Rising anti-smoking policy hurting RI tobacco exports

The government is expecting a slower annual growth in exports of tobacco and its products from average 18 percent in the past three years to an average of 15 percent growth in the next five years.

Industry Ministry director for beverage and tobacco industries Warsono said Friday the government expected a slower rate of growth as the main cigarette export destinations had introduced stricter controls on smoking.

“It will be good enough if we can make cigarette exports grow by 15 percent — slower than the 18 percent realized in the past three to five years – because it is becoming harder to export cigarettes nowadays,” he said.

“For example, the United States has banned [clove] flavored cigarettes [to be sold in its domestic market], with the issuance of a new bill, while the European Union (EU) has further limited smoking areas available to the public.”

The US Food and Drug Administration has banned cigarette flavorings, including clove or kretek, cherry and chocolate, since last year as sweet flavors are considered to encourage young people to smoke.

Indonesia is among the world’s five largest cigarette makers, besides China, India and the US, and the world’s largest kretek cigarette producer. Indonesian cigarettes make up 99 percent of the US market for the kretek product.

Indonesia also exports tobacco and tobacco products to the EU (tobacco and cigars) and former Soviet Union countries, as well as other developing countries in Africa and Asia.

According to the ministry’s latest data, in 2008 unprocessed tobacco exports were worth US$151.02 million, while cigarette and cigar exports stood at $357.8 million.

The ministry has forecast tobacco exports will reach $401.7 million and cigarette and cigar exports will reach $1.06 billion by 2015, the data shows.

Warsono said he had yet to receive data on exports of tobacco and its products in 2009.

Meanwhile, the government is limiting the production of domestic cigarettes — only for sale in the domestic market — to promote public health over dangers of smoking.

The government’s limit on domestic cigarette production is set at 240 billion sticks by the end of this year — a decline from 245 billion sticks produced last year.

The limit will eventually reach 260 billion sticks by 2015.

The government also has increased excise tariffs on cigarettes from Rp 65 per stick to a maximum of Rp 320 per stick, depending on whether they are hand-rolled or machine-rolled, to discourage people from smoking.

The regulation came into force on Jan. 1 this year.

The government also has increased import duties to 40 percent and has imposed 40 percent excise tariffs on imported cigarettes for the same reason.

Indonesian cigarette companies employ about 600,000 people with total sales revenues of more than Rp 800 trillion (about $8.8 billion) a year.

Services sector: An alternative route to high growth?

Indonesian economic growth has been marked by the rapid growth of its services sector, as indicated in the growth of its non-tradable sectors.

This sector, including trade, services, finance, transport, communication and construction, has been growing at 8 percent each year for several years, which is higher than the overall GDP growth.

Even after the impact of global economic crisis in 2009, services sector still grew at 5.9 percent, almost doubled the rate of growth of tradable sectors that consist of agriculture, mining and manufacturing.

Because of its rapid growth, Indonesian services sector has accounted for 51.9 percent of its GDP in 2009, compared with 48.9 percent in 2006.

This means that now, more than half of Indonesian GDP comes from its services sector. This trend would continue in the coming years, and as Indonesian industrial growth continue to lag behind the growth of its services sector, the Indonesian economy will be dominated more and more by its services sector.

Some have argued that an economy with a high growth in its services sector would tend to have high GDP growth, or to put it the other way, a country that has a high economic growth tends to show high growth in its services sector.

This argument was put forward recently by Ejaz Ghani (The Jakarta Post, March 31, 2010) an adviser to the World Bank. He made the argument after studying economic growth of China and India.

China and India have achieved a remarkable economic growth in recent years, but according to Ghani, the paths and patterns of their growth have been strikingly different.

While the Chinese pattern followed conventional stages, where manufacturing took over the roles of agriculture, India’s economy has leapfrogged from an agriculture-based economy into a service-sector-dominated economy. Ghani thinks India’s pattern of growth could be an alternative for underdeveloped economies still struggling to achieve high economic growth by developing their manufacturing sector.

