Month: September 2017

Indonesia’s economy has been in a decline over the past 2 year due to the fall of its exchange rate against the U.S. Dollar, and it has not fully recovered since then. Frustrated with the poor economic situation, the government made a new regulation, Bonded Logistic Park.

Bonded Logistic Park is a special economic zone that has a special custom supervised areas; it enables companies both in domestic and international markets to make logistic cost more efficient by allowing imported goods to be stored up to three years without paying the import related taxes until it was sold to the customer.

As a result, there is a reduction of cost of stocking goods by 25% and dwelling time from 5 days to only 1.2 days  (The Jakarta Post, 2016). It also allows for companies to use a single import license for all kinds of products, instead of one import license per customer or supplier per product.

In my opinion, this is one of the greatest move that Jokowi, President of Indonesia, has executed since the day he was elected. Jokowi saw the potential in Indonesia to be a logistic hub in the Southeast Asia region. Back then, the cost to import goods in Indonesia was extremely high due to the fact that large ships cannot dock in Indonesia’s port so these ships needs to do transits in either Singapore or Hong Kong to move the goods into smaller vessels. It is actually weird to think that a small country, Singapore, which does not have as much as resources as Indonesia can have a lower logistic cost (Sari Djalal, 2016).

Even though Indonesia lacks in the technological advancement compared to Singapore and Hong Kong, the government acknowledges their advantages such as their strength in the number of human resources available, the total size of the land and the vast oceans and are using it as a key to take the role of the ports Singapore and Hong Kong to be the centre of the Asia Pacific market. The opening of a new port, Teluk Lamong, in Surabaya will also boost their strength to increase the market coverage to evenly spread logistic distribution network which will especially lead to a stronger economy in the Eastern part of Indonesia.

In the other hand, by looking this more into the future, this regulation will certainly kill the middle class company that cannot match the price offered by that of companies that use the Bonded Logistic Park’s license; middle class players mostly rely on their single license single buyer import policy, and this regulation will most likely exclusively benefit the company that has a Bonded Logistic Park license. Will this government intervention and opportunities will be accepted by the whole community? Only time can tell.

 

 

 

 

 

Words Count : 450

Sources:

Govt Inaugurates 17 New Bonded Logistic Center. (2016). Retrieved from http://www.thejakartapost.com/news/2016/10/20/govt-inaugurates-17-new-bonded-logistic-centers.html

Asngadi, S. (2015). Pusat Logistik Berikat (PLB) VS Gudang Berikat (GB), Apa manfaatnya buat Pengusaha Importir? Retrieved from http://www.transformasi.net/articles/read/186/pusat-logistik-berikat-vs-gudang-berikat.html

Fauzi, Y. (2017). Ditjen Bea Cukai Ingin Contek Pusat Logistik Berikat China. Retrieved from https://www.cnnindonesia.com/ekonomi/20170413173021-92-207436/ditjen-bea-cukai-ingin-contek-pusat-logistik-berikat-china/

Sari Djalal, D. (2016). Singapore Tops List of ASEAN Countries on 2016 Logistics Performance Index, Ranked 5th Globally. Retrieved from http://www.worldbank.org/en/news/press-release/2016/09/15/singapore-tops-list-of-asean-countries-on-2016-logistics-performance-index-ranked-fifth-globally

Jokowi Opens Bonded Logistics Centers to Improve Indonesia’s Competitiveness. (2016). Retrieved from https://www.indonesia-investments.com/news/todays-headlines/jokowi-opens-bonded-logistics-centers-to-improve-indonesia-s-competitiveness/item6589?

Tinting, J. (2014). Suning Prepares Logistics Campaign in Guanshanhu. Retrieved from http://www.chinadaily.com.cn/m/guizhou/guiyang/2014-04/22/content_17453293.htm

 

We all know that most of the government attempt to satisfy the social interest, often end up to harming it. But it is intermittently required to set rules that will influence the way how the stakeholders interact.  Recently, there is a case involving gold and copper miner PT Freeport Indonesia (under Freeport McMoran) and the Indonesian government. The local people claimed that the enterprise has violated the rights of the indigenous people since 1991.

Freeport mining is located in Grasberg Mountain, West Papua with gold reserves worth an estimated $100 billion (Schulman, 2016). It is understandable for Indonesia, a developing country, to accept the multi-million dollar contract in 1991 which enables the development programs to alleviate the health, education, agriculture, and rural infrastructure issue mostly in Java Island.

Even though it looked like a promising deal at first, Freeport’s activity doesn’t show that they are augmenting the lives of the local people in West Papua. However, they are actually racking the indigenous tribes by the tailing sediments from the mine which raised the riverbed, suffocating the sea creatures on which the native’s diet and economy were based without the government knowing it, unfulfilling the accommodation contract for using the local tribe land and even killing 500,000 of them in fight to win their land back (Schulman, 2016).

As a business professionals, Freeport should know how to work ethically by making decisions that are moral and environmental friendly while maximizing their profit. They know that dumping as much as 200,000 tonnes of mine waste directly into the river would cause thousands of hectares of verdant forest into wastelands (Schulman, 2016). Yet, they are countering it by saying that the process is reversible. Is it possible to reverse a polluted river to a pristine ecosystem that was once the central economy of the local people?

If only the stakeholder has a great sense of business ethics, they would not have done something that portrays the greedy mindset of human that wants more than what he or she can get. I personally think that they should have revise their business plan in the matters of lowering their profit to avoid further destruction of the natural ecosystem that would give a snowballing effect to both the indigenous people and the stakeholders. However, it will be difficult for the Indonesian government to terminate their contract for Freeport is the biggest tax payers in Indonesia, and losing such contract will not be beneficial for both parties. A solution to this could be that the stakeholders should give accommodation to the local people, for they have lost their land and main economic based, that accommodation can be in terms of schools, church and maybe employment to improve the standard of living.

 

 

 

 

Word Count : 448

Sources:

Schulman,S (2016). The $100bn and the West Papuans who say they are counting the cost. Retrieved from https://www.theguardian.com/global-development/2016/nov/02/100-bn-dollar-gold-mine-west-papuans-say-they-are-counting-the-cost-indonesia

Coca,N (2017). Indonesia’s Neverending Freeport-McMoran Saga. Retrieved from http://thediplomat.com/2017/07/indonesias-neverending-freeport-mcmoran-saga/

Emont, J (2017). Foreigners Have Longed Mined Indonesia, but Now’s There’s an Outcry. https://www.nytimes.com/2017/03/31/business/energy-environment/indonesia-gold-mine-grasberg-freeport-mcmoran.html?mcubz=3