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Mohammad Afdal Bahaudin has revealed a series of losses worth trillions of rupiah. The Pertamina director of investment planning and risk management said the state oil and gas company was not breaking even in its programs of distributing subsidized fuel and non-subsidized gas.
By its calculations, as of July, Pertamina's losses from distributing subsidized fuel totaled some US$200 million or Rp2.3 trillion. "The fuel PSO (Public Service Obligation) is negative," Afdal announced at a discussion at the Ritz-Carlton Hotel in Jakarta on August 26. Under this government program, apart from being compensated for the subsidy, Pertamina is also paid a fee for distributing subsidized fuel.
The meeting took place at the Novotel Pangkalpinang Hotel on Bangka Island. Organized by the Trade Ministry, it brought together around 60 participants representing a variety of business interests. These included tin exporters, the Indonesia Commodity and Derivatives Exchange (ICDX), customs officials and executives from state-run contractor Surveyor Indonesia. At first the atmosphere was cordial. Then, in the question-and-answer session, things heated up.
Ismiryadi, chairman of the Indonesian Tin Industry Association (AITI), spoke first. He railed against the tightening of export rules as stipulated in Trade Ministerial Regulation No. 44/2014. Ismiryadi said it would hurt local entrepreneurs. "We'll be killed by this regulation," he told Tempo on Tuesday last week, echoing his comments at the meeting.
After three days of long lines at gas stations, Vice President Boediono called a meeting to discuss the subsidized fuel crisis. In attendance were National Police Chief General Sutarman, Energy and Mineral Resources Minister Jero Wacik and his deputy, Susilo Siswoutomo. Also present were commissioners from the Downstream Oil and Gas Regulatory Agency (BPH Migas) and directors from state oil and gas company Pertamina. "The vice president asked for reports from the relevant officials," Suhartoko, a Pertamina director, told Tempo.
When it was Sutarman's turn to speak, he commented on the situation in the field. Truck drivers who usually pay Rp5,500 per liter of diesel for 100 liters, he explained, were choosing to line up for subsidized fuel rather than buy non-subsidized fuel, the price of which could reach Rp12,500 per liter. That difference of Rp7,000 could cost one of these drivers an extra Rp700,000. "That was Pak Kapolri's message," Suhartoko related, referring to Sutarman.
There is no better testament to a successful business environment than a company continuing to reinvest in an area it has been operating for 40 years. Convinced that Indonesia is a growing market in the manufacturing industry, Sandvik Coromant, a Swedish metalworks supplier, recently invested over US$1 million on new facilities in Cilandak, South Jakarta, which includes a training center, "We really believe in the growth of Indonesia's market," said Klas Forsstrm, 47, Sandvik Coromant's global president.
Sandvik Coromant is a member of the global Sandvik industrial group, founded over 150 years ago in Sweden. The company supplies tools for the world's major automotive, aerospace and energy industries and has representative offices in 130 countries. This Swedish company is also known for its innovations, producing more than 2,500 new products every year
Small advertising booths display packs of A Mild Limited Edition cigarettes at 7-Eleven outlets around Jakarta. These days, Sampoerna, the A Mild manufacturer, offers them in a little tin rather than the usual cardboard box. The tin is plain, free of pictures of oral cancer, blackened lungs or that ubiquitous shirtless man puffing smoke before a pair of floating skulls. "Many customers are looking for the cigarettes in the tin, but we are out of stock," Herdiansyah, an employee at a 7-Eleven outlet in Kebayoran Baru, South Jakarta, said last week.
As far as Herdiansyah could recall, his 7-Eleven had begun selling the limited edition A Milds one week before the Health Ministry law came out, that required cigarette packs to brandish graphic health warnings, which took effect on June 24. The 7-Eleven outlet ran out of supply a month ago. Since then there has been no new stock. "Usually we order every three days. Each order is for 100 packs," he said.
A security guard stopped the black Pajero Sport Exceed SUV right before it entered the Pertamina gas station on Jalan Abdul Muis in Central Jakarta and initiated a brief exchange. Upon hearing what the guard had to say, the SUV's driver turned around and sped away. This station did not sell subsidized diesel fuel. "It happens a lot," station employee Agung said last week.
On August 1, all gas stations in Kalimantan, Sumatra, Java and Bali stopped selling subsidized diesel between 8am-6pm, with stations along toll roads entirely prohibited from offering it. Downstream oil and gas regulator BPH Migas had issued a decree on the matter on July 24.
The lawsuit hearing over the import of white sugar lasted only a quarter of an hour at the East Jakarta State Administrative Court (PTUN). On Tuesday two weeks ago, presiding judge Haryati merely read a challenge by the defendant's legal team, appearing for the Trade Ministry.
The lawsuit had been filed by 10 sugarcane farmers from Kudus and Pati in Central Java. They were challenging a policy allowing the import of 328,000 tons of white sugar. The plaintiffs, members of the Indonesian Sugarcane Farmers' Association (APTRI), blamed the policy for a fall in the price of sugar. The farmers' sugar was being traded at around Rp8,250-8,551 per kilogram at several sugar refineries, far below the government's benchmark price of Rp8,791.
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