Indonesia Economy Forum

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Indonesia seeing ‘positive’ signs on dual citizenship

The Jakarta Post | National | Sat, August 24 2013, 9:07 AM

An official at the Foreign Ministry said the country was experiencing more “positive” developments toward recognition of dual citizenship.

Wahid Supriyadi, head of the foreign ministry’s diaspora unit, said Friday that the new government regulation enabling multiple entry for Indonesians of foreign nationalities, which was signed in April, is among the developments.

He was responding to the results of the second Congress of Indonesian Diaspora, held in Jakarta from Aug. 18-20, which among others reiterated demands for state recognition of dual citizenship for foreign nationals of Indonesian descent, voiced earlier in the first Congress last year in Los Angeles.

The new regulation had already been implemented in Indonesian legislation, he told The Jakarta Post, “while we are surveying models from other countries that allow dual citizenship” to explore suitable options for Indonesia. Wahid said the government was also studying the Indian model, which issues documents in place of passports for individuals of Indian descent, enabling “75 percent recognition” short of dual citizenship, making it easier for them to invest and do business in India. “There is great economic benefit” to the host country as a result of dual citizenship, Wahid said.

Delegates said on Wednesday during the closing of the congress that a focus group would be formed to study the dual citizenship issue including representatives of the diaspora, academics and policy makers. They would then submit an academic draft to all stakeholders.

Deputy of the Commission I in charge of foreign affairs at the House of Representatives, Ramadhan Pohan, said during the closing of the congress that the House would also facilitate the revision of the immigration law “to accommodate the wishes of the diaspora” for dual citizenship.

“We are convinced that those among you with foreign passports still love Indonesia,” Ramadhan said, adding his two America-born children would also soon join the diaspora. The government estimates that there are some 8 million Indonesians and foreign nationals of Indonesian descent living and working overseas.

The other results of the congress included collaboration plans regarding business, innovation, environment, livable cities and better protection for migrant workers.

Lily Erin, a lecturer on demography from Sriwijaya University in Palembang, said it was time for Indonesia “to change its view” on its single citizenship policy in the current globalized era. Its legal legacy from the colonial era sought to ensure citizens’ loyalty, she said.

Indonesia only recently realized the strength of the diaspora, mainly with the rise of US president Barack Obama, whose step-father was Indonesian, and whose sister is half Indonesian, she said.

Delegates at the discussion on citizenship had raised feelings about not being recognized in Indonesia even if they wanted to resume cultural and family ties.

Anna Yoshitani, an Indonesian woman married to a Japanese man, said her daughter obtained a tourist visa for only two months from the Indonesian embassy to visit Indonesia. With her singing talents Yoshitani said that she hoped her daughter could help strengthen cultural ties between Japan and Indonesia.

A restaraunt owner and Malaysian national from Sabah who was born in Indonesia Abdul Mukti B. Syaubari, also said dual citizenship would allow him to set up business in Indonesia. “Now I travel for a few weeks to Indonesia to see my family” every year, he said.

Indonesians with foreign husbands have also said they still faced difficulties regarding the nationality of their children, despite the 2006 law on dual citizenship for children under 18.

“The information was not adequately spread,” Yoshitani said, especially among housewives.

Indonesia seeing

Big guys

The Jakarta Post | National | Fri, August 23 2013, 9:58 PM

Big guys: Two sumo wrestlers from Japan display their Sumo skills, a traditional Japanese sport, at the ASEAN Secretariat complex on Friday. At least 100 sumo wrestlers will participate at the Jakarta Sumo tournament 2013 from August 24-25, which is being held to commemorate the 40th anniversary of Indonesian-Japanese bilateral relations.(Antara/Benny S Butabutar)

 

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Agung Podomoro Plans for Construction of Three Superblocks Outside Java


By Jakarta Globe on 10:04 am August 23, 2013.
Category Business, Corporate News
Tags: Agung Podomoro Land, Indonesia property industry


Indonesian property developer Agung Podomoro Land plans to invest some Rp 7 trillion ($645 million) in the construction of three superblock developments outside of Java.

The company will construct the Borneo Bay superblock on a five-hectare plot of reclaimed land in Balikpapan. The development will include two apartment towers totaling 1,100 apartments, a mall, a hotel and a beach club. The project is expected to cost Rp 1.5 trillion and is targeted for a 2017 completion.

In Medan, the developer will construct the Rp 4.5 trillion Podomoro City superblock on a 5.2-hectare tract of land. In Batam, the sprawling 37-hectare Orchard Park will construct 2,200 housing units and 140 apartments at a cost of Rp 1 trillion.

“Superblocks are usually developed in big cities such as Jakarta, but we’ve observed the market conditions in several other regions, which are fairly good,” Agung Podomoro Land vice president Indra Widjaja Antono told Bisnis.com.

Agung Podomoro Plans for Construction of Three Superblocks Outside Java - The Jakarta Globe

 

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Sugar Consumption Set to Rise as Indonesia’s Sweet Tooth Grows


By Reuters & JG on 10:25 pm August 27, 2013.
Category Business, Featured
Tags: Indonesia sugar industry


Nusa Dua, Bali. Indonesian sugar consumption is forecast to rise around 12 percent this year as the country develops a taste for sweet snacks, helping dent the global surplus that has dragged on prices.

Consumption of the sweetener is set to climb to 5.7 million metric tons in 2013 from 5.1 million metric tons in 2012, according to Suryo Alam, chairman of the Indonesian Sugar Refineries Association, which groups 11 private millers.

“There’s tremendous growth in the snack industry,” he told Reuters at an industry conference in Bali.

“There’s also a growing population, an increase in income per capita and changes in lifestyle,” he said.

The Food and Agricultural Organization of the United Nations said in its 2013 Statistical Yearbook that people’s diets globally are expected to become richer in fats, sugar and salt, and that urbanization and the reduction of physical activities are likely to lead to fewer calories being burned and an increase in obesity.

In Indonesia, with more than 240 million people, diets have seen an increasing trend toward westernization, with people gaining an appetite for snacks such as donuts and fizzy drinks.

At the same time, interest in regional sweet snacks has also been on the increase due to a government scheme to promote domestic tourism, Alam said.

Any upturn in demand will eat into a global surplus that helped push prices to a three-year low of 15.93 US cents a pound in July. They last stood at 16.61 cents.

The world’s largest raw sugar importer has abandoned its goal of being self-sufficient in white sugar production by 2014 after struggling to boost output due to land license red-tape, competition for land and under-investment.

Indonesia, whose consumption accounts for about 3 percent of global output, imports raw sugar from Brazil, Thailand and Australia. In July, Indonesia issued additional raw sugar import permits for 110,000 tons to make up for shortfalls in domestic sugarcane supplies.

An official at the Indonesian Sugar Association on Monday said raw sugar imports could more than double to 5.4 million ton in 2013 from 2.5 million tons last year after heavy rains hit domestic output. Imports for this year were earlier estimated at 2.85 million tons.

“There’s no doubt consumption is growing quite strongly and above the world average,” said Tom McNeill, director at commodity analysis company Green Pool in Brisbane.

