Indonesia has succeeded in achieving self-sufficiency in corn, as domestic production has reached 90 percent of domestic demand. Indonesia has become self-sufficient in corn and has also begun exporting the product (the ministry's director general of food crops). However, this does not mean that imports have stopped. In 2008, Indonesia imported 170,000 tons of corn and exported 150,000 tons. Exports may still increase. This year the production target had been set at around 18 million tons, of which one million tons will be exported.

For 2009, the agriculture ministry has allocated a corn seed subsidy for producing 4,266 tons of corn, on an area of 225,534 hectares. Seed assistance taken from national seed supplies for farmers will reach 5,595 tons for an area of 353,000 hectares. Direct top seed assistance, totaling 7,610 tons, meanwhile has been allocated for an area of 507,333 hectares.

In line with the increasing of food and woof industry that using corn as raw material, Indonesia corn production experience a huge increase during almost last three decades (1970-2009). For the period of 1970-2009, corn production has steadily increased from 2.83 million tons in 1970 to about 16.48 million tons in 2009 (a growth rate of 8.4% per year). This continued growth of production could be mainly attributed to consistent growth in yields. During 1970-2009, the annual growth of yield was 8.19%, while harvested area growth was 0.91% per year. In 1970-1980, corn production grew at a rate of 3.76% per year.

According to the Presidential Regulation No. 28/2008 about national industry policy the location of the development for corn industry will be located in five provinces namely Lampung, NTT, Gorontalo, Middle Sulawesi and South Sulawesi. The number of regencies in these provinces is 23 regencies, i.e., 7 regencies in Lampung, 2 regencies in NTT, 5 regencies in Gorontalo, 3 regencies in Middle Sulawesi, and 6 regencies in South Sulawesi.

In the past decade, forestry has been categorized as a sunset industry, although forests themselves have now taken on a new economic value — not from exploitation but from protecting them. With 75.27 million hectares of rainforest, according to Ministry of Forestry data, Indonesia could earn billions of dollars in carbon trading if it were able to protect and properly manage its forests. The government's plan to issue a presidential decree allowing mining companies to mine underground in protected forest concession areas has resulted in mixed reactions from industry stakeholders.

The mining companies praised the decree, saying it would benefit the company immediately. For example, Antam and Australian exploration and mining company Herald Resources have a joint venture called PT Dairi Prima Mineral to develop a large lead zinc deposit in Dairi Regency, North Sumatra.
From 1969 to 1974, about 11 million ha of forest concessions were issued in just one province, that is, in East Kalimantan. Log production escalated to 28 million cubic meters. About 75 percent on this was exported.

In 1994, ten of the largest forest concession company conglomerates controlled 28.18 million ha (45 percent) of the forest concessions in the country. These companies then formed a cartel (APKINDO) that made Indonesia the largest plywood producer in the world and successfully increased the international price of plywood. The total income produced reached US$ 5.5 billion, equivalent to 15% of entire export earnings.

In 1995, about 585 forest concessions carried out logging on 62.5 million ha throughout Indonesia. They seized more than 62.5 million (49%) of natural forests in Indonesia which were thereafter termed “State forests”. About 28.18 million ha of them were controlled by just 10 companies.


In 1996, there were 445 forest concession holders covering an area of 54,060,599 hectares. Almost 50% of these were controlled by the same 10 companies. Nevertheless, in the mid 1990s, several of forest concessions were retracted. In a proportion of these cases, the forest concession holders had violated the law, while in other cases the tree stand value in the forest concession had deteriorated. Brown estimates that the total number of forest concessions had declined to 464 while the forest area under forest concessions had declined to 52 millions ha. In practice, the “retraction” of more than 100 forest concession licenses did not stop activities. Some forest concessions, whose 20 year contract period had ended, were shifted to five State-owned forestry enterprises (Inhutani I to V), or were re-formed as a partnership between the private company and one of the State-owned companies.

Malaysia and Indonesia agreed to review the possibility of refining the existing bilateral cooperation’s MoU that related to some commodities.  The review is related to the new commodity that will be added into the previous list in the cooperation framework.  The commodity is Jathropa Curcas which will be joined together with the previous (Palm Oil, Cacao, and Pepper). The agreement was took place at the  4th Joint Committee Meeting  Forum which attended by Minister of Commodity and Plant Industry of Malaysia, Tan Sri Bernard Dompok, and Minister of Agriculture of the Republic of Indonesia, Anton Apriyantono, in Malaysia.  The MoU refining is purported to improve the cooperation, especially in data and technical aspect information exchange in pursuing research and development activities on Jathropa.