Ghani’s arguments have provided some intriguing questions regarding the Indonesian economy: Has the Indonesian economy entered the threshold of an advanced economy, whose primary characteristic is the dominance of service industries?

If so, would its pattern of growth divert from conventional stages — from agriculture to industry and then to services — as prescribed in textbooks on economic development?

Before contemplating these questions it is worthwhile first to know why the services sector has seen higher growth than other sectors? There are several reasons that could explain this.

The services sector is a sector that could readily benefit from information technology and globalization. The process of adapting technology in services is more automatic and less complicated than in other sectors.

The market for services is already more global. Once a business entity enters service business, it is immediately plugged into a global IT network. This is clearly the case in the finance and telecommunications industries.

Globalization and the inherent competition it brings with it, and the widespread use of IT has brought down costs, which has benefited customers worldwide and generated opportunities for higher profit and growth.

In the case of Indonesia, high growth in services sector is also the result of its far reaching liberalization that has been accorded by successive Indonesian governments in the past.

While deregulation has been resented and criticized, and has aggravated an economic crisis in the past, the fact remains that the liberalization of its service industries has served as impetus for its high growth by enabling the sector to provide cheaper and better services to customers.

The other reason is that the service industries are less prone to backlogs in physical infrastructure than other industries such as manufacturing, whose growth is highly dependent on the availability of adequate physical infrastructure.

The increasing role of the services sector in the Indonesian economy is not a result of its ingenuities, nor does it mean the Indonesian economy is entering an advanced-economy stage. The services sector’s apparent growing importance in the overall economy is because the growth of the manufacturing sector is still depressed.

The manufacturing sector in Indonesia is still facing all myriad problems ranging from uncertain regulatory frameworks to a lack of infrastructure. Even though the government is working hard to overcome these problems, given its limited competence it will take several years to its structural reforms.

So Indonesia’s economic growth would still depend on the growth of its services sector. To make growth in the services sector more sustainable would require certain conditions, the most important of which is education.

India may be a poor country but it has an excellent education system. Its technical colleges have produced thousands of highly qualified engineers. Thousands of Indian engineering graduates have returned from American universities and Silicon Valley, California, the center of US computer industries.

These are people who have pushed Indian IT services to become a global power. They have made Bangalore, a dusty town in Southern India, become a Mecca for IT services for many large international corporations.

English language, which is the second language in India, has helped its services sector expand enormously.

Indonesia does not have these kinds of advantages, yet its services sector has managed to grow rapidly. But to rely too much on the services sector growth raises questions as to the quality of growth. Service industries require a highly skilled and educated workforce, so they tend to be less labor intensive than manufacturing industries.

While the growth of the services sector could be left to the dynamics of globalization and technology, Indonesia with its huge population and workforce needs to pursue high growth policies in its manufacturing industries especially those with high labor absorption capacities.

So, even though the growth of the services sector can pull up the overall GDP growth, it should not, and could not be an alternative to growth in the manufacturing industries.

Police await SBY’s nod to haul up Misbakhun

The National Police announced Sunday they had declared PKS legislator Misbakhun a suspect for faking documents to get a letter of credit from Bank Century.

“We’ve sent a letter to President Susilo Bambang Yudhoyono requesting permission to summon and question Misbakhun as a witness and a suspect,” said chief detective Comr. Gen. Ito Sumardi.

Police are required by law to seek presidential approval to summon legislators or regional heads for questioning.

Misbakhun, from the Prosperous Justice Party (PKS), was among the key legislators on the House of Representatives’ inquiry committee into the Bank Century bailout.

Allegations that he had received a fake letter of credit from the bank emerged during the debate on whether the bank’s Rp 6.76 trillion (US$716 million) bailout was justified.

At the time, presidential adviser Andi Arief had made public a copy of the letter of credit, which showed that Misbakhun’s company, PT Selalang Prima Internasional, had improperly obtained a $22.5 million line of credit from Century.

Later, Jemmy Setiawan, an activist from a pro-Yudhoyono youth organization, pressed charges against Misbakhun.

