GOVERNMENT TO FULFILL NEED OF 150 GRAMS OF FISH PROTEIN PER CAPITA/YEAR

The Ministry of KKP would promote people’s nutrition consumption through increased fish consumption. Index of animal protein consumption among Indonesian people was only 91.7 grams/per capita/day or equal to 5.04 percent per capita. Meanwhile the standard platform of food consumption was at least 150 grams per capita per day, so the Harkanas Fish Day consumption could step up fish consumption. KKP and the Ministry of Health had agreed to fulfill 150 gram of protein per capita/day. Meaning fish could fulfill 65 percent of protein through fish. In the future to fulfill need of at least 150 grams of protein per capita and fish all year through. “Compared to beer, fish is better in terms of distribution” Saut Hutagalung disclosed to Business News. [28/11].

KKP rated that preparation for Harkatnas was at maximum, except in appointing an iconic figure to act ambassador. The Harkatnas logo had been prepared in advance for long. ‘We expect the role of fish in food resiliency could be realized this year”

Fish consumption level was in parallel with the average height on an Indonesian. In Japan, the average height of people kept increasing year after year. In the past, Japanese people were short. The average level of intelligence of Indonesian people were also below that of other countries. “Mal nutrition was the cause, it’s not a myth.”

Beside icon, KKP was also preparing segmenting and targeting concept; including children, adult and aged people. Fish eating campaign could begin at early school level: from Kindergarten or Elementary School. Practical serving of fish was suitable for children, just like fibre-packed seaweed with flavoring.

Menu for aged people must not include bony fish. “The price is affordable, around Rp.6,000 per box, it is rich in calcium. In Singapore, fish was widely consumed by aged people, many of them are still active. We are continuing to make segmentation based on age, income etc.”(SS)

Business News - December 3, 2014

SNI CERTIFICATION IN ACCORDANCE WITH CODEX

The Ministry of Maritime and Fishery [KKP] synchronized application of SNI [Indonesia National Standard] of quality with Codex Alimentarius Commission [CAC], an institution established by FAO and WHO under the United Nations who held mandate of standardization in food, Consumer Health Protection, and Noble Practices in international food trading. “Under any circumstance Indonesia’s fishery products would refer to Codex standard in terms of raw materials, production process, end result and testing method” The Dir. Gen. of P2HP Saut P. Hutagalung disclosed to Business News [28/11].

Standardization of fishery products was on the frontier of protection line domestic products at home and abroad. Today the standardization of fishery products consisted of 160 SNI or fishery products. Standardization for exported products referred to Codex, which automatically had passed screening process at the laboratory, so the products were hygienically guaranteed and safe to consume. Certification was compulsory for all products.”

On the other hand KKP convinced business people that SNI application was advantageous to business. Under the present condition some modern retailers. Under the present condition some modern retailers including Carrefour and Giant tend to buy from suppliers on ‘pay now’ basis. “Now all fish products sold in modern markets must be SNI certified. They buy on ‘pay now’ basis not consigning their products on ‘pay later’ basis.”

By globalization the world was now united under new reference called “standard.” Accordingly, most activities in the fishery industry were based on standardization. Competitiveness of standardized fishery products was part of market liberalization. SNI was also a system of quality upgrading, market expansion, innovation, and value addition. “Year after year, SNI of fishery products was keeping ip with technology advancement.”

The Technical committee 65-05 on Fishery Products ane Technical Committee [KT] were executor of Law no 20/2014 on Standardization and Evaluation. In 2014 BSN had stipulated 8 SNI formulated by KT 65 05. The products were among others Fish Bakso Meatballs, Frozen Fish, Fresh Tuna for Sashimi, Frozed Tuna Loin. Besides, SNI also applied chemical testing system on bronze [CU] and zinc [Zn] on fish products. “Market demand for testing was increasing, but there was price adjustments. Traders and consumers could interact, while consumers were assure of product safety, producers were advantaged by SNL”

Today there were obstacles to SNI execution. The Government and the Fish Processing Unit Center must work hard to apply SNI. The problems encountered were among others: business people were ignorant of SNI, the advantages of SNI. Thirdly, limited number of Evaluation agents [LPK] in terms of quantity, scope of screening and outspreading. Fourthly low commitment to SNI application and poor coordination among related executors.

