BRI Unit--a Micro-finance Bank.
Microfinance practice in Indonesia has long historical root at community level since its colonial period (Rudjito, 2003). One best recorded of such practice is the existence of what now famous world class microfinance institution of Bank Rakyat Indonesia Unit Desa or BRI Unit Desa. The history was rooted since 1895 when Lumbung Desa or literally means Village Rice Barn, founded by community self-help group in Banyumas Central Java; facilitated by Aria Wirjaatmadja--a Javanese aristocrat and De Wolff Van Westerrode--an Asisten Residen or Dutch District Colonial Administration. The bank was first founded in the name of De Poerwokertosche Hulp-en Spaarbank der Inlandsche Hoffden. The date of the bank’s development—16 December 1895, then recognized as the BRI anniversary (www.bri.co.id).
The concept of Lumbung Desa was to help farmers with financial services during distress seasons like occurrence of flood, long drought, famines or crops failure because of widespread pests. The practice of the financial services continued and in 1905 a Bank Desa or Village Bank was developed from accumulated asset of Lumbung Desa to assist rural people with capital and prevent from money lenders and traders. From the Lumbung Desa and Bank Desa practices the micro-finance institution was recognized as services that provided for people. The institutions are formalized by the Dutch Colonial Administration as BKD (Badan Kredit Desa or literally means Village Credit Board). The Dutch Colonial Administration regulated the BKD in 1908 on how to develop, manage and supervise BKD. The regulation then formalized with Ordonantie BKD in Staatsblad No.357 1929 for Java and Madura and Rijksblaad No.9 1937 for districts in Pakualaman kingdom (Susuhunan or King of Surakarta) and Rijksblaad No.3/H 1938 for districts under sultanate authority (Sultan of Yogyakarta).
The bank’s name was changed several times. First was De Poerwokertosche Hulp-en Spaarbank der Inlandsche Bestuur Ambtenaaren, De Poerwokertosche Hulp-en Landbouw Credietbank (Volksbank), Centrale Kas Voor Volkscredietwesen in 1912 and Algemene Volks Credietbank (AVB) in 1934. During the Japanese occupation, the bank become Syomin Ginko. After the Indonesian independence, the bank was again changed into Bank Rakyat Indonesia in 22 February 1946. BRI was declared as the first state bank of Indonesian Republic through the Government Regulation No. 1 1946. As the state’s bank, BRI play a key role in realizing the government’s vision to improve the people’s economy. The government changed the BRI into Bank Koperasi Tani dan Nelayan (BKTN) in 1960. Based on Law No.21 1968, the government renamed the bank BRI and regulated it as public bank. Later based on Banking Law No.7 1992, BRI has its name and legal status as entity PT Bank Rakyat Indonesia (Persero). Consistent with focus on micro, small and medium businesses; BRI has inspired many institutions to empower the business in that sectors that become backbone of the Indonesian economy.
In 10 November 2003, BRI became publicly listed company and the government divested 30% of the share to public. Since then the BRI’s shares are increased and included in the Blue Chips share belonging to LQ45 Group. With the public controlling 43% of shares, BRI shares are actively traded in the capital market. To date, BRI become a strongest bank with 4,407 working units, of which are 3,705 BRI Unit Desa serving micro, small and medium business with more than 24.2 million clients positing the bank as the biggest micro banking institution in the world.
Tuesday, July 14, 2009
Monday, March 2, 2009
Building Capacities of Women Entrepreneurs and Exploring Opportunities for MicroEnterprise Development For Cooperatives in Southeast Asia
MDG (Millennium Development Goals) goals number 3, calls on nations to promote gender equality and empower women, but progress to achieve the goal has been uneven. The economic, social, political, legal and cultural structures that perpetuate gender inequality are still in place throughout the world while globalization has exacerbated the situation. Although it brings economic growth, new living standards and opportunities; but the benefits are distributed unequally. Unemployment, underemployments, social exclusion of vulnerable groups, ‘informalization’ of economies and changing world of works demand new application of new solution.