Misbakhun responded by pressing libel charges against both Andi and Jemmy.

Following the revelation of the letter of credit, Misbakhun toned down his rhetoric significantly against the government’s bailout of Century.

The Supreme Audit Agency (BPK) reported that Selalang, of which Misbakhun was a commissioner, was among 10 companies that received a total $177.8 through several letters of credit.

A letter of credit is required when a business seeks to import goods or borrow money from a bank.

The BPK said all the borrowers had defaulted on the loans, amounting to $175 million in arrears as of Dec. 31, 2008.

Misbakhun previously said he had obtained the credit legitimately, but had failed to repay.

His lawyer, Sahala Pangaribuan, said he knew nothing about the police’s move to name his client a suspect.

“Should he be called in for questioning, he will certainly comply,” he said as quoted by detik.com.

Earlier, the National Police declared Selalang director Franky Ongkowardoyo a suspect in the case and arrested him.

Both Misbakhun and Franky will be charged with forgery under Article 266 of the Criminal Code.

Jemmy said the Misbakhun case was a slap in the face of the PKS and the Century inquiry committee.

The PKS said it had not decided whether to dismiss him from its ranks.

“Pending any legal proceedings, Misbakhun remains a member of the PKS,” said party member Nasir Djamal.

The Golkar Party’s Bambang Soesatyo, also vocal during the Century inquiry, said he would help defend Misbakhun.

He called the police’s naming of Misbakhun as a suspect “an attack on the investigation of the Bank Century bailout”.

The police said they had done so only after “discussions with a number of relevant institutions”.

“This credit case is part of investigation into the Century bailout,” chief detective Ito said.

“Thus we can’t understand why people question our motives.”

A clever concept for Wi-Fi hot spots

www.fon.com

There are dozens of Wi-Fi routers out there. I have a couple of different models like the LinkSys and a 3Com on my shelves. Recently, a friend lent me another wireless router called Fonera 2.0n.

At first glance, it seems like any old-fashion router — a box with four RJ-45 ports for wired connection, with one RJ-45 for a broadband connection at the back and aerials.

The only thing that sets the Fonera apart is the USB port on the front panel.

It turns out this product features many technological advances. We need to spend a bit of time flicking through the manual before understanding how this technology works.

Before we continue, let me backtrack a bit and describe how companies like AT&T now serve their mobile customers worldwide.

If you are a globe-trotting professional and you need an Internet connection in your hotel room, you need to first access the hotel’s welcome page, find the Wi-Fi service page, specify the length of Internet connection and then enter your credit card number. If you stay in a budget hotel, you may even have to go to the front desk and buy a voucher.

Service providers are clever. They have created a pricing scheme that almost always tries to lead us to buy a voucher for 24 hours when in reality we will only use the internet a couple of hours each night. To help traveling employees stay connected without the hassle of having to look for a hot spot and pull out their credit card, AT&T has built 25,000 hot spots in countries such as Austria, the Czech Republic, Germany, UK, China and more, available in coffee shops, bookstores, hotels, airports, restaurants and convention centers — all paid for by their headquarters.

Enter a company from Spain called Fon (www.fon.com). Fon also wants to make available a network of hots pots around the world. The main difference is that Fon does not need to build and maintain Wi-Fi networks.

It works like this. If you are an owner of a Fonera router, you are a member of the Fon Community and can access the Internet through a growing number of Fon hot spots, around the world.

The community reportedly has two million members and one-and-a-half million live hots pots globally. Fon community members can share their hot spots. They can even sell the service to non-members and earn some money — provided their ISP permits it.

A Fonero — a Fon user — can use the Fon Spot service for free to browse the Internet, make calls using Skype, send and receive emails or communicate with instant messaging.

So, the basic principle is “I let you use my Fon Spot, in return I can also use your or someone else’s hot spot.”

