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Economy

Fishing, mining bans seen hurting Indonesian economy

Indonesia's government has gradually banned fishing trawlers.

SORONG, Indonesia -- New regulations designed to protect local marine resources and develop the country's mining industry are harming the workers in those fields whom the government wished to help.

     The related bans are blamed for exacerbating the cooling of an Indonesian economy already hurt by the outflow of funds amid a weaker rupiah.

Trawlers moored

Many fishing vessels are moored at a port in the West Papua Province city of Sorong, a gateway to waters with abundant shrimp and bonito. Indonesia's Ministry of Maritime Affairs and Fisheries last November began gradually banning trawlers, citing protection of marine resources as the ships drag fishing nets on the ocean floor and catch even fry.

     Seeking to keep out illegal overseas fishing boats, the ministry also put a freeze on business licenses for foreign-built vessels. But this had the unintended consequence of preventing fishing by some local crews who use imported boats.

     "This is a matter of life and death, but there is no solution," said a director of West Irian Fishing Industries, a local shrimp trawling company. With its fleet of nine vessels kept idle, the company slashed its workforce from about 300 to just 50. Alfa Kurnia, partly owned by Japanese company Maruha Nichiro, also has whittled its payroll from 208 to 34 since the regulations were put in place. Its fishing harvest for this year came to virtually zero.

     The ban has caused an uproar among a trade group, which estimates the strict regulations are costing 600,000 jobs, including those in the processing business. But Fisheries Minister Susi Pudjiastuti is taking a firm stance, declaring she would step down rather than approve trawling.

Miners see raw deal

Jakarta banned exports of raw mineral ores in January 2014, requiring nickel miners and others to refine them before shipping. The government sought to attract refineries to the country to increase added value, but little progress has been made with ore output declining sharply.

     "When the mines were operating at full thrust, this square was packed with workers," said a fruit juice vendor near a nickel mine on the island of Sulawesi. Some 20 eateries and shops surround the square, but they seem to have little business today. A trade association claims the export ban has cost at least 55,000 jobs. Even the jobs of vendors, drivers and security guards around the mine are at risk.

     The Indonesian industry is also reeling from falling commodity prices. The base coal price was $58.20 a ton in September, less than half the peak in February 2011. A coal industry group says member companies dismissed over 400,000 workers in a one-year period from mid-2014.

     The dismal job market is hurting motorcycle sales, which tumbled 20% on the year from January to August. "The regulations are making matters worse," a local Honda Motor executive said. At least 60% of motorcycle users are said to be laborers and mom-and-pop shop owners. Truck and heavy machinery sales are suffering as well.

     President Joko Widodo's government, facing the lowest growth in five years and weakest rupiah in 17 years, unleashed a stimulus package of trade and investment measures. But they have done little to bolster consumer spending and employment, a local analyst said. Easing fishing and mining rules temporarily could be another option to stimulate the economy.

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