Among these solutions are promotions and development of enterprise, and the provision of business development services for entrepreneurs, especially the women who have proven that they can be significant economic players in Asia. Micro, small, medium enterprises (MSMEs) play a major role in contributing to a country’s Gross Domestic Product (GDP), employment creation, entrepreneurship development and poverty reduction. Women can play important roles as owners, managers and investors and enlarge their roles in the national economy.
The Asian Women Cooperative Development Forum (AWCF)—based in Manila, is a resource center and advocacy body in Asia that has been working on gender and development (GAD) and cooperatives since 1990. Since 2002, AWCF has been working with ASEAN Foundation initiatives supporting and promoting women’s economic empowerment. The workshop: Building Capacities of Women Entrepreneur and Exploring Opportunities for Micro-enterprise for Cooperatives in Southeast Asia, is part of initiatives in capacity building project that promote micro-enterprise development for cooperatives. The workshop was conducted in Bangkok 10-12 February, participated by 9 (nine) ASEAN countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Thailand and Vietnam.
Common platform:
Growing concern on women empowerment through entrepreneurship and micro-enterprise development across ASEAN countries is noted.
Different stakeholders and institutional set up are noted in each country but state and civil society organizations (CSO) are remain the key actors in promoting micro-enterprise development in ASEAN countries:
1. Straight vertical cooperative and its umbrella organization directly provide services to women members in the micro-enterprises development. (Philippines, Thailand, Malaysia, Lao PDR, Myanmar)
2. State institution (through different ministerial bodies) directly provides services to cooperatives to reach women members in micro-enterprises development (Brunei Darussalam, Cambodia).
3. NGO and cooperative umbrella organization work hand in hand to promote women empowerment through micro-enterprise development (Indonesia, Vietnam).
Each institutional set up are country specific, but general trends are showing a synergetic collaboration among the key actors: state and CSO (Cooperatives, NGO and Regional Network Organization/AWCF) to reach women members in promoting micro-enterprise development. The state provides policies more sensitive and conducive for women empowerment, and the CSO provides services to women members and their families. The collaborative interventions among the state and CSO in all ASEAN countries will move towards a more effective and efficient institutional set up.
Common Model and Processes of Interventions
Individual women as cooperatives or self-help group’s members are empowered through several personal skills and knowledge development through rich and various trainings, counseling and facilitating process in developing their entrepreneurship and micro-enterprises. These trainings are to equally and equitably distribute resources, benefits and statuses among men and women in their families and larger society.
Financial services are noted as common and essential services that women members are in need and seek for developing their micro-enterprises.
1. Micro-credit/finance for start up and existing micro-enterprise, with no collateral and low interest accessible to women members.
2. Different forms of insurance; health, credit-life insurance or life insurance have also been developed to better serve women members.
In providing the financial services, cooperatives are encouraged to make larger collaboration either among primary cooperatives or another financial institution such as bank or insurance companies to secure and enhance the services to members.
Beyond financial services, examples on Business Development Centers to boost women entrepreneurship and micro-enterprise development are also noted from ASEAN country workshop participant.
1. Product development
2. Market information
3. Access to wider and global market
In developing Business Development Centers, each facilitating institutions are called to identify their own strength and weaknesses to do and remain open in delivering such services.
ICT (Information and Communication Technology) has also been playing an instrumental role in support of the BDC. It is providing rapid or real time (on-line), efficient and effective tools in accessing information on products in demand and also marketing without geographical and time barrier. A trend on green cooperatives products are also highlighted by most all of the workshop participants. These green products are to conserve the world future environmentally and socially.
Cooperatives have been proven as a best practice of institutional model in delivering financial, technical and also social services. Through its values of passion and love in delivering services, cooperatives have shown confident, prudent and very good governance; in providing services to members and wider community with economic and social benefits.
