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Republic of Indonesia Data Collection Survey on Public-Private-Partnership for Activating Agricultural Promotion

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Republic of Indonesia Data Collection Survey on Public-Private-Partnership for Activating Agricultural Promotion Republic of Indonesia Ministry of Agriculture Republic of Indonesia Data Collection Survey on Public-Private-Partnership for Activating Agricultural Promotion Final Report February 2017 Japan International Cooperation Agency (JICA) International Development Center of Japan Inc. (IDCJ) ＲＤ ＪＲ 17-010 Currency Exchange Rate September 2016 October 2016 November 2016 3 months average USD1=JUY102.129 USD1=JPY100.606 USD1=JPY104.758 USD1=JPY102.498 IDR1=JPY0.007701 IDR1= JPY 0.007777 IDR1= JPY 0.008023 IDR1=JPY0.007833 Abbreviations ADD Village Allocation Fund (Alokasi Dana Desa) API-P production importer number (Angka Pengenal Importir Produsen) API-U general impoter number（Angka Pengenal Importir Umum） Organization of Regional Development Planning Board（Badan Perencanaan BAPPEDA Pembangunan Daerah） BKPM Investment Coordination Board (Badan Koordinasi Penanaman Modal) BOP Base of the Economic Pyramid Fund for primary and junior high school management (Bantuan Operasional BOS Sekolah) Counseling Center for Agriculture, Fisheries and Forestry (Balai Penyuluhan BP3K Pertanian, Perikanan dan Kehutanan) BPTP Institute for Agricultural Technology (Balai Pengkajian Teknologi Pertanian) BUMN State Owned Company (Badan Usaha Milik Negara) BWR Batu Wisata Resources DAK Special Allocation Fund (Dana Alokasi Khusus) DAU General Allocation Fund (Dana Alokasi Umum) DID Regional Incentive Fund (Dana Insentif Daerah) DOA District Office of Agriculture and Food Crops (in Central Aceh District) EC E-Commerce EPA Economic Partnership Agreement GAP Good Agricultural Practice GDP Gross Domestic Product GHP Good Handling Practices GI Geographical Indication GMO Genetically Modified Organism GMP Good Manufacturing Practice GRDP Gross Regional Domestic Product HACCP Hazard Analysis & Critical Control Point HRD Human Resource Development ICSFRI Indonesian Citrus and Semi Tropical Fruits Research Institute ICT Information and Communication Technology IJEPA Indonesia-Japan Economic Partnership Agreement IP Principle Permit (Izin Prinsip) ITPGR International Treaty on Plant Genetic Resources for Food and Agriculture JA Japan Agricultural Cooperatives JBIC Japan Bank for International Cooperation JETRO Japan External Trade Organization JGAP Japan Good Agricultural Practice JICA Japan International Cooperation Agency JPP JICA Partnership Program JTA Japan Tourism Agency KBI West Indonesia (Kawasan Barat Indonesia) KPTR Sugarcane Farmer’s Cooperatives (Koperasi Petani Tebu Rakyat) KTI East Indonesia (Kawasan Timur Indonesia) MAFF Ministry of Agriculture, Forestry and Fisheries METI Ministry of Trade, Economy and Industry MLIT Ministry of Land, Infrastructure, Transport and Tourism MoA Ministry of Agriculture NEDO New Energy and Industrial Technology Development Organization NEXI Nippon Export and Investment Insurance ODA Official Development Assistance OVOP One Village One Product PAD local financial resource (Pendapatan Asli Daerah) National Project on Empowerment of People (Proyek Nasional Pemberdayaan PNPM Masyarakat) POS Point of Sale PPP Public-Private Partnership Import Recommendation of Horticulture (Rekomendasi Impor Produk RIPH Hortikultura) RKP Annual Government Working Plan (Rencana Kerja Pemerintah) RKPD Annual Local Government Working Plan (Rencana Kerja Pemerintah Daerah) Regional Medium-term Development Plan (Rencana Pembangunan Jangka RPJMD Menengah Daerah) National Medium-term Development Plan (Rencana Pembangunan Jangka RPJMN Menengah Nasional) National Long-term Development Plan (Rencana Pembangunan Jangka RPJPN Panjang Nasional) integrated pest management field schools (Sekolah Lapang Pengendalian Hama SL-PHT Terpadu) SME Small and Medium-Sized Enterprise STA Sub Terminal of Agribusiness TICAD Tokyo International Conference on African Development TPP Trans-Pacific Strategic Economic Partnership Agreement UNESCO United Nations Educational, Scientific and Cultural Organization UPOV International Union for the Protection of New Varieties of Plants USAID United States Agency for International Development Summary 1. Background and Objectives of the Study Indonesia has marked an average annual growth rate of 5.8% during the last ten years between 2004 and 2013. With the recent economic development, the wealthy and middle-income population is expected to expand. On the other hand, poverty still prevails in rural areas, and the widening gap between the rich and the poor is one of the major challenges of the country. Agricultural sector accounts for 40% of the workforce and 14% of (Gross Domestic Product) GDP of the country. It plays an important role to supply food, rural income, and employment to the