Government of Indonesia, represented by Ministry of Marine Affairs and Fisheries, and Government of Korea, represented by Korea Institute of Industrial Technology, agreed to cooperate, especially in utilizing seaweed for bio-fuel development. The cooperation was also intended to promote the enlargement of algae utilization as an estuary of two interests. First, Indonesia needs to develop technology to utilize the resources at one side. And, secondly, Korea with the technology that has already been developed also needs a resources in order to implement the vision of “Low Carbon, Green Growth” at the other side.

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KRC Vol1-No3.pdf	539 Kb

Energy availability and consumption play an important and strategic role in generating economic growth. One common measurement used in analyzing energy-GDP relationship is energy intensity, which is the amount of energy required to produce a unit of income (GDP). This research examines relationship between energy intensity and income per capita for ten Asia Pacific countries with various economic performances over the period of 1980-2005. Using static and dynamic panel data models, energy consumption and energy intensity are expressed as quadratic logarithmic function of income per capita, squared income per capita, and energy price. As a result, the long run coefficient of income per capita is greater than one and the long run coefficient of squared income per capita is negative. It describes that energy intensity has quadratic relationship with income per capita, and indicating a change in trend of energy intensity. This research also analyzes responses of energy consumption and energy intensity to the change of energy price and income per capita in both the short run and long run. The price elasticity is negative and very inelastic; it means the response of energy consumption with respect to the change in energy price is relatively low. However, the estimation results are also show that the income elasticity is positive but tends to decrease slightly over time. Here, the estimated value of income elasticity varies across countries where the high income countries have lower elasticities than those of the middle-low income countries.

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Indra_energy_IRSA-.pdf	234 Kb

Review on Recent Issues of Agriculture, Forestry, and Bio-Energy Sectors in Indonesia
By: Dicky Firmansyah (leader), Dina, Indra

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Review on Recent Issues of Agriculture, Forestry, and Bio-Energy Sectors in Indonesia

By: Indra (leader), Dina, Dicky, Dwi.

EXECUTIVE SUMMARY

Agricultural Sector

A majority of people in Indonesia are living and working in rural areas, and most of their income is derived from agricultural activities. Rice, which has dominated agricultural production in Indonesia, is the main staple food for most households for both urban and rural alike. The investment on food crops and plantation have been varying in value in the past six years, however, the number of projects that are approved by the government indicate an increasing trend. Food crops and plantation are included in primary sector, which also comprises of livestock, forestry, fishery, and mining. For the crops commodity, harvested area under rice and corn have been increasing in general in the last few years while that of soybean, sweet potato and cassava have been on the decrease.

Forestry Sector

At the moment, Indonesia is faced crucial problems in the forestry sector such as forest fires and degraded land that tend to increase in the future. In recent years, Indonesia has been loosing up to 2 million hectares annually (World Bank, 2006), mainly due to illegal logging and land conversion brought about by problems of excessive processing capacity, lack of effective management and poor law enforcement. Indonesia’s forest areas are threatened with degradation, fragmentation and destruction. Forest loss undermines rural livelihoods and ecosystem services. Poor forest governance damages the investment climate, rural economic potential, Indonesia’s competitiveness and international reputation. Forest crime exacerbates problems of budget and fiscal balance, and diverts public revenues that could be better spent on poverty reduction and development goals.

Bio-energy Sector

The Minister for Energy and Mineral Resources of Republic of Indonesia launched a new ministerial regulation (No. 32/2008) on September 26, 2008 about supplying, utilizing, and trading arrangement of biofuels. It is a revision of the regulation No. 51/2006 concerning biofuels trading guidelines. The biofuels as stated in the regulation are categorized into three types; bio-ethanol (E100), bio-diesel (B100) and pure plantation oil (O100).
With respect to the utilization policy, the biofuels stated in this regulation are categorized into two types i.e. specific (regulated) and general type. The government regulation will group the utilization of the specific (regulated) biofuels, in terms of type, standard, specification, volume, pricing (subsidizing), and blending arrangement with the other type of fuels. Meanwhile, the government will not provide a subsidizing scheme for the general type, so business entities have an authority in managing their prices based on consumer purchasing power, sustainability of supply and distribution, and the economic margin consideration.

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