Aside from the model and processes, there are also external condition that also influencing the outcomes and impacts of the interventions. Among others is strong state control over the CSO and community in Vietnam has hindered the development of cooperatives and hence women empowerment and micro-enterprise development as well. Global financial crisis have also contributed into negative results of the interventions shown in the businesses turn down, arrear or delinquencies.
Workshop participants also noted, aside from capacity building for member organizations; market and products exchange are also facilitated to the regional (ASEAN) network organization like AWCF towards mutual and fare markets for country members.
Impacts Assessment
Impacts had been identified in different levels: individual women and their families, organization and network or umbrella organization.
At individual level, successes and increasing businesses in size and returns are direct and positive impact of the interventions. Better personal development, confidence and leadership position in the cooperative and social roles are also identified. But more importantly are better relation in their family relations, better health, education of children and happiness.
At cooperatives or organizational level, impacts can be seen in the development of institutional indicators such as increasing assets, capital, net profits and increasing outreach of members and equality among men and women in the cooperatives. The increased cooperatives and organization development as impacted from its intervention may also be measured from the more services whether financial or social to the betterment of their members.
Bangkok, 11 February 2009
Among these solutions are promotions and development of enterprise, and the provision of business development services for entrepreneurs, especially the women who have proven that they can be significant economic players in Asia. Micro, small, medium enterprises (MSMEs) play a major role in contributing to a country’s Gross Domestic Product (GDP), employment creation, entrepreneurship development and poverty reduction. Women can play important roles as owners, managers and investors and enlarge their roles in the national economy.
The Asian Women Cooperative Development Forum (AWCF)—based in Manila, is a resource center and advocacy body in Asia that has been working on gender and development (GAD) and cooperatives since 1990. Since 2002, AWCF has been working with ASEAN Foundation initiatives supporting and promoting women’s economic empowerment. The workshop: Building Capacities of Women Entrepreneur and Exploring Opportunities for Micro-enterprise for Cooperatives in Southeast Asia, is part of initiatives in capacity building project that promote micro-enterprise development for cooperatives. The workshop was conducted in Bangkok 10-12 February, participated by 9 (nine) ASEAN countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Thailand and Vietnam.
Common platform:
Growing concern on women empowerment through entrepreneurship and micro-enterprise development across ASEAN countries is noted.
Different stakeholders and institutional set up are noted in each country but state and civil society organizations (CSO) are remain the key actors in promoting micro-enterprise development in ASEAN countries:
1. Straight vertical cooperative and its umbrella organization directly provide services to women members in the micro-enterprises development. (Philippines, Thailand, Malaysia, Lao PDR, Myanmar)
2. State institution (through different ministerial bodies) directly provides services to cooperatives to reach women members in micro-enterprises development (Brunei Darussalam, Cambodia).
3. NGO and cooperative umbrella organization work hand in hand to promote women empowerment through micro-enterprise development (Indonesia, Vietnam).
Each institutional set up are country specific, but general trends are showing a synergetic collaboration among the key actors: state and CSO (Cooperatives, NGO and Regional Network Organization/AWCF) to reach women members in promoting micro-enterprise development. The state provides policies more sensitive and conducive for women empowerment, and the CSO provides services to women members and their families. The collaborative interventions among the state and CSO in all ASEAN countries will move towards a more effective and efficient institutional set up.
Common Model and Processes of Interventions
Individual women as cooperatives or self-help group’s members are empowered through several personal skills and knowledge development through rich and various trainings, counseling and facilitating process in developing their entrepreneurship and micro-enterprises. These trainings are to equally and equitably distribute resources, benefits and statuses among men and women in their families and larger society.
Financial services are noted as common and essential services that women members are in need and seek for developing their micro-enterprises.
1. Micro-credit/finance for start up and existing micro-enterprise, with no collateral and low interest accessible to women members.
2. Different forms of insurance; health, credit-life insurance or life insurance have also been developed to better serve women members.