“We feel the need for stages in the application of mandatory SNI. Now application of SNI was stll on voluntary basis, but we keep on promoting. We are afraid that some unstandardized products were banned, we don’t want this to happen to fishery products. Producers must be made aware of the long term business benefit of SNI.”

Upon embarking on the AEC 2015 Indonesia would be bound to the single market agreement not to prohibit fishery products which had met qualifications. SNI was in fact not the only strategy to shield off invasion of imported products. SNI was intended to assure product quality.

SNI was an important instrument for screening product quality, “Domestic Small Business [UKM] product are SNI certified, such as canned food which had broad market base. As soon as they are SNI certified, UKM products would be ready to compete in Asean market. It would be ready to compete in Asean market. It would wall out imported products”

In 2014 the Dir Gen of P2HP had facilitated 10 UKM to have SNI certification; this would promote upgrading of UKM. Among the UKM being facilitated were : UD Cindy Parung, Bogor, West Java. They produced Bandeng Presto which was SNI certified. There were 9 other UKM who expected to be SNI certified by end of 2014. “There will be registration fee for UKM, which is natural. KKP employ experts and testers with salary of Rp6 million per product and they are paid by KPP. We only help small business [UKM], big companies have to pay their own fee” (SS)

Business News - December 3, 2014

OIL PRICE, BI RATE, INFLATION AND ECONOMIC GROWTH

BI’s policy to increase benchmark rate by BI rate by 25 bps to become 7,75% on November 20 last brought pressure to businessplayers and the banking sector. Increase of BI rate was in response to oil price increase.

Companies were burdened by heavier production cost as oil price was increased on November 18 last. The Ministry of Finance stated that to increase of oil price was inevitable to support APBN state budget.

           

Understandable because oil subsidy was a wrong policy to adopt. It had negative effect on state budget’s structure, the Government needed fund for building infra structure.

It would be the right step of the Government built infra structure for the sectors of agriculture, maritime and energy. To control poverty, the Government was promoting social aid through distribution of Indonesia Smart Card, Indonesia Healthy Card and Indonesia Prosperous Family Card.

One thing was sure oil price increase had its impact on Indonesia’s economic outlook. In the next 3 months there was going to be additional inflation of around 2% plus 1.5% all through next year this was inclusive of BI’s factor who had increased benchmark rate by 7.75%.

BI must have a forecast of the ensuing inflation and a scenario for tackling it. Oil price increase had caused economy to suffer from cost-push inflation; this was related to increasing production cost due to increasing price of raw materials.

Fast moving cost push inflation could cause economic growth to slowdown, which if in continued it could lower people’s welfare level significantly. Economic growth would no longe be inclusive and sustainable.

Increased oil price would reduce people’s purchasing power. Consequently economic growth in terms of household consumption would be corrected. Application of the “wizard card” system could not be fully effective as price was higher than buying power.

If inflation was under control, it would be easy for BI to troubleshoot by monetary policy, but if inflation was beyond expectation due to increased world’s oil price, then monetary approach alone would have no effect on inflation control. In that case BI must coordinate with the Government to better the supply side. BI and the Government were advised to apply the monetary-fiscal policy.

In the short run, increase oil price would drive inflation up, suppress people’s purchasing power and reduce household consumption. Jokowi-JK expectation to attain 7% economic growth in the 2014-2019 period would have to face challenges. To set growth target of 7% growth, the investment needed was Rp5,500 trillion

Under the present circumstance, President Joko Widodo needed support of all the people including the political elite. The KMP Coalition Group and KIH Coalition Groups should better reconciliate and combine forces.

