The Indonesian fisheries sector grew rapidly throughout 2015 beneath the steam from the Jokowi government’s renewed concentrate on Indonesia’s competitive advantages within maritime related sectors. Beneath the new Minister of Maritime Affairs and Fisheries (MAF ) Ms Susi Pudjiastuti, Indonesia’s fishing industry grew 8. 37% year-on-year (yoy ) inside the third quarter of 2015, far above the country’s overall economic development of 4. 73%. Capture fishery production until the 3rd quarter of 2015 also increased by 5. 05% when compared with a similar period inside the previous year. A similar holds true for aquaculture production which also increased by 3. 9%. Another noteworthy breakthrough in 2015 was improved police force against illegal fishing. No fewer than 117 illegal foreign fishing vessels were sunk from the Ministry of MAF throughout 2015. Minister Susi also prohibited 1, 132 ex-foreign vessels from operating in Indonesia ; this policy has resulted inside a surge of fish stocks and catch from Indonesian waters and marks a brand new paradigm in Indonesia’s approach to its fisheries sector.
A brand new wave
The Indonesian government continues to enhance its policies in an effort to enhance the living standards of fishermen and boost investment inside the fishery sector. These policies include the opening of six sub-sectors inside the fish processing industry to foreign investment, the provision of fishing equipment, storage and processing facilities for example modern ships and cold storage, and facilitating admittance to financing.
Ms Susi Pudjiastuti has begun a brand new wave appealing and growth in Indonesia’s fisheries sector. The Ministry has made important strides in boosting Indonesia’s fishery sector, both inside the upstream and downstream industry. This really is evident coming from the increase inside the capture fishery production to 4. 72 million tonnes until the 3rd quarter of 2015, up 5. 05% when compared with a similar period inside the previous year. A similar holds true for aquaculture production which increased to 10. 07 million tonnes, or up 3. 98% over a similar period inside the previous year.
Overall, consistent with data coming from the Central Statistics Agency (BPS ), the fisheries sector in Indonesia has grown 8. 37% yoy inside the third quarter of 2015, far above the country’s economic development of 4. 73% yoy inside the same quarter. Until finished of 2015, domestic capture fishery production reached 6. 2 million tonnes, while that of aquaculture reached 17. 6 million tonnes. Although both areas actually missed their set targets, Indonesia remains the world’s second largest capture fishery producer after China, and also the fourth largest aquaculture producer in the planet.
Indonesia’s fish exports also suffered a decline in 2015. Consistent with data coming from the Ministry of MAF, the worth of total fish exports in 2015 was just $4 billion USD, which is really a considerable gap versus the target of $5. 8 billion USD. Along with the slowing global business climate, the decline was also due partially towards the ban of 1, 132 ex-foreign ships from operating in Indonesian seas.
The Ministry of MAF issued a moratorium on ex-foreign vessels in November 2014 which were banned from fishing in Indonesian waters with individuals violating the policy facing the threat of having their ships sunk ; often in rather public ways. Due to this policy, many ex-foreign ships fled the nation which resulted inside a decline in exports to countries whose fishing boats engaged in illegal fishing including China, the Philippines, and Thailand. Depending on data coming from the Ministry of MAF, fish exports to China and Thailand in 2015 decreased by 17% and 41. 72%, respectively. In 2015, the United States was still the biggest importer of Indonesian fishery products. The nation accounted for 41% of total Indonesian fishery exports, followed by Japan (16% ), Europe (12% ) and also the ASEAN countries (11% ).
The Indonesian government has set a target to extend capture fishery production by 2. 4% to six. 45 million tonnes in 2016 and aquaculture production growth by 8. 72% to 19. 5 million tonnes. These targets seem achievable given Indonesia’s vast areas ideal for aquaculture that still largely unused. Currently there will be 11. 8 million hectares employed for aquaculture inside the sea, 2. 3 million hectares of aquaculture area in brackish water, and 2. 5 million hectares employed for freshwater aquaculture.
Additionally, Indonesia is likewise expected to discover fish production growth in 2016 together with the expiration from the moratorium upon the issuance of fishing permits for ex-foreign fishing vessels in October 2015. Warmer weather because of El Nino is likewise expected to assist the development of fish population in Indonesian waters. Indonesia’s capture fishery exports are dominated by tuna and skipjack. While aquaculture exports are dominated by tilapia, milkfish, shrimp, and catfish.
In 2016, exports of shrimp along with other fishery products are expected to rise because of the implementation from the ASEAN Economic Community (AEC ). Furthermore, the US cancelled import duties for 34 fishery products from Indonesia in mid-2015 beneath the generalised system of preference. Simultaneously, the US also banned the entry of fishery products resulted from forced labour in Southeast Asia which hit fish exports from competing countries for example Thailand and also the Philippines.
Increased government support
Like a maritime country with two-thirds of their territory consisting of sea ; Indonesia’s fishery sector is sorely neglected during the past. The marine and fishery sector’s contribution to gross domestic product of Indonesia remains small, only 3. 57% in 2014 with development of only 0. 6% during the previous 3 years. This dire state is beginning to enhance beneath the Widodo administration. In 2016, the govt allocated 13. 8 trillion IDR inside the 2016 State Budget (APBN ) to the Ministry of MAF, up 31. 4% coming from the budget allocation in 2015.