“I think China and Indonesia will be the world’s two largest raw sugar importers for some years to come.”

Sugar Consumption Set to Rise as Indonesia

I think Indonesia is already became the major net importer of Sugar raw, demands is tremendously a lot while Indonesia production capacity is near at it top capacity production.

 

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Govt to increase processed seaweed exports


The Jakarta Post, Jakarta | Business | Thu, August 29 2013, 6:35 AM

The government plans to increase exports of processed seaweed to get added value by promoting the growing seaweed processing industry to importers.

The Maritime Affairs and Fisheries Ministry is cooperating with Swiss promotion agency Swiss Import Promotion Program (SIPPO) and has invited 15 seaweed and natural ingredients importers from several countries in Europe, such as Austria, Denmark, Germany, Ireland and Switzerland, to visit seaweed processing plants in Indonesia.

The visit started on Tuesday and will last until Saturday, said the ministry's director for foreign marketing, Artati Widiarti, adding that in November ministry representatives would visit Frankfurt, Germany, to promote seaweed.

Indonesia exported 174,000 tons of seaweed in 2012 worth US$177.9 million (Rp 2 trillion). Around 80 percent of it was dried seaweed and 20 percent processed seaweed, which was in the form of carrageenan and jelly.

The price of dried seaweed is $2 to $3 per kilogram, whereas the price for good quality carrageenan can reach $20 per kilogram, said Artati.

Govt to increase processed seaweed exports | The Jakarta Post

IHSG maintains positive momentum


The Jakarta Post, Jakarta | Business | Thu, August 29 2013, 1:52 PM

The Indonesian Composite Index (IHSG) maintained positive momentum during the first trading session on Thursday.

The index rose by 0.4 percent to 4,044.3.

Kontan.co.id reported seven out of 10 sectors performed positively.

The best three performing sectors were agriculture, up 2.88 percent, miscellaneous industries (1.98 percent) and consumer goods (1.75 percent).

Govt eyes foreign firms for agriculture


Anggi M Lubis, The Jakarta Post, Jakarta | Business | Thu, August 29 2013, 11:10 AM

The government is aiming to lure foreign investors to develop agricultural fields and farms outside Java, given the “insignificant” foreign contributions to total investments in the sector.

According to Agriculture Minister Suswono, who cited Investment Coordinating Board data, domestic investment in the agricultural sector reached Rp 32.06 trillion (US$2.92 billion) between 2008 and 2012, or 12 percent of the total investment figures during that period, while foreign investment in the same sector made up $3.58 billion, or 4.17 percent of the total, during the same period.

“I, however, think that current foreign investment does not reflect Indonesia as an agricultural country,” he said on Monday at an event to introduce local potentials to foreign diplomats.

He said that with 14.4 percent, the agricultural sector was the second-largest contributor to the country’s gross domestic product (GDP) last year after the services and industry sectors.

Land procurement, social security, local regulation uncertainty, lack of data and promotion, had traditionally hindered investors, in addition to poor infrastructure, such as irrigation and transportation.

“We will focus on improving infrastructure, mainly irrigation, to stream investment into the sector,” Suswono said.

The minister previously said 48 percent of the country’s irrigation system was in poor condition and that the government needed at least Rp 21 trillion to fix it. The ministry has allocated Rp 6 trillion — or 35 percent out of its annual budget of Rp 16 trillion — this year to rehabilitate the system, with works expected to be completed within four years.

Agriculture Ministry data shows that 13 domestic and foreign companies have proposed to invest in a food estate in East Kalimantan. Among the companies is South Korea-based PT Harim, which has planned to develop a corn plantation and cattle farm on a total of 11,000 hectares of land.

The East Kalimantan food estate project, launched by the government, emerged after the government, which is aiming for national food sufficiency, failed to realize its project on the Merauke Integrated Food and Energy Estate (MIFEE) in Papua, after the area was reduced from 1 million to 200,000 hectares due to land and security issues there.

http://www.thejakartapost.com/news/2013/08/29/govt-eyes-foreign-firms-agriculture.html

 

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JTI set sights on Indonesia market

The Jakarta Post, Jakarta | Business | Thu, August 29 2013, 10:54 AM

Japan Tobacco International (JTI), the world’s third-largest tobacco company by sales volume, plans to build a strong foundation in Indonesia as it attempts to get a foothold on the market.

Udo Freeman, general manager of JTI Indonesia, saw Indonesia’s population size as a big opportunity for JTI, along with the growing demand for quality products and services.

According to JTI market research, Indonesia, which is among the top four markets for tobacco products in Asia, will approximately sell 300 billion cigarettes in 2013.

The company believed that Indonesian consumers would continue to demand high quality consumer products, Freeman said on Wednesday.

Although the tobacco market is still dominated by kretek or clove-blended cigarettes by 93 percent, JTI Indonesia is optimistic about expanding its presence in the white cigarette market.

“Our findings also suggest that tobacco products are culturally accepted among 60 percent adult males,” said Freeman.

JTI considered Indonesia, with approximately 250 million inhabitants, among the largest markets in Asia. That is why, he went on, JTI would like to increase its brand awareness in Indonesia.

Freeman said that the company was focusing on a-step-by-step approach to gradually increase its market share in Indonesia. “We will see where things go in 5-10 years,” he said, adding that less than 1 percent of cigarettes produced in its Malaysian factory were imported to Indonesia.

Analyzing the market, Freeman described Indonesia’s market as fragmented, where the number of retailers and outlets were enormous.

“Competing in a fragmented market, plus competition from established markets, is challenging enough,” said Freeman, referring to Philip Morris International’s Marlboro brand and British American Tobacco’s Dunhill.

Rory Morgan, strategy and development manager of JTI Indonesia, said that competition in Indonesia’s tobacco market was going to get tougher.

Morgan said that while developing local employees, JTI Indonesia would continue to enhance and sharpen operational capabilities.

“JTI’s portfolio already includes some of the most prominent brands in the world, including Mild Seven, which is moving forward with a new brand named Mevius”, said Morgan.

Morgan said that JTI Indonesia would invest in brand building in targeted areas such as Jakarta, Bandung, Surabaya and Bali. (asw)

JTI set sights on Indonesia market | The Jakarta Post

China Faces Curb on Tin Output as Indonesia Bans Low-Grade Exports


By Polly Yam on 3:04 pm August 29, 2013.
Category Business, Commodities
Tags: China imports, Indonesia exports, Indonesia mining, tin

Hong Kong. China will be forced to scramble for supplies of low-grade tin from Malaysia and London Metal Exchange warehouses after a rule change in top exporter Indonesia, which supplied material used to produce 10 percent of China’s high-grade tin last year.

Reduced supply from Indonesia is likely to curb the growth of refined tin output in China, while the push to source feed elsewhere could support London Metal Exchange (LME) tin prices, which have fallen more than 7 percent this year, traders and sources at smelters said.

Indonesia, the world’s top exporter of tin, banned exports of tin ingots with purity levels less than 99.9 percent from July 1. The ban is part of a government effort to boost industrial activity and export higher-value processed goods rather than raw materials.

