Conversation

Siti                   : Hey Ms. Hanna how are you?

Hanna             : Hey Ms. Siti, I’m fine thanks and you?

Siti                   : Fine too and thank you. Now your bakery business has gone into a great success. What an achievement!

Hanna             : Thank you. I’m still trying as best as I can to satisfy every customer. 

Siti                  : Can you tell me the story of your success Ms. Hanna? 
Hanna             : Ya, before my business goes this big, I also experienced hard times. At the first time starting out my boutique, when I have any idea I can made collection design  in my boutique. I did everything by myself and my best friend. I tried my best to satisfy people and make them love my collection design in my boutique.

Siti                   : And then… what happened next?
Hanna             : Over day, many people began to like my boutique collection. Seeing that opportunity, with adequate fund of bank loan I decided to build and open up my own boutique. It wasn’t still a large boutique.

Siti                  : Did many people come to buy right after you opened the boutique?

Hanna             : I had to introduce my new-open boutique to people once more. I made advertisement in media social and brochures to get people know my boutique. Finally, people started to come over my boutique. My boutique customers then increased in number by the help of mouth-to-mouth promotions. That was how my marketing strategy worked.    

Siti                  : Wow, weren’t you overwhelmed to handle those customers all by yourself?

Hanna             : Of course, I had trouble to meet customer’s demands. Therefore, I decided to employ workers to work on my boutique. I started out employing 3 workers. 

Siti                   : Do you need more workers then?           

Hanna            : Of course in order that I can new-open boutique again

Siti                   : That’s great, Ms. Hanna. Thank you for sharing. I wish your story can be helpful for me someday.      

Hanna             : You’re welcome, Ms. Siti.

News Economic in Indonesia

World Bank revises RI’s
CAD outlook

            The World Bank has revised its projection of Indonesia’s current-account deficit (CAD) as it estimates that the country’s mineral ore export ban will squeeze exports this year. In its latest quarterly report, launched on Tuesday, the World Bank set Indonesia’s CAD target at 2.9 percent of gross domestic product (GDP), from 2.6 percent, the previous estimate made in December. With the new projection, this year’s total deficit is expected to stand at US$24.4 billion, down from the $28.5 billion that Indonesia posted in 2013.           
            According to World Bank chief economist Jim Brumby, part of that deficit would be due to the mineral ore exports ban, which took effect in January. “We estimate that there will be a $5.3 billion trade deficit in 2014. For the next three years, until 2017, the total deficit in the trade balance caused by the ban will amount to $12.5 billion,” he said.       
            The Indonesian government has previously said that the ban would help Indonesia’s GDP and trade balance. It argues that by urging industry players to process ores domestically, the country will see an increase in value-added mineral exports, which will later bring in higher revenue.   
            However, following the ban’s implementation, Indonesia saw its exports fall to $14.48 billion in January, down 14.6 percent from the previous month. Year-on-year, the export figure declined 5.8 percent. Data from the Central Statistics Agency (BPS) shows that the decline was driven by lower exports in the non-oil and gas segment, especially in ores. Ore exports recorded the steepest decline, tumbling 70.1 percent month-on-month to $291.8 million.         
The fall in exports eventually led to Indonesia’s trade balance swinging back into the red, with a $430.6 billion deficit in January, overturning the $1.5 billion surplus only a month before.  
            Despite revising the CAD estimate, the World Bank upheld its projection of Indonesia’s GDP growth target at 5.3 percent for 2014.        Several remaining domestic and external factors would affect the growth, according to Brumby. “Domestically, the upcoming elections will hopefully lead to a boost in consumption, even though investment will still be weak,” Brumby said. “Externally, we can see that the global risk appetite is stronger than expected. That will boost portfolio inflows to emerging markets, including Indonesia,” he added.           
            Meanwhile, Bank Danamon chief economist Anton Gunawan also predicted that this year’s CAD would stay at around 2.9 percent of GDP. However, according to Anton, the oil and gas segment will play a bigger role than the ore export ban in relation to the trade balance and CAD. “The pressing concern is the fuel subsidy because it has put a big burden on our budget. Will the new administration have the guts to increase the price of subsidized fuel and allocate the funds where they are needed?” he asked, after attending the report’s launch.        
            Separately, Bank Mandiri chief economist Destry Damayanti said that the ore export ban would affect the country negatively in the short term with $6.5 billion in potential losses this year if the government insisted on forbidding all kinds of mineral ore exports.  
“But the ban will be beneficial in the long run because we will see products wtih greater value. What is important is that the government provides the necessary infrastructure, so that private firms will be willing to invest in smelters,” she said, adding that the bank set the CAD estimate at 2.7 percent.

Comment  :

            64 different minerals banned so we need 64 different smelters but if you build an iron ore smelter in Lampung, what is going to happen to iron ore mines in Kalimantan or Sulawesi? Sending the ore to Lampung for smelting will add an additional USD12 per metric ton in cost! So we need hundreds of smelters located strategically throughout the archipelago.... do we have enough electricity PT PLN?