How does Fon generate additional revenue besides the sale of routers? Here is the scheme: A Fonero can register as a Linus (the pioneer of the Open Source movement) or a Bill (the founder of Microsoft). All Linuses can use Fon Spots for free, as described above. All Bills, on the other hand, will be charged a small amount that will be split 50-50 between the owner of the hot spot and Fon. Does it sound complicated? It’s not.

Even if you do not want to share your Fon Spot with Linuses or Bills — they are password secured — you still can enjoy several powerful features of the Fonera 2.0n router.

First, the router allows owners to up or download torrents and files from the Internet without having to turn on your PC or notebook. The data can be stored in any USB 2.0 storage device such as an external hard disk or a thumb drive.

You can also directly upload photos, videos and other materials directly to web 2.0 services such as YouTube, Facebook, Flickr, Picasa, bypassing the computer. If you need to download a large file from RapidShare, all you have to do is create a RapidShare account.

You can also connect a USB webcam and a printer to the Fonera 2.0n using the USB hub, and it will host them all. What is also amazing is that, if you do not have fixed broadband in your home, you can use your 3G connection and convert it into Wi-Fi. Just plug your 3G modem dongle into the router’s USB port.

How do we know if someone is using our Fon Spot or that our file download is complete without turning on the computer? Owners can set up their account to receive updates over Twitter.

Fonera 2.0n costs Rp 899,000 (US$100), which quite reasonable given the benefits of being a Fonero. In comparison, LinkSys WRT120N-SG costs $55, but does not come with the functionality of the Fonera 2.0n.

If you frequently travel abroad, I would highly recommend this product so you can make the most of other Fonera’s Fon Spots in the global Fon Community.

New police chiefs installed behind closed doors

The Jakarta Post , Jakarta | Mon, 04/12/2010 10:38 AM | National

National Police chief Gen. Bambang Hendarso Danuri installed on Monday four new provincial police chiefs in a ceremony which was held behind closed doors.

Journalists were barred from covering the event which took place at the main assembly room at the National Police Headquarters, kompas.com reported.

The top officers inaugurated were new Aceh police chiefs Insp. Gen. Fajar Priyantoro, who replaced Insp. Gen. Adityawarman who is retiring, North Maluku police chief Brig. Gen. Erlan Lukman Nur Hakim who took over from Fajar, Gorontalo police chief Brig. Gen. Irawan Dahlan who succeeded retiring Insp. Gen. Sunaryono and Bangka Belitung police chief Sr. Comr. M Rum Murkal who replaced Brig. Anton Setiadi.

Previously Brig. Gen. Sulistyo Ishak had been installed as the new Lampung police chief in place of Brig. Gen. Edmon Ilyas, following revelation of an alleged case brokering practice involving police officers, tax official Gayus Tambunan and state prosecutors.

Officer buried, cause of death remains uncertain

Chief Brig. Wagino, one of the two police officers who were found dead at their workplace in the Central Java town of Purwodadi on Saturday, was buried in Kebumen, also in Central Java, on Monday.

Wagino’s wife, Purwati, said her husband did not demonstrate anything peculiar prior to the shooting incident that killed him and his colleague First Brig. Iwan Eko Nugroho.

“He fetched our children to school as usual before he went to the police post on Friday,” Purwati was quoted by Antara.

Central Java police have remained in the dark about the cause of the twin deaths. The provincial police chief, Insp. Gen. Alex Bambang Riatmojo, said investigators were collecting more evidence of the case.

The two officers died of gunshot wounds, with each of them shot twice.

President opens world democracy forum

President Susilo Bambang Yudhoyono opened on Monday the sixth World Movement for Democracy in Jakarta, which will last until Thursday.

The President also delivered his keynote speech in the international event, which gathers 625 democracy activists, academics and other participants from 110 countries across the world, including Myanmar and Cuba.

The forum will discuss cooperation among different cultures to enhance democracy in the world.

Malaysia’s opposition party leader Anwar Ibrahim, former prime minister of Canada Kim Campbell and prominent activists from Egypt, Zimbabwe, Myanmar and several other countries, are scheduled to speak in the forum.