Minister Susi Pudjiastuti has issued numerous policies in support of fishermen and also the sustainability from the fisheries sector in Indonesia since her induction like the minister. One among her controversial yet widely applauded policies is that the eradication of illegal fishing by sinking illegal foreign vessels. This policy has were able to boost the national fish supply by 240%, which adds to the catch of local fishermen. The interest in fish from Indonesia among global export markets has also risen, in line using the drop in fish production in neighbouring countries.
In 2016, the govt has prepared numerous policies to assist support the Indonesian fishery industry. One such policy, among others, is that the construction of latest ports in fish production centres to ensure that fishermen can directly export their catch without having to transport them first to large ports in Medan, Jakarta, Surabaya or Bali. The Indonesian government also plans to supply 3, 200 modern fishing vessels and sow 1 million fish seeds. Inside the downstream sector, the govt has plans to construct 354 ice machines, 61 cold storage areas, two units of freighters you processing vessel.
Although the Indonesian government has brought various steps to enhance the local fishery sector, numerous problems remain. Perhaps one of the major weaknesses of Indonesia’s fishery sector is 95% from the 2. 2 million people engaged inside the sector are traditional fishermen. These fishermen lack the resources and capital to understand more about the huge potential of Indonesian aquatic resources. The majority of fishermen still use small boats and traditional equipment, which prevents them from going in to deep waters which leads to lower catch volumes. They even have minimum admittance to finance as banks are usually reluctant to extend credit towards the fishery sector, especially smallhold players, because of the high degree of bad debts, which reached 11. 76%.
Bank lending towards the marine and fisheries sector in Indonesia in 2015 reached only 67. 33 trillion IDR, or 1. 85% of total bank lending of around 3, 000 trillion IDR. A similar is true inside the multifinance industry where funding to the fisheries sector totalled only 1. 7 trillion IDR, or 0. 7% from the industry’s total loans.
Moreover, banks tend to be more interested to disburse loan towards the fish processing industry instead of the capture fishery or aquaculture industry. This really is understandable as long as the economic worth of the fish processing industry reached 115 trillion IDR, far greater compared to the capture fishery and aquaculture sectors of 70 trillion IDR and 75 trillion IDR, respectively. Other constraints faced from the Indonesian fishing industry are the shortage of infrastructure, technology and equipment for example ports, container ships and cold chain systems say for example a cool boxes, ice factories and cold storage. Consequently, fishermen don‘t have the bargaining power when one thinks of selecting a market their catch which resulted in lower incomes.
A further challenge is that the government’s policy allowing the import of fish from abroad. Stakeholders inside the fishery sector think about the Trade Minister Regulation No. 87 / 2015 that was revised by Trade Minister Regulation No. 94 / 2015 concerning the convenience of imports of fishery products has harmed the domestic fish processing industry for allowing import of processed fishery products that may be produced domestically.
Lastly, other major obstacles that hinder the development from the fisheries sector is that the low degree of fish consumption in Indonesia, which until 2011 was ranked 5th inside the ASEAN at 32. 25 kg / capita / year. This really is in contrast with national fish production which ranked primary inside the ASEAN. Additionally, the Indonesian palate tends to favour fresh and dried fish. Consequently, It‘s difficult for fishermen to feature value on their catch as well as fish processing industry that produces fish meatballs and nuggets to thrive. This trend however is probably to alter like the ranks of middle class always grow and also the preference grows for frozen breaded fish and seafood from modern retail markets that offers greater convenience.
Bright investment opportunities
Foreign and domestic investment opportunities in Indonesia’s fishery sector are to the taking. Based on the Processing and Marketing Association of Indonesian Fishery Products (AP5I ), the entire investment needed from the capture fishery sector to the 2015-2019 period reached 127 trillion IDR. Meanwhile, the entire investment needed from the aquaculture industry during a similar period reached 320. 73 trillion IDR. In 2016, investment required from the capture fishery and aquaculture sectors is predicted to attain 23 trillion IDR and 29. 97 trillion IDR, respectively.
Various opportunities for investment exist within capture fishery, aquaculture, fish processing, cold chain systems, and warehousing (See Indonesia’s New Negative Investment List ; A Big Bang? ). However, its not all business sectors inside the fishery industry are open to foreign investors. Sooner or later, the govt plans to prohibit foreign investment inside the capture fishery sector. Foreign investors are only allowed to take a position inside the fish processing industry, having a maximum of 40% ownership inside the western region and 60% ownership inside the eastern region of Indonesia. Within fish processing, specific areas for investors to pay attention to are frozen fish, minced fish and surimi, canned fish, preserved shrimp along with other frozen aquatic biota.
The Indonesian government has found out four supporting policies to boost investment inside the fisheries sector, especially inside the special economic zones. First, income tax incentives (PPH ) as a reduction in applicable tax by 5% each year for 6 years, a reduction in value added tax (VAT ) as free VAT on taxable goods, customs facilities as duty-free entry to the imports of goods and capital, and also a reduction of red tape with the streamlining of processes by BKPM.