and the winners are...

As part of its effort to provide stimulus for the economy amidst the global (and hence domestic) crisis, GOI has decided to give privileges to some sectors. 'Fortunately', rather than a direct picking-the-winner strategy, GOI did have a general set of criteria (albeit vaguely) -- or so it claimed. Here are the criteria for those who are exempted from paying the value added taxes:

1. Facilities are given to sectors affected by economic slowdowns, but with the following nature: can absorb large number of employment, produce goods needed by the general public, belong to 'promoted sectors' (sektor unggulan) that contributes highly to the country's export.
2. Facilities are given in order to maintain the stability of basic needs' prices.
3. Facilities are given to protect consumers.
   

And here are the criteria for exemption of import duty:

1. Criteria for industry: a) produce goods or services for general public and/or for protecting consumer's interest (see how vague this is?); b) increase competitiveness; c) increase job creation, and d) increase country's revenue.
2. Criteria for goods and materials: a) not yet produced domestically, b) has been produced domestically but not yet meet the required specification, and c) has been reduced domestically but not sufficient enough.

And the winners are:

1. Free from value added tax: steel material, machine used for the 10,000 MW electricity projects, mini machine to produce ice for fishery, machine for cold storage for fishery, textile for garments, leather and rubber for footwear, materials for ship building, materials for (car?) assembly, silver materials for handicrafts or jewelry, materials for train locomotive, materials for film production, crumb rubber, rattan for furniture, fish/shrimp feed, non-subsidized plant-based oil, cooking oil, and gas and geothermal.
2. Free from import duty: ballpoint, materials and components for heavy weight industry, materials and components for development of small electricity generator, materials for milk production, supporting materials for methyltin mercaptide (?), materials and components for automotive industry, electronics components, fiber optics and components for telecommunication, materials and components for ship building, supporting materials for sorbitol industry, materials and equipments for film, electricity, health equipments, aircrafts.

Sounds like many, with alas, unclear criteria (protecting consumers by protecting producers? How's that?). And yet, the list will grow, apparently.

Shadow government

Of course everybody should be free to assemble his own shadow government or whatever. No consent from Defense Minister should be required. People do that, including kids at schools. But, why am I laughing reading this? I would love to see a shadow DPR, playing another comedy.

FTA-ing APEC?

APEC members are to be commended for being cautious with U.S. proposal for a giant FTA. The proposer is the main culprit behind DDA's failure. Why trust them now?

2008 State Budget

Assumptions: 6.8% growth, 6% inflation, 7.5% BI Rate, IDR9,100/USD, and USD60/barrel of oil price.

The 6.8% growth assumption is wishful. I think the best we can go in 2008 is 6.5%.

EPA, PTA, FTA: tomato potato

This whole EPA party scares me. You may call it EPA, or FTA. To me it is PTA. And I am no fan. As we argued in this paper:

However, Indonesia’s engagement in FTA talks might not go as planned. Despite series of negotiations, only a few FTA schemes show progress, if any, with regards to trade liberalization. There are three factors that contribute to it. First, thus far FTA facilities are underutilized. Second, the proliferation of FTA distorts resources away from multilateral agreement, i.e. WTO. Third, FTAs are prone to overlaps which in turn will create very complicated conflicts across rules of origins – ‘spaghetti bowl effect’ (Bhagwati, 1995; Panagariya, 1998). This should not be underestimated as in any FTA there are competing protectionist interests in all sides.

Unfortunately, further unilateral liberalization is not easy amidst the creeping protectionism, whereas the progress of multilateral agenda is still in limbo as Doha seems to go nowhere. So Indonesia is left with a difficult position. That is, to rely on FTA/PTA for trade liberalization. There are at least three caveats to this. First, FTA should be in line with MFN non-discriminatory principles.

Second, engagement in any trade arrangement with foreign partners should be consistent with the effort to improve the quality of institutions at home. Third, when progress is made in the supply side, further unilateral liberalization should be resumed.

Recent development in this regard is rather mixed. So far, AFTA seems to be on track in this regard, but some bilateral FTAs might lead more toward trade diversion rather than trade creation. Indonesian government considers regional cooperation as a building block for longer term multilateral trade liberalization. It claims that AFTA and APEC are consistent with the Multilateral Trading System of WTO, including the enabling clause and General Agreement on Trade in Services (GATS) (WTO, 2007).

I am skeptical.

Update: Yudo at Ruang 413 is less skeptical, here and here. He says, trade diversion is not necessarily welfare deteriorating if you make an FTA with someone who is not too different (in terms of efficiency) from someone else outside the FTA. But why would you want to make an FTA with someone who is not significantly different from others?