China, the world’s largest producer and consumer of tin, relied on Indonesia for nearly half of its record imports of 31,334 tons of metal last year, using almost all as feed to produce high-grade tin for soldering and packaging.

Cui Lin, chief representative in China for global tin industry body ITRI, said Chinese output would likely fall about 6,000 tons a year if Indonesia strictly enforced its policy.

The fall would have been more, but producers would partly offset the loss by buying elsewhere, she said.

Uncertainty still surrounds Indonesia’s push to move up the value chain in commodities, with some in government pushing for a relaxation of a ban on metal ore exports to shore up the rupiah and boost the economy.

ITRI has shaved its 2013 forecast of China’s refined tin production to 158,100 tons, down from 160,000 tons previously, but still up 4 percent from 152,000 tons in 2012.

The downgrade was mostly due to weak prices in China discouraging producers from making metal, Cui said, although ITRI expects higher prices in the second half which could prompt a step-up in output.

It had not yet included the impact of Indonesian export ban in its 2013 forecast as it was still assessing whether the ban would be fully in place in coming months, she added.

Malaysia, LME eyed

Refiners have already boosted imports of feed ahead of the Indonesian ban, according to official figures.

China’s imports of tin ores and concentrates rose 148 percent on a year ago in the first seven months of the year to 55,343 tons, official data showed.

The impact of any reduced supply of refined metal due to the shortfall from Indonesia may be muted in the short-term, as China’s economic slowdown has dampened demand in recent months, said the smelter sources and analysts.

Domestic spot tin prices stood at 143,500 yuan ($23,400) a ton on Wednesday, the lowest since August 2012.

As demand rises, however, refined tin producers will need to find raw materials to replace the Indonesia shortfall to boost production, they said.

Chinese refiners would look to Malaysia for supply because, like Indonesia, it has a free-trade agreement with China, said a sales manager at a tin producer in Yunnan, the top tin producing province in China. That means tin imports are free of a 3 percent import tariff, he said.

Higher demand from China for LME metal and Malaysian materials could push up premiums in Asia. The firm had imported low-grade tin from Indonesia in previous years at premiums of about $250 to $300 over the cash LME prices, the manager said.

Supply from Malaysia could be limited as the nation’s producers also relied on imports from Indonesia, said traders, while taking tin from LME warehouses would involve joining long queues with buyers of other metals such as aluminium and copper.

Chinese producers had tried to buy low-grade metal from LME warehouses last year but cancelled when it became clear that delivery would take a few months, a trader at an international trading house said.

“Where else can the Chinese get low-grade metal if the supply in Malaysia and the LME warehouses dry out?” the trader said.

Reuters

http://www.thejakartaglobe.com/business/china-faces-curb-on-tin-output-as-indonesia-bans-low-grade-exports/

Summarecon Profit Surges on Land Sales


By Francezka Nangoy on 10:00 am August 29, 2013.
Category Business, Corporate News
Tags: Indonesia property developer, Summarecon

Major property developer Summarecon said on Wednesday that first-half earnings surged, thanks to booming property sales.

The company, which owns Mal Kelapa Gading and township developments in Bekasi and Serpong, reported net income in the January-June period jumped 77 percent to Rp 611.59 billion ($56 million) from a year earlier. Revenue rose 26 percent to Rp 1.92 trillion.

Leonardo Gavaza, an analyst with Bahana Securities, said that earnings growth was supported by “greater revenue from shophouses and land lots, which provide higher margins.”

At halfway through the year, net income had already reached 61 percent of Bahana’s full-year income estimate.

“We like Summarecon for its sustainable business model with strong operating profit contribution from high recurring income — 30 percent of the total revenue,” Leonardo said.

Recurring income at Summarecon comes from operation of its shopping malls, commercial areas, offices and a hotel.

Leonardo said that Summarecon’s new projects, including a recently opened shopping mall in Bekasi, should further boost the company’s recurring income.

The Bekasi mall, opened in June, has a retail area of more than 60,000 square meters and is already home to 227 stores. Summarecon expects the new property to contribute Rp 30 billion in revenue this year alone, the company said earlier this year.

Next year, the company is planning to start operations at six other projects including a convention center at Serpong, a dormitory town located in Banten province to the west of Jakarta, and hotels in Kelapa Gading in North Jakarta and Bali.

The company plans to more than double its 550 hectare land bank, allocating Rp 1.31 trillion for 500 hectares of purchases this year, with an additional Rp 932 billion next year for a further 230 hectares.

Summarecon shares gained 4.1 percent to Rp 760 on Wednesday, exceeding the main stock index’s 1.5 percent gain for the day.

Leonardo has set a Rp 1,600 target price for the stock and reiterated his buy recommendation. Summarecon has underperformed the index by 25 percent in the last three months, he noted. So far this year, the stock has lost 19 percent.

http://www.thejakartaglobe.com/business/summarecon-profit-surges-on-land-sales/

 

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Growth in Shipping to Africa, United States, Heartens Maersk


By Francezka Nangoy on 9:19 am August 29, 2013.
Category Business, Corporate News
Tags: Africa, Maersk

Maersk Line Indonesia, the local unit of a Copenhagen-based shipping company, sees signs of growing exports to the United States and Africa, providing hope Indonesia’s trade deficit will soon fall.

Jakob Friis Sorensen, president director of Maersk Line Indonesia, told reporters on Wednesday that the company’s export shipping was improving in the second half of this year after a period of no growth.

Sorensen said he expected export volumes to pick up in the third quarter, which is traditionally peak season as US and Europe retailers stock up ahead of Thanksgiving, Christmas and New Year.

His statement came amid concerns over Indonesia’s trade deficit, which stood at $3.31 billion at the end of June, the most recent figure available, widening from $2.53 billion a month earlier.

Maersk’s freight volume stood at about 60,000 forty-foot-equivalent units in the first half of this year, matching the same period in 2012.

“I am quite hopeful that we will see a little bit of improvement in this last year’s peak over last year, but it wouldn’t be much, about 2 percent to 3 percent,” he said.

“Shipping to the US is going stronger. Export of furniture from Indonesia to US is picking up as people start to buy houses there.”

In the United States, June’s house price index increased by 0.7 percent from May, more than expected. In August, the US consumer confidence index also rose more than expected.

In Indonesia, first-half non-oil and gas exports to the US reached $7.54 billion, up from $7.45 billion in the same period in 2012, according to Central Statistics Agency (BPS) data. Some 10 percent of Indonesia’s exports go to the United States.

The weaker rupiah relative to the dollar has contributed to increased demand for Indonesian goods in the United States.

The rupiah has weakened by 13 percent so far this year as the current account deficit widened to 4.4 percent of gross domestic product in the second quarter, from 2.4 percent in first quarter.

Indonesia’s exports to east and west Africa, up 41 percent year on year from a low base, included cooking oil and paper.

Sorensen said infrastructure is still the biggest concern for Indonesia’s shipping industry, with long waits in ports and shallow drafts in some ports hurting the efficiency of companies including Maersk.

