in selecting which ones were considered goods that were using well-known brands. The government must also do brand/label arrangement, followed by standardization so that to achieve good quality.

Regarding employment relationship, it looks that the outsourcing system is still needed, especially to meet business demand in line with dynamic social-economic development. But, the implementation must be able to guarantee protection and fulfillment of worker’s social security (jamsostek). In this case, an outsourced works is ensured that he receives the rights and work protection insurance at least the same with other workers, and it set forth in the prevailing legislation.

And, in determining Minimum Wage (UM), it is enough to consider the Need for Decent Living (KHL) and economic growth components. While, worker’s productivity variable is important in doing periodic wage adjustment. In an attempt to minimize gap in UM value between regency or municipality where usually there is confusion in the calculation process at regental or municipal or provincial level, so it is proposed that UM should only be determined at the provincial level by considering objective KHL survey by competent institution, such as the National Bureau of Statistics (BPS), at the regental or municipal level.  

Business News - August 24, 2012