In providing the financial services, cooperatives are encouraged to make larger collaboration either among primary cooperatives or another financial institution such as bank or insurance companies to secure and enhance the services to members.
Beyond financial services, examples on Business Development Centers to boost women entrepreneurship and micro-enterprise development are also noted from ASEAN country workshop participant.
1. Product development
2. Market information
3. Access to wider and global market
In developing Business Development Centers, each facilitating institutions are called to identify their own strength and weaknesses to do and remain open in delivering such services.
ICT (Information and Communication Technology) has also been playing an instrumental role in support of the BDC. It is providing rapid or real time (on-line), efficient and effective tools in accessing information on products in demand and also marketing without geographical and time barrier. A trend on green cooperatives products are also highlighted by most all of the workshop participants. These green products are to conserve the world future environmentally and socially.
Cooperatives have been proven as a best practice of institutional model in delivering financial, technical and also social services. Through its values of passion and love in delivering services, cooperatives have shown confident, prudent and very good governance; in providing services to members and wider community with economic and social benefits.
Aside from the model and processes, there are also external condition that also influencing the outcomes and impacts of the interventions. Among others is strong state control over the CSO and community in Vietnam has hindered the development of cooperatives and hence women empowerment and micro-enterprise development as well. Global financial crisis have also contributed into negative results of the interventions shown in the businesses turn down, arrear or delinquencies.
Workshop participants also noted, aside from capacity building for member organizations; market and products exchange are also facilitated to the regional (ASEAN) network organization like AWCF towards mutual and fare markets for country members.
Impacts Assessment
Impacts had been identified in different levels: individual women and their families, organization and network or umbrella organization.
At individual level, successes and increasing businesses in size and returns are direct and positive impact of the interventions. Better personal development, confidence and leadership position in the cooperative and social roles are also identified. But more importantly are better relation in their family relations, better health, education of children and happiness.
At cooperatives or organizational level, impacts can be seen in the development of institutional indicators such as increasing assets, capital, net profits and increasing outreach of members and equality among men and women in the cooperatives. The increased cooperatives and organization development as impacted from its intervention may also be measured from the more services whether financial or social to the betterment of their members.
Bangkok, 11 February 2009
Thursday, January 8, 2009
Indonesian Economy in the Global Crisis
Indonesian Economy in the Global Crisis
Global financial sector is shaken again when the giant American finance company Lehman Brothers bankrupt, followed with another bubbling companies such as Merrill Lynch, Goldman Sachs, Northern Rocks, UBS and Mitsubishi UFJ. The shakes will determine the endurance and survival of Indonesian economy in the near future.
Is the national economy—financial and real sector, suffer from the global crisis worse than the one that hit the Asian countries at the last decade? Some experts predict that the national economic survival depends on the domestic economic system. If the national economy persists, the possibility of the Indonesian economic survival will be greater and the impact of the global crisis will be less serious.
Financial Sector
There are some reasons affecting the early financial shakes will be followed by some further affects to Indonesian economy.
First factor is existence or non existence of direct linkage between international finance companies now suffering from crisis with the domestic companies. The linkage can be in the forms of placement or loan disbursed significantly from Indonesian companies to global investment banks.
Second factor is liquidity domestic banks and finance companies. Domestic bank condition and finance companies are still have abundant liquidity. This is indicated by low ratio of Loan to Deposit Ratio (LDR) below 50% at the end of the year 2008. Third factor is high investment to the real sector that related with increasing the national production capacity, after suppressed from condition before full recovery or normal demand.
From the above reasons, impacts of the global crisis might be isolated to second round effect which is slowing down on exports and limited capital-outflow, which is not causing to the slow down of the economic growth. Indonesia has an amazing economic growth in 2007 of 6,33%. Up to the third quarter of 2008 the national growth rate was still around 6% which will be slightly lower in the forth quarter. This economic growth was the highest after the economic crisis of the1998.