Jakarta’s overburdened container port and Tanjung Priok is in the early stages of a major expansion.

Growth in Shipping to Africa, United States, Heartens Maersk - The Jakarta Globe

SBY to Argue for ‘Green’ Palm Oil


By Muhamad Al Azhari on 10:08 pm August 28, 2013.
Category Business
Tags: Indonesia palm oil, Susilo Bambang Yudhoyono SBY

Indonesia will use its status as host of this year’s Asia-Pacific Economic Cooperation forum to push for crude palm oil to be included on a list of environmentally friendly goods eligible for a tariff reduction.

Indonesian CPO producers would benefit from an import tariffs cut of up to 5 percent from APEC member nations from 2015 if President Susilo Bambang Yudhoyono successfully makes his case at the Bali forum that starts on Oct. 1, a government official said.

Yudhoyono had urged the 21 APEC member nations to include CPO on the group’s green goods list at last year’s forum in Russia, but the proposal was opposed by the United States and other developed nations.

“We will successfully set an agenda with regard to the CPO issue at the APEC forum in October,” Deputy Trade Minister Bayu Krisnamurthi declared on Monday.

Indonesian CPO producers face tariff barriers from countries including mass importers China, India and Pakistan, as these countries seek to limit penetration of foreign-produced CPO in their vegetable oil market.

In some developed countries, including the United States and Australia, CPO products also face non-tariff barriers, including verifying that the product did not originate from a palm oil plantation established on deforested peatland.

Deforestation of peatland produces vast amounts of carbon dioxide, contributing heavily to Indonesia’s net emissions of the greenhouse gas. Indonesia’s peatlands represent just 0.1 percent of the world’s land mass, but contribute 4 percent of global emissions, according to data cited by Greenpeace.

Indonesia — the world’s biggest producer of CPO — is regularly criticized by developed nations and environmental groups for destroying tropical forests to pave the way for palm oil plantations.

The US Environmental Protection Agency has deemed biodiesel made of palm oil a non-renewable fuel.

But Daud Dharsono, chairman of the sustainability committee at the Indonesian Palm Oil Association (Gapki), said the association intends to prove that “CPO products produced [by Gapki members] are from sustainable processes.”

Daud said producers demonstrated at the forum of the International Conference on Oil Palm and Environment last year that the palm oil industry in Indonesia is developing into a model for sustainable agriculture.

Palm oil provides direct employment to 4.9 million workers in Indonesia, according to data compiled by Gapki. There were 8.9 million hectares of palm oil plantation in Indonesia last year.

Palm oil is also the second-biggest contributor to Indonesia’s foreign exchange earnings, after the oil and gas sector. Last year, foreign exchange reserves from palm oil stood at $21 billion.

http://www.thejakartaglobe.com/business/sby-to-argue-for-green-palm-oil/

Coffee Reserves Seen at 2000 Low on Indonesian Rain


By Isis Almeida on 6:47 pm August 28, 2013.
Category Business, Commodities, Featured
Tags: Indonesian coffee, Vietnam coffee

A worker spreads out harvested Robusta coffee berries to sun dry at a coffee plantation in Tanggamus, Lampung Province, Indonesia. (Bloomberg Photo/Dimas Ardian)

Robusta coffee stockpiles are poised to slump to a 13-year low as torrential rain in Indonesia disrupts supply and consumers wait three more months before Vietnam’s new crop gets shipped.

Rain in the largest growing regions of Indonesia, the biggest producer behind Vietnam and Brazil, was as much as twice the 30-year average since April, MDA Weather Services says. Inventories certified by NYSE Liffe will tumble 34 percent to 52,000 metric tons by the end of 2013, the lowest since May 2000, the average of 10 trader estimates compiled by Bloomberg shows. Futures will gain 13 percent to $2,000 a ton over the same time, according to the median of seven forecasts.

The deluge delayed harvesting and drying of beans. Nedcoffee BV, an Amsterdam-based trader with Indonesian offices, says deliveries from farms have been about 16 percent lower than last year. Stockpiles already tumbled 38 percent since mid-May as traders in Vietnam curbed cargoes to hold out for higher prices. Euromonitor International Ltd. predicts a 3.6 percent expansion in the market for instant coffee, mostly made from robusta, to a record $29.2 billion.

“It’s tight into the fourth quarter,” said James Hearn, co-head of agriculture at Marex Spectron Group Ltd., a brokerage with more than 600 staff and based in London. “The market will continue to need the certified stocks. The main question at the moment is how far and how fast the stocks will fall.”

JM Smucker

Robusta fell 7.9 percent to $1,772 this year on NYSE Liffe in London, while arabica, the most-consumed coffee, dropped 19 percent to $1.169 a pound ($2,577 a ton) on ICE Futures US in New York. The Standard & Poor’s GSCI gauge of 24 commodities rose 2.5 percent, led by crude oil, cotton and cocoa. The MSCI All-Country World Index of shares gained 8 percent and the Bloomberg US Treasury Bond Index lost 3.4 percent.

Demand for robusta is stronger than arabica, according to Mark T. Smucker, the president of US retail coffee at The J.M. Smucker Co. The Orrville, Ohio-based company makes Folgers instant coffee.

Prices for both types of coffee declined this year as traders anticipated a supply glut. Robusta production will rise 3.8 percent to 65.3 million bags in the 2013-14 season as demand expands 1.6 percent to 63.8 million bags, Macquarie Group Ltd. says. A bag weighs 132 pounds. The bank says the surplus in arabica will be almost three times larger at 4.2 million bags.

Next harvest

The robusta surplus has yet to show up in exchange-monitored warehouses. Farmers in Vietnam are still storing 140,000 tons from the last harvest after local prices dropped 13 percent in the second quarter, according to the median of nine trader and shipper estimates compiled by Bloomberg and data from the Dak Lak Trade & Tourism Center.

A rally in prices may prompt Vietnamese growers to sell some of the beans they have stored from the current crop. The first significant shipments from the new crop typically are made in December, arriving in Europe about a month later, leaving an absence of new supply for the next several months.

“If you plan all your shipments from the new crop for October, I doubt you will find it,” said Renaud de Kerchove from Ecom Agroindustrial Corp. in Pully, Switzerland, referring to supplies from Vietnam. “But you can still find some coffee from this crop that people will be happy to sell if the markets rally enough,” said the managing director of coffee for Europe and Middle East at the company which traded 11 million bags in 2011.

Accelerate shipments

Vietnam’s 2013-14 harvest probably will increase 17 percent to a record 1.7 million tons, according to the median of nine estimates from traders and shippers in the country. Farmers expanded plantations and rain boosted growth, said Alexander Gruber, the Ho Chi Minh City-based trading manager at Tong Teik Pte, a coffee company owned by RCMA Commodities Asia Pte. While prices may rally to $2,050 next month, they will retreat to $1,850 by the end of the year, he said.

Rain in Indonesia probably will be “near normal” in the next two months, said Donald Keeney, a senior agricultural meteorologist at MDA Weather Services in Gaithersburg, Maryland. That may allow farmers to dry beans and accelerate farm deliveries that had fallen to 129,844 tons in the five months through Aug. 2, from 155,152 tons a year earlier, according to Nedcoffee.