population. The National Long-term Development Plan (RPJPN2005-2025) of Indonesia aims for establishment of a solid structure in which the agricultural economy forms the basis of an economy. Based on this objective, the new administration which started in October 2014 puts a high priority on food security. Also, the National Medium-term Development Plan (Rencana Pembangunan Jangka Menengah Nasional: RPJMN2015-2019) aims at equitable growth and focuses on narrowing income and regional gaps. It also mentions the needs for development of agribusiness, sustainable agriculture and benefits for farmers, especially strengthening rural area for small-sized agricultural processing, improvement of competitiveness of agricultural products and value addition. JICA (Japan International Cooperation Agency) has implemented projects centered on partnership between Japanese and Indonesian local governments and proposal-based projects by Japanese local governments and private companies. Japanese local governments and private entities possess know- how in promotion of local industry and sophisticated agricultural technology. Therefore, it is expected that partnership between local governments of the two countries and utilization of technology that private companies have can contribute to strengthening competitiveness of and adding value to agricultural products of Indonesia. The present study (hereinafter called “the study”) aimed to collect necessary information to consider future cooperation projects for agricultural development in Indonesia through promotion of partnership between local governments and technology expansion by Japanese private companies. The information to be collected included the following: 1) To collect information on the latest Indonesian government’s policies on agriculture and food security and priority issues in this sector 2) To examine the Indonesian needs for cooperation in promotion of local agriculture and livestock industry, value addition, agricultural promotion through agricultural-commercial-industrial integration1, etc. of which Japanese local governments and private actors have experience. 3) To analyze the issues that would emerge when the Japanese stakeholders collaborate with or enter 1 Agricultural promotion through agricultural-commercial-industrial integration is currently named sixth industrialization,in Japan that combines primary (production), secondary (processing) and tertiary (marketing) industries at the local level. i Indonesia. 4) To analyze the potential of agricultural products and processed goods of Indonesia, and possibilities to utilize Japanese knowledge and technology in this area. 5) To consider possible JICA cooperation projects in the agriculture and livestock sector through partnership between local governments based on the findings from the steps described above. 2. Guiding Principles First, it is imperative to develop partnership between Indonesian and Japanese local governments in a way that becomes a win-win solution for both sides. If there is little merit in the partnership for either side, it would not be sustainable. Four types of merits; 1) Export to Indonesia, 2) Import from Indonesia, 3) Business Expansion, and 4) Knowledge & Experience Sharing, were assumed. Second, this study carefully analyzed the international situation related to agriculture in Indonesia and promoted partnership between Indonesian and Japanese stakeholders in a way that prioritized areas of Japanese comparative advantage. Third, the study targeted partnerships at two levels: between private companies of Indonesia and Japan on one hand and between local governments on the other. In other words, while partnering private entities was promoted on a trial basis, it was equally important to obtain knowledge and lessons on how local governments should support such a partnership. 3. Schedule The study was conducted from March to December, 2016. During the 1st Survey in Japan (March-April), selection of Japanese local governments was implemented, studying their agricultural situation, agricultural promotion policies, and needs in collaboration with Indonesia. In the 1st Survey in Indonesia (May-June), based on the recommendation by the Ministry of Agriculture of Indonesia, selection of Indonesian local government was made, visiting each candidate local government. Study Team interviewed on their agricultural situation, agricultural promotion policies, and needs in collaboration with Japan, and shared the information on Japanese candidate local governments. Based on the expressed interest of Indonesian local governments, in the 2nd Survey in Japan, the Study Team visited candidate Japanese local governments to share the information of Indonesian candidate local governments. By this time, four potential partners were identified. In the 2nd Survey in Indonesia (July-August), stakeholders of candidate Japanese local governments visited
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