But further effects of global crisis require serious attention to policy makers. Some domestic indicators might be affecting more serious to the national economy. Extra ordinary pressure on domestic money market is now occurring, both on stock market and bonds.
Up to the last October, Average Stock Price Index (Indeks Harga Saham Gabungan/ IHSG) continuously fall down, national currency exchange rate to US Dollar is also falling down. Strong pressure is also occurred in the State Promissory Note market, seen in the rise of yield over 50 basis points from all kind of bond. At the same time, yield curve constantly rising, expressing the expectation on tight monetary policy at the short and medium term.
Foreign transaction was the main reason for the falling down of the domestic money market and bond. Many global investors take safety measures through capital flight to assets with lower risks, including Indonesian market. In another words, there is flow of liquidity to foreign market which in turn harden national economy as a result of tight money policy.
The situation stimulates the increase of interest rate for credit which is the key to relate between financial sector and real sector. The high interest rate will lead into mobilization of fund from investment to saving. In turn, investment rate will slow down and real sector suffer from high interest rate. High interest rate will also trigger non-performing loan/NPL and burden household from increasing installment for housing finance or another consumption credit.
There is no formal report on increasing non-performing loan of credit from finance companies, either bank or non banks. Early warning comes from non bank finance companies reporting that their credit expansion has slowed down. This is the direct effect from the increased interest rate and price of consumption goods. Negative or positive impacts of the quantity and quality of credits will be seen in the mid of 2009.
Real Sector: People’s Economy
How serious is the global crisis affecting people’s economy in Indonesia?
Global financial crisis in the US and European countries will directly affect in decreasing consumption from that countries.
At national level, net export of Indonesia is 10% from the total GDP. The export is composed of 20% oil and gas products and 80% non oil and gas. The destination of the non oil and gas export products is 12% to US and European countries, other destinations are to Japan, Singapore and Middle East countries. Industries such as textiles, automotive and others based on export to the above countries will directly be affected by the global crisis.
Non oil and gas export to US was valued of 1 Billion US $ and European countries 990 Million US $ in 2007. These values of exports are now collapsed. Demand of the main export to those countries from textiles in 2008 now remains 30% only. Thousands of textile workers have been laid off in Central Java and West Java. Up to the end of 2008 and early 2009 there will be another lay off of workers in formal and informal sectors as much as 350.000 skilled labor and up to 3.5 million unskilled labors. Reports from the North Sumatra Micro Small and Medium Enterprise Service, mentions a decline of even domestic demands of ceramics and crafts products. Ceramics are sold to Nangroe Aceh Darussalam Special Province and North Sumatra, meanwhile from Samosir leather shoe and wallet are for export market. The decline of the demand is almost the same with the national export decline, which is close to only 30% of the 2007 export volume. This situation is hardly influencing Indonesian people’s economy.
Meanwhile, export from agricultural products has no sign of declining yet from coffee and tea products. National export of coffee which mostly come from people’s plantations, are reportedly increasing of the target. In 2007, coffee export of Indonesia reached 300,000 MT and in 2008 it is estimated to reach 325.000 MT or an increase of 8%. This is because of the remained stable European market for coffee especially to Germany, which is the biggest consumer. Aside from that there also an increasing demand from country that benefited more from foreign exchange and oil price hike like Russia. . Nevertheless, tea commodity of Indonesia tends to decrease in production. In 2007 the national production reaches 149,000 tons and in 2008 it is predicted to reach 145,000 tons. Export of tea is also declining since 2006 with 95,000 tons, in 2007 reaching 83,000 tons and in 2008 is expected to reach back to 95,000 tons. This situation was caused by decline in maintenance and plantation culture.