Physical supply

More shipments may still not boost the European stockpiles certified by NYSE Liffe as being suitable for delivery into its contracts if prices stay little changed. Futures are trading at a discount to physical supply from producing nations, said Freddie Schol, a trading manager at Nedcoffee, which mostly transacts robusta. That makes it unprofitable to direct cargoes into bourse inventories.

Beans from Vietnam for shipment in September and October were at a premium of $120 a ton to the exchange price last week, according to Volcafe Ltd., a trading company in Winterthur, Switzerland. Indonesian supply for the same months cost $130 more. Brazilian robusta is selling at a premium of about 2 cents to 5 cents a pound ($44 to $110 a ton), according to Flavour Coffee, a brokerage in Rio de Janeiro.

NYSE Liffe-monitored inventories dropped to 78,750 tons on Aug. 19, the lowest since August 2007. They have declined 81 percent from the record 417,420 tons reached in July 2011, bourse data show. The 52,000 tons anticipated in the Bloomberg survey would be the lowest since May 2000, according to Marex. Inventories of arabica tracked by ICE Futures US expanded 9 percent to 2.8 million bags this year.

Arabica premium

That signals buyers favor cheaper robusta beans, said Judy Ganes-Chase, the president of J. Ganes Consulting in Panama City, Panama. Arabica’s premium over robusta is now at 37 cents a pound, from 87 cents in September. Arabica is mostly used in specialty coffees sold by Starbucks Corp. (SBUX) and other coffee shops. Money managers switched to being net long, or betting on higher robusta prices, as of Aug. 20. They had been net short, or betting on lower prices, since May 28, NYSE Liffe data show.

Falling arabica prices may limit gains in robusta, Hearn said. The Brazilian real’s 14 percent retreat against the dollar this year increased revenue from dollar-denominated coffee sales and encouraged exporters to ship more beans.

Sales of instant coffee by volume will expand 3.7 percent this year, faster than the 2.3 percent gain for fresh ground coffee and beans, according to Euromonitor, a consumer research company in London. Nestle SA (NESN), the Vevey, Switzerland-based maker of Nescafe, accounted for 49 percent of global instant coffee sales last year, Euromonitor data show.

“There’s plenty of arabica supply out there,” Smucker of J.M. Smucker said on a conference call with analysts on Aug. 21. “The demand for robusta is a little stronger, so we might be a little more bullish on robusta.”

Bloomberg

http://www.thejakartaglobe.com/business/coffee-reserves-seen-at-2000-low-on-indonesian-rain/

 

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Indonesia, Pakistan Ink Free Trade Agreement After 10 Years
By Tito Summa Siahaan on 1:33 am August 31, 2013.


Trade between Indonesia and Pakistan is set to accelerate after the governments of both countries finally signed a long-awaited free trade agreement, according to a senior Indonesian official.

“Today, a free trade agreement between Indonesia and Pakistan has been signed,” Deputy Trade Minister Bayu Khrisnamurthi said on Friday, adding the agreement will be fully implemented soon. “By Sept. 1, trade between Indonesia and Pakistan will be opened up,” he said.

Bayu said the impact of the free trade agreement will be seen by the fourth quarter this year. “The immediate potential [trade] from the agreement in 2013 is around $100 million to $200 million,” he said.

That increase in trade will come from the palm oil, garments, paper products, footwear and coal sectors.

Next year the impact will be greater, Bayu said. “The agreement could generate an additional $1.5 billion to $2 billion [in trade between the countries] next year.”

He said Indonesia booked a surplus of $1.1 billion in non-oil and gas trade with Pakistan and another $2 million surplus in oil and gas trade for the first six months of this year.

The agreement will also provide Indonesia with greater access to markets beyond Pakistan’s borders, said Bayu. “It’s not only about Indonesia and Pakistan. The idea is to go up, to Central Asia,” he said.

Talks to establish a free trade agreement between the countries started in 2002.

Under the agreement, Pakistan will grant preferential treatment to 287 imports from Indonesia, including cocoa, chemicals, tableware, kitchenware, rubber and wood products.

For Pakistan, Indonesia will provide preferential import duties on 216 products, including fresh fruit, garments, and leather goods. Indonesia has also offered to scrap duties on Pakistan-grown mandarins and oranges.

Indonesia, Pakistan Ink Free Trade Agreement After 10 Years - The Jakarta Globe

 

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PTDI To Double Production Capacity[/SIZE]

JAKARTA—PT Dirgantara Indonesia is getting more aggressive in boosting production of pioneer commercial plane in fulfilling local demand which increases significantly.

Program Manager N219 Directorate of Technology and Development, PT DI, Budi Sampurno, said opportunities are created by interest from several parties such as local government and Ministry of Defense to order N219 as the main consideration to boost production.

“If contract is already signed, we will consider increasing production capacity from the current capacity of 12 planes per year. We aim at reaching 24 planes per year,” said Budi on Thursday (8/29).

To boost the capacity, Budi said it will change production system through panelizing claimed to accelerate production. The expansion of production capacity will start soon in 2015.

Budi explained the price of pioneer plane is at US$4.2 million – US$5 million depending on the variation of configuration and plane operational feature. In the MoU with the Ministry, N219 is planned to replace Nomad plane commonly used by Navy.

Besides the Ministry, South Sulawesi local administration, said Budi, also has interest in ordering N219 for local airline. This urges the company to consider focusing on local market. (msw)

 

[Nike]

Arwana’s New Plant to Raise Tile Output


By Tito Summa Siahaan on 8:15 pm September 2, 2013.
Category Business, Corporate News
Tags: Arwana Citramulia, tiles

Tile producer Arwana Citramulia is looking to expand its production capacity. (GA Photo/M Defrizal)

Arwana Citramulia, a ceramic tile producer, is looking to add 8 million square meters to its existing 41 million square-meter annual production capacity, once its fourth plant — located in Palembang, South Sumatra — becomes operational this year, the company’s founder and chief executive said.

Tandean Rustandi was upbeat on the industry’s outlook, giving that as the main reason for the business expansion.

“Our population is 240 million [people] and yet ceramic consumption is only 1 square meter per capita. It is very low, even when compared with Vietnam which has 4 square meters of ceramic consumption per capita,” said Tandean, who founded Arwana in 1993 and made it one of the top 20 tile manufacturers in the world.

Currently, the firm operates three plants in Tangerang (Banten), Serang (Banten) and Gresik (East Java). Its Palembang plant is scheduled to begin commercial operation in October.

Since its inception, Arwana has consistently targeted the lower- and middle-class segments. In 2011, it introduced a new product for the well-heeled segment of society but remains confident that the lower and middle class, traditionally its bread-and-butter, remains its major market.

The biggest hurdle for the business, however, as Tandean explained, was the lack of a reliable gas supply. The ceramics business is energy-intensive, making securing energy sources a top priority.

Energy is the largest cost component in the ceramic industry, accounting for 35 percent of total costs.