Din's flipflop continues

Hizbut Tahrir Indonesia wants a caliphate. Its members believe democracy is bad. Because "it brings you secularism, an arch enemy of Sharia".

Then enter Din Syamsuddin, the chairman of Muhammadiyah. He says caliphate system is good and "we shouldn't reject it". But he also says, "[Caliphate system] should not undermine the inclusivism and and pluralism of the nation" and it should conform with Pancasila.

We know Pancasila is almost identical with democracy. 'Inclusivism' and 'pluralism' are the children of democracy, or so we were taught in schools.

So, Din, apparently you have to choose one. You can't have 'em both, Mister. Trick or treat?

Independent candidate? Yeah, right

There is no such thing as 'calon independen' (or, independent candidates -- I'm talking about election). I don't understand why people make such a big fuss over this issue.

Whoever you are, you can't run a populace alone. You would need support, cheer, organization, funding and all that. And that my friend, is called, 'party'.

Don't tell me you're independent. Because that is bullshit.

Update: A.p. at Cafe Salemba is less pessimistic.

Nike

Shoe manufacture workers are protesting against Nike. They demand that Nike extend its contract with its employers. Nike, on the other hand, was disappointed with the quality of the shoes. So, it gave a 9-month notice to its contractors before terminating the term, as required by law.

The workers should instead ask compensation, if any and justified by law, from their employers, not Nike.

So what does 'hero' really mean here?

Remember the time not so long ago when there were a couple of ex business crooks who were invited to Istana after they expressed their willingness to return the money they had stolen? Yes, many people were outraged. Calling the government a dirty whore who did not have dignity. A minister reportedly said that if those crooks were asking for forgiveness and managed to return the money (not even the whole!), it would be good enough. Some agreed, some not. Nevertheless, the law seemed so flexible.

Now, another story. The moral is basically the same. But because this one involves Amien Rais, who are heroes to many, people easily overlook the similarity. Amien confessed that he took some amount of illegal money from Rokhmin Dahuri the then Minister for Fishery and Marine Resources for his presidential campaign in the last election. Rokhmin, on the other hand, has announced that the current president SBY, along with the former president Megawati and another then-candidate, Wiranto did accept similar funding. Following the Rokhmin's report, Amien confessed and said he 'was ready to go to jail, if he had to'.

Of course Amien's confession seems loaded: to at least bring SBY down. Well, we agree: if SBY is proven guilty, of course he should be punished. So should Megawati and Wiranto and Amien himself. So, let's hope that these cases are taken seriously by the law people.

But, now come the interesting part. The chief of MPR, Hidayat Nur Wahid seems to think that Amien Rais is a hero. He suggests that Amien should not be taken to jail. Because Amien is 'a national figure who is well respected'. If Amien is found guilty, Hidayat conutinues, he can just return the money. Now, that sounds familiar (see the first paragraph above).

Seems that we really don't need Laws. After all, forgiveness is what matters. No wonder we're so safe.

Update 1: It is just getting more and more interesting. Now a law expert thinks Amien has given enlightenment to the study of law. I wonder, if he is such a noble person, why did he have to wait more than 2 years before admitting his misconduct? Why did he have to wait until Rokhmin blew it all?

Update 2: From the court, as reported by Kompas, Amien Rais actually received Rp 600 million, not Rp 200 million as he confessed. Let's wait and see if he 're-confesses' or denounces the extra Rp 400 million.

Update 3: President SBY reacted (yes, after long deliberation, I guess, as usual). Basically he accused Amien Rais of trying to ruin his reputation. Quoting the Law, SBY stressed that such action by Amien Rais was against the law and could lead to nine months in jail. But then, SBY implied that he would not take the case to the court, "unless Amien accuses me directly in public". That is ridiculous. If SBY is so troubled by Amien, why doesn't he just sue him now? If he doesn't think he should sue Amien, why bother with press conference to explain?

In the meantime, Sutrisno Bachir, the head of PAN (Amien's party, too) said he would return the money Amien and PAN received from Rokhmin. In TV, Bachir said, "We should return the money, because it belongs to the people of Indonesia". Another hero, I guess. Who rushes to do good deeds when found guilty.

Fahri Hamzah from another accused party PKS, who now is a House member, said that the House Board has no right to investigate him, because at the time (of accepting the money from Rokhmin), he was not yet a House member. OK, but does that mean you're innocent?

What a comedy.