Noteworthy was ex Finance Minister M Chatib Basri’s opinion who said that now was not the time for Indonesia to aim high in economic growth. All effort must refer to the actual fundamental economy.

The point was that Indonesia’s economy was in the state of uncertainty. This was made worse with the world’s economy which was not fully recovered. Even China was having economic slowdown and this would have its effect on the merging markets.

According to Chatib, the world’s economy was having economic slowdown. The world’s unending crisis had its impact on the emerging markets and not impossible also Indonesia.

However, growth target of around 6% - 6,5% must still be pursued for the next 2 – 3 years because it would have ,multiplier effect especially in opening employment opportunities. The only thing was that economic strategy must focus more on the tradeable sector rather than the non-tradeable.

The consequences of focusing economic strategy on no-tredeable sector was difficulty to reduce poverty. Low quality economic growth was visible in widening income index where the latest position was 0.41 in 2013.

The portion of constructive poverty reduction budget was still extremely small which was apparent in the inclusion of state’s capital to support the Credit Program for Small Business [KUR] amounting to Rp.2 trillion through 2011 – 2014.

It was undeniable that poverty solution fund in the State Budget over the past 5 years had been constantly increasing and by end of 2013 it came to Rp503.2 trillion but over that same span of time population of the poor was only reduced by 3.1% on the average.

The year 2014 and 2015 were the year of economic consolidation where BI and the Government agreed to prioritize economic stability instead of growth because of high inflation and deficit in current transaction. (SS)

Business News - December 3, 2015

MARKET RESPONDING POSITIVELY TO INCREASED OIL PRICE AND BI BENCHMARK RATE

At last, the euphoria of increase oil price and BI’s benchmark rate showed signals supportive to Rupiah strengthening. The motion was still sideways as marketplayers were waiting for Government’s announcement of economic data this early December. Besides, the effect of oil price increase and BI benchmark rate on Indonesia’s fiscal would only be seen in the next 3 months. The increasing probability of the US Central Bank to increase benchmark rate overshadowed Rupiah.

There was potential that Rupiah would be downpressed with growing demand for USD by end of month. As known, companies must fulfill obligations in USD. Predictably over the week Rupiah would be in the range of Rp.12,000 – Rp.12,200 per USD as the positive sentiment was still there.

Projection for Rupiah was inclusive of BI’s forecast of November inflation till year end. Due to oil price increase, inflation in November would be around 1.2% - 1.4% compared to previous month [m t m].

Therefore BI must maintain price stability to end of year. BI’s inflation target after oil price was increased by Rp.2,000 per liter was notably low compared to the years before. With increased inflation of 2.4% - 2.8%, BI was optimistic inflation could be managed in the range of 7.7% - 8.1%. And yet in 2013 there was all year inflation as increase of oil price touched 8.38%.

One of BI’s effort to control inflation till end of 2014 was to make sure that inflation of volatile food and inflation was not significantly affected. BI must constantly coordinate with the inflation Controlling Team at central and provincial level as well as the Government to prevent second round effect of oil price increase.

Oil price increase would bring pressures on certain sectors like manufacturing, transportation, construction and property, so stockplayers should be responsive to the trend. The essential need sector was probably less affected and IHSG would settle at 5,140 – 5,240 with tendency to strengthen.

The Moneymarket

Bloombreg Dollar Index: last Friday [28/11] Rupiah inched down by 0.11% to Rp.12,191 per USD, meanwhile on Thursday [27/11] Rupiah inched up by 0.01% to Rp.12,177. USD was overpowering Southeast Asian currencies, namely: Singapore by 0.31%, Philippines [0.1%], Rupiah [0.23%], Malaysia 0.81%, Thailand [0.14%]. So Southeast Asian currencies slumped simultaneously against USD.

The Government strived to minimize second round effect of increased oil price, such as public transportation cost.