“Even with a low level of consumption we find trouble securing natural gas supplies,” said Tandean, who believes there is a need to make the domestic gas market more competitive.

Tandean, who entered the business with little knowledge, now has partnerships with 14,000 distributors selling only Arwana ceramics. He says the company commands a 20 percent domestic market share.

The company reported net income of Rp 133.9 billion ($12 million) in the first half of the year, more than double from the same period a year earlier, even as sales increased by just 30 percent.

Tandean is no longer the majority shareholder in Arwana. Major financial institutions like Credit Suisse, UBS and HSBC own substantial interests in the company which, according to Tandean, is a show of confidence in the company’s growth plans.

“They include Arwana in their investment portfolio because we are not being forced to expand, but are consistently expanding,” noted Tandean. For his business success, his alma mater gave him the University of Chicago Entrepreneurial Alumni Award for 2011.

He also received the Indonesia Young Entrepreneur Award from Ernst & Young in 2002.

Read the full story in Globe Asia’s September edition.

Arwana

Pertamina Moves to Expand Gas Business

By Tito Summa Siahaan on 7:52 pm September 2, 2013.
Category Business, Corporate News, Featured

A workers cleans the Pertamina sign at a filling station in Semarang, Central Java. (JG Photo/ Dhana Kencana)

State energy firm Pertamina plans to inject more than Rp 1.5 trillion ($155.4 million) in capital to improve its gas infrastructure next year, a company executive said.

Hari Karyuliarto, a director of gas business at Pertamina, said the company planned to build as many as 14 gas refueling stations next year as it projects more vehicles would use gas-powered engines.

“We expect to spend at least Rp 1.5 trillion to Rp 2 trillion for gas infrastructure in Jakarta, Surabaya and Palembang,” he added.

“We will start from locations where there is already adequate infrastructure and gas consumption has already started to gain momentum.”

There are 14 gas refueling stations in the country, eight of which are owned by Pertamina, Hari said.

He said the company this year planned to build two gas refueling stations in the greater Jakarta area.

“The state budget has also allocated Rp 470 billion to Pertamina for two gas refuelling stations, two mother stations, four mobile refueling units and a 22-kilometer pipeline network this year,” he said.

“Construction works have already begun and will be completed by December this year.”

Edy Hermantoro, the director general for oil and gas at the Energy and Mineral Resources Ministry, said Pertamina’s plans would be matched by the increasing number of converters distributed by the government.

He said the government would distribute 2,000 converters for the conversion of gasoline vehicles to gas next year on top of the 2,000 distributed so far.

Of that number, around 500 will be allocated to operational vehicles for Indonesia’s armed forces, said Edy, who was speaking on the sideline of the inaugural ceremony to mark the TNI’s move to use gas engines for its operational vehicles.

The government planned to increase the use of gas to power car engines with a hope of reducing gasoline consumption. The program, though, has seen little progress mainly due to lack of infrastructure and the availability of cheap subsidized fuel.

The government has obtained a supply guarantee for 7.16 million metric standard cubic meters per day to support the program.

http://www.thejakartaglobe.com/business/pertamina-moves-to-expand-gas-business/

 

[Nike]

Indonesia will be strong in ASEAN Economic Community 2015

by Ni Komang Erviani on 2013-09-07

Indonesia is likely to be a major player in the ASEAN Economic Community (AEC) in 2015, a think tank chief said at Julius Baer’s inaugural Next Generation Summit in Asia in Nusa Dua, Bali, on Friday.

Simon Tay, chairman of the Singapore Institute of International Affairs, predicted that Indonesia — as it had the biggest population in the region — would be strong in the face of the AEC.

“Indonesia is about 40 percent of the ASEAN economy. For AEC, Indonesia is really strong,” Tay said, adding that the management of its financial institutions would determine the country’s position among the other ASEAN countries.

“The leadership of the central bank as well as the Finance Ministry will be crucial. However, I am quite confident that Indonesia will be okay,” he said.

There are currently 10 ASEAN member countries representing a population of over 600-million people. In 2015, ASEAN is set to launch the AEC, a unified market for its members, to enhance not only the group’s collective marketing might, but also the individual competitiveness of its members.

The groundwork for AEC was laid at the 13th ASEAN Summit in November 2007, with the AEC Blueprint unveiling its objectives: the formation of a common market and production base is complemented by innovative approaches to economic development. The recent progress report on ASEAN’s readiness to meet the AEC mandate has been a welcome development. A substantial amount of the measures outlined in the AEC have already been accomplished.

In terms of per capita income, ASEAN has seen this rise to US$3,759 in 2012 from $2,267, since the blueprint was approved in November 2007.

Despite period of massive volatility in the global economy over the past decade, the Indonesian economy has displayed remarkable resilience and it is one of the ASEAN countries with positive economic development, Julius Baer research revealed. During the period of 2001-2012, the average gross domestic product of 5.4 percent came with low growth volatility.

“The preceding chapter on policy innovation and ASEAN 2015 broadly covers the framework of the union, which should unleash a new age of growth in Southeast Asia. Indonesia stands out in this regard for several reasons. As ASEAN 2015 breaks down barriers, one of the key beneficiaries, in our view, of these new economic freedoms will be Indonesia. This is because Indonesia’s enormous potential has as yet gone untapped, despite recent growth, which is in itself also impressive,” the research report states.

Boris FJ Collardi, Julius Baer Group CEO, said the high population was important, but, the presidential election next year would be an important step to “determine what will happen in the region”.

Julius Baer’s inaugural Next Generation Summit in Asia also discussed the outlook for China and Asia in general and an impressive line-up of international speakers was presented exclusively to 200 of the bank’s guests.

Nobel Prize winning economist Paul Krugman presented the keynote. He presented his view on the future of the global economy and the role that Asia will play within this context. The professor was elaborating on new ways to tackle shared challenges.

Another speaker was Tony Fernandes, AirAsia Group CEO, who spoke about the innovative strategy behind his company’s success. Gerhard Schmitt, director of Singapore ETH-Centre, spoke about developing sustainable cities in Asia in a video specially created for the summit. Liang Xinjun, Fuson Group vice chairman and CEO, demonstrated how Fuson International Ltd. was making global brands more relevant to the growing market of Chinese consumers. Ronnie Chan, Hang Lung Properties chairman gave an animated speech on the undeniable opportunity of China presents in term of growth opportunities.

In a key ASEAN panel led by Mark Matthews, head of Julius Baer Asia research, it was highlighted that unity is the key ingredient of the ASEAN’s future success. A “Global Innovators” panel discussed what it means to be global innovator together with David Yu, Yunfeng Capital founder and chairman, and Samih Sawiris, Orascom development executive chairman. Meanwhile DMG Entertainment founder Dan Mintz led a sizzling presentation that painted an image of Asian dominance within the Hollywood entertainment industry.

“The next generation series keeps our guests in touch with the big themes guiding investment decisions. We look forward to establishing this conference as a ‘must attend’ regular annual event,” Collardi said.