Agriculture and food products from imports with import contents are surely influenced. Tofu and tempe the most people’s favorite food made of soybean from import, from its country origin have to compete with another uses such as for bio-energy or animal feeding. Scarcity of this product will surely be increasing the market price. Meanwhile, national rice production from the prediction of 3 million tons target had been achieved 2.85 million tons at the third quarter. Agricultural product like rice will be sufficiently supplied by domestic products and import will not be required. This situation will in turn reducing national expenses.
In tourism sector, it is reportedly no declining foreign tourist visits yet until the end of 2008. This might be because of holidays have been planned long time beforehand and culturally cannot easily postponed or cancelled. Tourist visits can be declining if the crisis goes worse further.
Momentum that must be maintained by the Indonesian government is to increase the domestic products for domestic markets, as Indonesia is a large market with its huge population. In this sense industrial products of Indonesia cannot be let unsold because of loosing competition with China or Vietnam products that enter the Indonesian market illegally and with very low price. Indonesian Customs as part of the Department of Finance and Department of Trade and Industry as well should look carefully into the increase of 10-15% import for oil, electronics and iron products from China.
In this global crisis, aside from appropriate trade policy, monetary policy through Central Bank decision on BI rate to respond, Indonesia should optimize national production based on the domestic resources and sell it to the domestic market. Principle of self-reliance in economy practiced by similarly large populated country like India, might be good example.
Global financial sector is shaken again when the giant American finance company Lehman Brothers bankrupt, followed with another bubbling companies such as Merrill Lynch, Goldman Sachs, Northern Rocks, UBS and Mitsubishi UFJ. The shakes will determine the endurance and survival of Indonesian economy in the near future.
Is the national economy—financial and real sector, suffer from the global crisis worse than the one that hit the Asian countries at the last decade? Some experts predict that the national economic survival depends on the domestic economic system. If the national economy persists, the possibility of the Indonesian economic survival will be greater and the impact of the global crisis will be less serious.
Financial Sector
There are some reasons affecting the early financial shakes will be followed by some further affects to Indonesian economy.
First factor is existence or non existence of direct linkage between international finance companies now suffering from crisis with the domestic companies. The linkage can be in the forms of placement or loan disbursed significantly from Indonesian companies to global investment banks.
Second factor is liquidity domestic banks and finance companies. Domestic bank condition and finance companies are still have abundant liquidity. This is indicated by low ratio of Loan to Deposit Ratio (LDR) below 50% at the end of the year 2008. Third factor is high investment to the real sector that related with increasing the national production capacity, after suppressed from condition before full recovery or normal demand.
From the above reasons, impacts of the global crisis might be isolated to second round effect which is slowing down on exports and limited capital-outflow, which is not causing to the slow down of the economic growth. Indonesia has an amazing economic growth in 2007 of 6,33%. Up to the third quarter of 2008 the national growth rate was still around 6% which will be slightly lower in the forth quarter. This economic growth was the highest after the economic crisis of the1998.
But further effects of global crisis require serious attention to policy makers. Some domestic indicators might be affecting more serious to the national economy. Extra ordinary pressure on domestic money market is now occurring, both on stock market and bonds.
Up to the last October, Average Stock Price Index (Indeks Harga Saham Gabungan/ IHSG) continuously fall down, national currency exchange rate to US Dollar is also falling down. Strong pressure is also occurred in the State Promissory Note market, seen in the rise of yield over 50 basis points from all kind of bond. At the same time, yield curve constantly rising, expressing the expectation on tight monetary policy at the short and medium term.
Foreign transaction was the main reason for the falling down of the domestic money market and bond. Many global investors take safety measures through capital flight to assets with lower risks, including Indonesian market. In another words, there is flow of liquidity to foreign market which in turn harden national economy as a result of tight money policy.
The situation stimulates the increase of interest rate for credit which is the key to relate between financial sector and real sector. The high interest rate will lead into mobilization of fund from investment to saving. In turn, investment rate will slow down and real sector suffer from high interest rate. High interest rate will also trigger non-performing loan/NPL and burden household from increasing installment for housing finance or another consumption credit.