Previously BI was striving to keep inflation low and stable. By 2015, inflation was predicted to be at around 1% + 4%. By 2016 inflation might reach 3.5% plus minus 1%. Low inflation of 3,8% as in 2011 and 4.3% as in 2014 resembles the inflation in the Philippines, Malaysia and Thailand. Meaning BI rate must go down.

Inflation in Indonesia could be the lowest in ASEAN provided the Government strengthened structural reformation. In case of subsidized oil price it was recommendable for the Government to adopt fixed subsidy policy. In that case inflation could be controlled.

The Capital Market

Asian stockmarkets left IHSG behind. Selling spree had made IHSG to be axed by 17 points. In opening session last weekend, IHSG inched down by 5.673 points [10.11] to 5,139.462. Index stagnated during weekend as players tend to wait and see.

IHSG Index was willowy and constantly descending. The lowest position was 5,126, During closing of session I [28/11]. IHSG corrected by 17.387 points [0.34%] to the level of 5,127.928 while index of LQ45 was axed by 3.937 points [0.44%] to the level of 882.903.

Some acts of profit taking was happening at the stock hall among rising shares. Index of the plantation sector was corrected quite deeply. Transactions was running moderately with 104,172 transactions and 5.118 million lots worth Rp.2.399 trillion. 111 shares ascended 147 shares descended and 79 shares stagnated.

Most regional shares strengthened, expect Hong Kong stockmarket but China’s plan to inject stimulus was positive. Index of Nikkei 225 soared up by 192.48 points [1.12%] to the level of 17,440.98 Index of Hang Seng weakened by 25.70 points [0.11%] to the level of 23,978.58. Index of Composite Shanghai rose by 19.00 points [0.73%] to 2,649.57. Index of Straits Times grew by 11.14 points [0.33%] to the level of 3,352.10.

During transaction last Thursday [27/11] IHSG was closed to increase by 12.279 points [0.24%] to 5.145,315 while index of LQ45 increased by 2,253 points [0.25%] to 886,840. Investors zest to buy premium shares revitalized IHSG.

Foreign investors were seen to be making sizable net buy, posted at Rp.522.721 billion which made 8 out of 10 sectoral shares to strengthen. Only 2 sectors weakened, i.e. infra structure and banking.

Transaction was running moderately as many as 201,264 times including 6.603 billion lots worth Rp4.65 trillion. 124 shares went up, 124 went down and 95% stagnated; 8 of 10 sectors strengthened.

The strengthening sectors were agro business [1.17%] mining [0.55%] basic industry [0.88%], various industry [0.87%], consumers [0.33%], property [0.18%], trading [0/1%] and manufacturing [0.61%]. Only one or two sectors weakened during closing session i.e. infra structure [0.24%] and finance [-0.14%].

Banking analysts projected increase of benchmark rate would only suppress financing growth till Q 1 2015. They expected the high benchmark rate era would only last for a short term, between 1 to 3 months next year, thereafter BI rate was projected to descend so the real sector and banking sector could revitalize itself.

They predicted that demand fro credit would lessen. On the contrary, from the demand side financial institutions would also be prudent in extending credit. All in all the real sector would contract. In general economic growth would be under pressure due to increased BI benchmark rate and oil price increase.

The Indonesian Stock Analysts Association [AAEI] predicted IHSG would strengthen next year. A better economic fundamental was the underlying reason for index strengthening. Next year index stand a chance to break through 6,300. Index was signaling increase even now.

Government’s decision to increase oil price was responded positively by the market. BI’s decision to increase benchmark rate by 7.75% was also well responded although it might hold back economic growth and Rupiah tend to strengthen also.

In view of the response, the two policies were believed to improve macro economy fundamental as a whole but the policy could also generate short time pressure of 3 to 4 month. So this week index would fluctuate in the range of 5,150 – 5,200. Last week end [28/11] IHSG fluctuated around 5,125 - 5,175. (SS)

Business News - December 3, 2014