Indonesia will be strong in ASEAN Economic Community 2015 | The Jakarta Post

President again suggests capital move


The Jakarta Post | National | Mon, September 09 2013, 6:20 AM

President Susilo Bambang Yudhoyono has once again floated the idea of moving the country's capital from Jakarta to another part of the country.

Yudhoyono said that Jakarta could remain the country's economic center but it would no longer serve as the seat of government.

He said that there were examples of countries which had managed to separate the centers of business and government such as Turkey, Australia and Malaysia.

“Look at a city like Putra Jaya. In spite of the move Kuala Lumpur still functions as before,” Yudhoyono said as quoted in his website presidenri.go.id.

Yudhoyono has previously stated that the prospect of moving the Indonesian capital out of Jakarta should be considered seriously.

any have proposed that the capital city should be moved to Kalimantan, an island five times the size of Java with a population of only 11 million in the center of the country.

http://www.thejakartapost.com/news/2013/09/09/president-again-suggests-capital-move.html

 

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Bali's airport gets $343m major facelift
Bali's International Airport Upgrades With New Terminals.

WHEN delegates of the Asia-Pacific Economic Cooperation (Apec) forum arrive in Bali for their meetings next month, they will be ushered into a new-look airport with cavernous halls filled with Balinese paintings facing glass panels that let in more light than the old terminal.

Before they land, they may spot the wavy blue roof, representing the ocean, of the new international terminal and the tiered green roof, representing the island's famed padi fields, of the multi-storey carpark. This is the result of a 3 trillion rupiah (S$343 million) revamp of the old airport, which had not been renovated for more than a decade.

"The main driver of this airport facelift is the extreme lack of capacity we are facing," Mr Yuristo Hardi Anggoro, spokesman for airport operator Angkasa Pura I (API), told The Straits Times.

The old airport served 14 million passengers last year, twice its stated capacity, but the rebuilt one can handle up to 25 million passengers annually. It is equipped with speedier baggage checking facilities and contains a transit hotel with 224 rooms. The new terminal will welcome its first international passengers at the end of this month.

The upgrading of Bali's airport, the country's third-busiest, is part of the Ministry of Transportation's countrywide airport revitalisation programme that will see 45 airports replaced or revamped in the next decade. The government will spend a total of US$53 billion (S$67 billion) to upgrade air transport infrastructures.

Most Indonesian airports are running at overcapacity, following years of robust growth that has made the country's 240 million people more affluent and more able to afford flying - the most practical way of travelling across this archipelago of 17,000 islands.

Last year, 72.5 million domestic passengers flew over Indonesian skies, up from 60.2 million in 2011, said a Centre for Asia Pacific Aviation (Capa) report. This figure is double that in 2008.

But infrastructure has not kept pace with this thirst for flying, leading to a host of problems, from pilot shortage to overcrowding and long queues for airliners at airports which make delayed landings and take-offs common.

Jakarta's Soekarno-Hatta airport, ranked ninth-busiest globally last year, handled 56 million passengers that same year, nearly triple its present capacity of 22 million. An 11.7 trillion rupiah expansion project is under way to build more hangars, a fourth terminal and a third runway and to revamp existing terminals.

Medan's new sprawling airport was built in the outskirts of the city after the 85-year-old Polonia Airport strained to serve double the capacity it was designed for. Completed in July and linked to the city by rail, it can handle 8 million passengers yearly.

Bali's revamped airport will be connected directly to the tourist districts of Benoa, Nusa Dua and Kuta via a 13km toll road built over the sea to avoid traffic jams on normal roads.

However, observers have flagged potential problems in the revitalisation programme.

API's data shows the number of flights to Bali increased 9.7 per cent from 2011 to 2012 and passenger volume rose by 15.6 per cent at the same time.

Flight numbers are predicted to jump to 131,682 next year from 113,639 last year, and passenger volume from 14 million last year to nearly 17 million by the end of next year. That figure is expected to exceed 70 million by 2030.

Capa's chief analyst Brendan Sobie told The Straits Times: "Indonesia is well behind the growth curve. About three-quarters of the major airports are already operating above capacity.

"The projects that are on the drawing board need to be accelerated and in some cases expanded."

Bali's airport gets $343m major facelift

 

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wrong room, moved

 

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Govt plans implementing fuel cards by 2014
The Jakarta Post, Jakarta | Business |

The government plans to implement a fuel card system for the purchase of subsidized fuels at gas stations starting in 2014.

Energy and Mineral Resources deputy minister Susilo Siswoutomo said in Jakarta on Friday that the use of fuel cards was aimed at allowing the government to know for certain about the distribution of subsidized fuels.

“Therefore, this card can also prevent the misallocation of subsidized fuels,” he said, as quoted by Antara news agency.

As an example, he said that if a gas station recorded the sale of 5,000 liters of fuel while only the sale of 4,000 liters had been recorded on fuel cards, then that would mean there were 1,000 liters that had been potentially misallocated.

Susilo said if the system were implemented, such misallocation could be prevented.

He said the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas), in cooperation with several banks, such as BNI, BCA, BRI and Mandiri, would organize the project.

Susilo said the project would be carried out together with existing fuel control and monitoring programs being overseen by state-owned oil and gas company PT Pertamina (Persero).

The government will launch a trial for the project in Bali, Batam and Greater Jakarta. (apt/ebf)

Govt plans implementing fuel cards by 2014 | The Jakarta Post

 

[Reashot Xigwin]

Worst could be over for Indonesia’s economy
Satria Sambijantoro, The Jakarta Post, Jakarta | Headlines | Sat, September 28 2013, 11:16 AM
Headlines News

Indonesia may have weathered its recent economic woes as bold measures implemented by monetary authorities during the last two months will likely put its economy back on track, say analysts.

Bank of America Merrill Lynch economist Hak Bin Chua estimated that Indonesia, among the hardest hit by the recent financial market turmoil, would soon see a significant improvement in its macroeconomic indicators.

The country’s inflation, which rose sharply in the last two months, was already close to its peak, while the trade deficit would likely make a sharp U-turn and become a surplus in the coming months, he said.

“Indonesia has implemented a range of policies to tackle a mini balance of payments crisis. We think the worst is largely over and macro data will show signs of stabilization in the coming months,” he wrote in a report released on Friday.

Indonesia has suffered at the hands of capital outflows in the region in the past weeks, amid fears the US central bank would scale down its stimulus package.

This year, the rupiah and Indonesian bond yields became the worst-performers in Asia, as the nation’s high inflation and widening current account deficit exacerbated negative sentiment among investors already spooked by the prospect of tighter US monetary policy.

The Indonesian stock market was also among the hardest hit in the recent turmoil.

The latest data shows Indonesia’s annual inflation surged to a four-year high of 8.8 percent in August, while the trade deficit widened to a historic-high of US$2.3 billion in July. The Central Statistics Agency (BPS) is scheduled to announce new inflation and trade deficit data next week.

In the second quarter, the current account deficit swelled to a record high of $9.8 billion, equivalent to 4.4 percent of gross domestic product (GDP), raising concerns among foreign investors about the sustainability of Indonesia’s economy.

