E-Commerce and E-Government

On 31 August 2017, GOI issued a new Economic Package, called KEN XVI, aimed  to speed up the licencing to do business in Indonesia with the help of Information Technology, into single submission system. The reason of the policy is to eliminate inefficiency in doing business and improving public service.

The first step to improve the process is to setup a taskforce team. The TF will smooth the process of licencing and coordinate the process among government sectors and bodies. The Checklist will be issued to help the businessmen and data sharing among government sectors will be optimized.

The second steps is to reform the regulations and rules for licensing of doing business. The reform will simplify the process of registering and obtaining licences. Afterward, the Information Technology will be implemented to enable single submission for business lecensing.

The new system is expected to run by 1 January 2018. The GOI hopes to increase the FDI value to Indonesia from 32.7% to 38.9% of targeted investment under RPJMN by 2019. Furthermore, the system will reduce the inequality of investment in Java and outside Java. The system is also benefitting from the growth of e-commerce platform.

This KEN is inline with the KEN XIV, paving the way of e-commerce business in Indonesia. The coordinating minister of economy is expecting that the value of e-commerce business in Indonesia would reach USD 130 Billion by 2020. That would elevate Indonesia as the leading digital economy in South East Asia. E-commerce will also help Banking to provide access to people through cellphone application.

E-commerce also responsible for the growth of logistics in Indonesia. According to ALFI, the soaring growth of Small Package and Express services in logistic business is due to the widely used e-commerce platform among the freighter. The value of Small Package and Express services is amounting to USD 6.75 Billion in 2017, far exceeding the international courier and contract logistics, which amounting to USD 806 Million and USD 3.75 Billion, respectively.


Industrial Structure

Central Bureau Statistic of Indonesia recorded that in the first quarter of 2017, Import to Indonesia is dominated by raw materials and supplies for production by 75.65 pct. Followed by capital goods by 15.35 pct and consumption by 9.03 pct. In terms of dollars, the import of raw materials and supplies is valued at 27.735 billions USD (+18.05 % yoy), import of capital goods is valued at 5.286 billions USD (+6.52 % yoy), and import on consumption is valued at 3.313 billions USD (+4.75 % yoy).

The structure tells that  domestic consumption is less dependent on foreign supplier, and the policy of import substitution works well on the consumer goods. The government will push the policy also to the industrial consumption. The Ministry of Industry reveals that there are rooms for further investment to substitute import.

The Chemistry and Textile industry in Indonesia is valued at 586.6 Trillions IDR, which 436.54 Trillions IDR is imported. Cements, ceramics and glass industry is valued 89.05 Trillions IDR, which 16.07 Trillions IDR is imported. Pharmaceuticals industry is valued at 58.62 Trillions IDR, which 16.63 Trillions IDR is imported. Leather and Shoes is valued at 35.14 Trillions IDR, in which 14.9 Trillions IDR is imported.

Given that Indonesia has the abundant resources for the said Industry, the opportunity for doing business in the above mentions sectors is  huge. Its time to rethink your investment strategy.


Projection electricity demand of Indonesia

Indonesia’s electricity consumption in 2014 was 199 TWh.Consumptive purposes consumption was still dominant where electricity consumption of household sector reached 42%, followed by industrial sector (33%), commercial sector (24%), and transportation sector (0.1%). In line with assumptions of economic and population growth, as well as the increase of electrification ratio target of 100% in 2030, electricity demand is projected to increase significantly to more than six times to 1,205 TWh in 2050 for base scenario or reach 1,491 TWh for high scenario.

In 2050, industrial sector is predicted to dominate the electricity demand with market share of around 57%, followed by commercial sector (27%), and household sector (16%) in high scenario. As for electricity demand of transportation sector is only 0.1% of the total. The decline in contribution of electricity for household sector with growth rate of 2.9% per year is because it is also affected by low population growth. As for the small electricity demand of transportation sector is because it is used for rail transport only. Share of electricity contribution in base scenario will change slightly with share of electricity demand for industrial sector is 55% of the total in 2050.

In response to the demand, Govenment of Indonesia has launched the 35 000 MW electricity procurement program through State Electricity Company (PLN). The ambitious program, with a completion target of 2019, will require the construction of 219 power plants and 737 transmission facilities consisting of 75,000 towers, 1,375 main stations, 2,600 transformers using 300,000 kilometers of aluminium cable. The program is expected to help increase the national electrification ratio to 97 percent by 2019, up from the current ratio of 88.3 percent.

Money Matters

Money matters, describe exactly roles of money in business. Business serves the interest of owners, costumers, investors, employees, etc. Money is needed becasue it would enable business. Money matters, because without it business won’t run. Having a lot of money, with the absence of good management, also matters most. Because business doesn’t get benefit from money. So, money always matters.

What matters in money can be summarised in 5 words : Raising, Investing, Compounding, Returning, Controlling. Business need these activities done on their money. There is no need of piling up the amount of unused fund, doesn’t grow  the business. Anyone can start with 1000, 100, 10 or even 1 dollar, what matter is the multiplication. That is why the most important math in money is compounding ( and not just arithmatic, but exponentially)

It is no surprise that some people concentrate in taking care and responsibility in money matters. They read the correct books, undergone specific training program, and enlisted with the profesional bodies. Accountant is one of them. Accountant knows how to count…and control. Prestigesolusi.biz is ran by accountants, so I hope you can enjoy reading it.