There is no formal report on increasing non-performing loan of credit from finance companies, either bank or non banks. Early warning comes from non bank finance companies reporting that their credit expansion has slowed down. This is the direct effect from the increased interest rate and price of consumption goods. Negative or positive impacts of the quantity and quality of credits will be seen in the mid of 2009.
Real Sector: People’s Economy
How serious is the global crisis affecting people’s economy in Indonesia?
Global financial crisis in the US and European countries will directly affect in decreasing consumption from that countries.
At national level, net export of Indonesia is 10% from the total GDP. The export is composed of 20% oil and gas products and 80% non oil and gas. The destination of the non oil and gas export products is 12% to US and European countries, other destinations are to Japan, Singapore and Middle East countries. Industries such as textiles, automotive and others based on export to the above countries will directly be affected by the global crisis.
Non oil and gas export to US was valued of 1 Billion US $ and European countries 990 Million US $ in 2007. These values of exports are now collapsed. Demand of the main export to those countries from textiles in 2008 now remains 30% only. Thousands of textile workers have been laid off in Central Java and West Java. Up to the end of 2008 and early 2009 there will be another lay off of workers in formal and informal sectors as much as 350.000 skilled labor and up to 3.5 million unskilled labors. Reports from the North Sumatra Micro Small and Medium Enterprise Service, mentions a decline of even domestic demands of ceramics and crafts products. Ceramics are sold to Nangroe Aceh Darussalam Special Province and North Sumatra, meanwhile from Samosir leather shoe and wallet are for export market. The decline of the demand is almost the same with the national export decline, which is close to only 30% of the 2007 export volume. This situation is hardly influencing Indonesian people’s economy.
Meanwhile, export from agricultural products has no sign of declining yet from coffee and tea products. National export of coffee which mostly come from people’s plantations, are reportedly increasing of the target. In 2007, coffee export of Indonesia reached 300,000 MT and in 2008 it is estimated to reach 325.000 MT or an increase of 8%. This is because of the remained stable European market for coffee especially to Germany, which is the biggest consumer. Aside from that there also an increasing demand from country that benefited more from foreign exchange and oil price hike like Russia. . Nevertheless, tea commodity of Indonesia tends to decrease in production. In 2007 the national production reaches 149,000 tons and in 2008 it is predicted to reach 145,000 tons. Export of tea is also declining since 2006 with 95,000 tons, in 2007 reaching 83,000 tons and in 2008 is expected to reach back to 95,000 tons. This situation was caused by decline in maintenance and plantation culture.
Agriculture and food products from imports with import contents are surely influenced. Tofu and tempe the most people’s favorite food made of soybean from import, from its country origin have to compete with another uses such as for bio-energy or animal feeding. Scarcity of this product will surely be increasing the market price. Meanwhile, national rice production from the prediction of 3 million tons target had been achieved 2.85 million tons at the third quarter. Agricultural product like rice will be sufficiently supplied by domestic products and import will not be required. This situation will in turn reducing national expenses.
In tourism sector, it is reportedly no declining foreign tourist visits yet until the end of 2008. This might be because of holidays have been planned long time beforehand and culturally cannot easily postponed or cancelled. Tourist visits can be declining if the crisis goes worse further.
Momentum that must be maintained by the Indonesian government is to increase the domestic products for domestic markets, as Indonesia is a large market with its huge population. In this sense industrial products of Indonesia cannot be let unsold because of loosing competition with China or Vietnam products that enter the Indonesian market illegally and with very low price. Indonesian Customs as part of the Department of Finance and Department of Trade and Industry as well should look carefully into the increase of 10-15% import for oil, electronics and iron products from China.
In this global crisis, aside from appropriate trade policy, monetary policy through Central Bank decision on BI rate to respond, Indonesia should optimize national production based on the domestic resources and sell it to the domestic market. Principle of self-reliance in economy practiced by similarly large populated country like India, might be good example.
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