Chua, however, predicted the current account deficit would narrow to 3.8 percent of GDP in the third quarter this year, thanks to lower imports due to slower economic growth, combined with the expected increase in exports stemming from the weak rupiah.

“The good news is that, before the end of this year and through the course of 2014, we are likely to see the trade and current account deficits narrow, as well as headline consumer price inflation fall,” Robert Prior-Wandesforde, an economist with Credit Suisse, wrote in a report released on Friday.

Meanwhile, observers have attributed the possible improvement in Indonesia’s external position to aggressive monetary tightening performed by Bank Indonesia (BI), which has raised its key interest rate by 1.50 percentage points to 7.25 percent since the middle of June.

The central bank will also gradually raise its secondary reserve requirement to 4 percent beginning in October, from 2.5 percent at present, to further curb inflation.

“The cumulative 150 basis points tightening since June has helped to restore monetary policy discipline and build credibility with foreign investors,” said Philip McNicholas, an economist with BNP Paribas.

The bout of interest rate hikes “should help reduce the impact on the rupiah from a future tapering-related shock”, he added.

Worst could be over for Indonesia

 

[Reashot Xigwin]

Indonesia Needs To Focus Development On Fisheries
By ANDI ABDUSSALAM

JAKARTA, Oct 16 (Bernama) - With two-third of its area as water, Indonesia should focus on developing its fishery sector to become the world's seventh biggest economy by 2030.

The development model in Indonesia, the world's largest island country, is still terrestrially oriented although it is actually the fishery sector that can catapult the country into one of the world's largest economies, Marine Affairs and Fisheries Minister Sharif Cicip Sutardjo said.

"So far, the orientation of development in Indonesia has remained focused on land," Indonesian news agency ANTARA quoted Sutardjo as saying.

The McKinsey Global Institute, in a report entitled "The Archipelago Economy: Unleashing Indonesia's Potential", said that the fishery sector was a main sector which could help boost Indonesia to become an advanced economy by 2030.

"By that year, Indonesia's economy will emerge as the seventh biggest in the world, outpacing even those of Germany and Britain," Minister Sutardjo said.

The Marine Affairs and Fisheries Minister added that development in Indonesia should now be focused on the sea because most of the land based biodiversity has been depleted.

Indonesia still has a rich marine potential, which is yet to be tapped into.

Sarwono Kusumaatmadja, a former marine affairs and fisheries minister, said that Indonesia comprises 17,504 islands with a coastal line stretching as long as 104,000 kilometres, and was a maritime nation in the past.

"But now Indonesia has lost its iconic status as a maritime nation that it once enjoyed during the era of the Majapahit and Sriwijaya kingdoms," Kusumaatmadja, who is now an adviser at the marine affairs and fisheries ministry, said.

Kusumaatmadja said people often misunderstood that Indonesia was a maritime country because it had a vast water area. A maritime country should also have an advanced marine industry, products and commerce.

Indonesia has not yet reached that stage, including having an advanced and reliable navy, thus the country should focus its development on the marine sector.

"The marine potential could be exploited to the maximum to boost Indonesia's economic growth and ensure the welfare of the people," Kusumaatmadja said.

Minister Sutardjo pointed out that through the Juanda declaration of 1957, Indonesia was designated as an island country, with an exclusive economic zone of about 200 miles from its coastal line.

The Ministry of Marine Affairs and Fisheries had earlier claimed that it has been applying research to develop technologies appropriate to the requirements of fishermen across the various regions of the country.

"The technology being developed by the marine affairs and fisheries ministry has been tweaked, keeping in mind the needs of fishermen and the coastal people in general," he stated.

Developing world maritime science was essential because Indonesia was yet to utilise its great marine potential, Sutardjo stated, while delivering a general lecture at a private university during an event entitled "Universitas Pembangunan Nasional Veteran" recently.

He also reiterated that with 17,504 islands and a 104,000 kilometre-long coastline, serious efforts should be made to tap into the country's considerable marine potential as much of the Indonesian mainland's biological resources have already been depleted.

It was with this in mind that Indonesia should develop maritime science for its younger generation. The minister further stated that the development of maritime science could encourage youths to find affinity with the area of sea development in Indonesia, which is an island country.

On its part, the Marine Affairs and Fisheries Ministry has remained consistent in restructuring the pattern of maritime and fisheries development by adopting the concept of sustainable development with an emphasis on the Blue Economy model.

In the meantime, the Indonesian Chamber of Commerce and Industry (Kadin) has expressed hope that marine development would focus on the fishery sector to ensure the welfare of about nine million fishermen in Indonesia.

Kadin noticed that an upward trend in Indonesia's marine and fishery product exports has been noticed over the past three years.

Increase in export of fishery products results in prosperity for fishermen.

"I do not think it will be of any use if our turnover continued to increase but did not add to the welfare of fishermen," Kadin Deputy Chairman for Fisheries Affairs Yugi Prananto said.

Kadin data showed that Indonesia's fishery exports in 2010 stood at US$2.86 billion. These increased to US$3.52 billion in 2011, and US$3.85 billion in 2012.

"With the upward trend in the fishery export, we hope it will also improve the welfare of fishermen," said Yugi Prananto.

At another seminar on the national green base at the Bogor-based Institute of Agriculture (IPB) over the weekend, Minister Sutardjo revealed that the gross domestic product (GDP) of the country's fishery sector in 2012 increased by 6.48 percent or Rp57.69 trillion to Rp255.3 trillion.

"The Central Bureau of Statistics (BPS) showed that in 2012, Indonesia's economic activities in the fishery sector were worth Rp255.3 trillion," Minister Sutardjo told the seminar.

He said that in the second quarter of this year, GDP growth in the fishery sector was recorded at seven percent, compared to the data for the corresponding period last year.

The growth is higher than the country's economic growth which was recorded at 5.81 percent.

In terms of economic size, the Rp57.69 trillion increase in the fishery sector, excluding the growth in other marine activities, was a big rise, according to the minister.

He said Indonesia had 2.96 million hectares of fresh water cultured fishery potential, of which only 628,857 hectares or about 23.04 percent had been fully exploited.

It also has 12.55 million hectares of sea cultured fish potential with a utilisation rate of only 0.94 percent or 117,649 hectares.

"The cultured fish potential still does not include the 541,100 hectares of fish ponds, 158,128 hectares of public water cultured fish potential and 1.54 million hectares of mina-padi (fish-rice farm cultivation) programmes," the minister stated.

With regard to catch fisheries, the minister said Indonesia has a potential for 6.5 million tonnes of fish per annum whereas in 2011, only about 5.71 million tonnes or 77.38 percent had been realised.

He said that Indonesia's water areas cover 5.8 million square kilometres, consisting of territorial waters, exclusive economic zones and continental shelves.

These areas are abundant in natural resources, both renewable resources such as fish, coral reefs and mangroves, as well as non-renewable ones like natural oil, gas, minerals and other mining resources. (1 USD = 10,982.75 IDR)

--BERNAMA

BERNAMA - Indonesia Needs To Focus Development On Fisheries