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INDONESIAN South Sea Pearls : Glimmering Maritime Richness From The Sea

Indonesia South Sea Pearl

Indonesia has plenty of maritime resources being the world’s largest archipelago. One of the most valuable resources is South Sea Pearl of which Indonesia is the world’s largest producer.

The central government is working together with regional administrations and pearl association to increase production and improve quality.

Pearl

Pearl is a hard object being is produced in the tissue (usually the mantle) of a living mollusk. Just like its shell, pearl is consisted of concentric layers made of calcium carbonate in tiny crystalline form.

An ideal pearl should have a perfect and smooth round form although there are many other forms. For centuries, natural pearls with high quality have been regarded as gemstones and objects of beauty.
The word “pearl” has been associated with something rare, good, valuable and splendid.

Pearl is a marine commodity with high economic value and good prospect for business development in the future. There are more and more people looking for pearl and the price is increasing from year to year.

There are huge potentials for Indonesian pearl being sold abroad. Indonesian marine resources still allow further development of pearls for higher production rate.

Pearl cultivation is one of sustainable and environmentally friendly maritime activities. The industry absorbs 5,000 permanent workers and 1,500 seasonal workers, cnnindonesia.com reported in May 2015.

South Sea Pearl is one the world’s largest and most expensive pearls with a size of between 8 millimeters and 22 millimeters and ranges from white to golden in color.

Production data in 2013 and 2014 revealed that local production of South Sea Pearl reached some 5,400 kilograms or nearly half of the world’s estimated production of 12,700 kilograms.

Meanwhile, Indonesian export of raw pearls reached between US$65 million and US$70 million, or about 32% from the world’s global export of US$200 million.

Although Indonesian production of South Sea Pearl reached 42%, the value was only 32% because Indonesian pearls have yet to reach its best quality.

If the quality can be improved, the export value can be boosted up to 50% with the same production rate.

The world’s center for pearl trading, including South Sea Pearl, is still in Japan and almost 80% of the world’s sea pearls (Akoya, Black Pearl, and South Sea Pearl) is shipped to Japan first before being distributed to other countries.

Sea Pearl Cultivation

Pearls are cultured to be used in jewelry but in the past pearls are also used as ornamentation at luxurious dresses.

Pearls can also be crushed to be used in cosmetics, medicines, or paint formulas.

Quality pearls almost always colorful and resemblance mother of pearl, such as the interior of shell producing the pearls.

Almost all of shelled mollusks can produce pearls although less shiny or less round.

Although these pearls are also recognized as “pearl” by gemology laboratory and under the US Federal Trade Commission’s regulation and are formed in the same way, most of them are not valuable unless as antique goods.

Almost all shelled mollusk or oysters can produce various types of pearls through natural process when a microscopic object is trapped in the mollusk’s mantle but these pearls are not recognized as gemstones.

A natural pearl is formed without human intervention in the wild, which is very rarely to happen.

In the past, hundreds of pearl oysters have to be collected and opened, therefore killed to find a pearl.

This is the only way to fund pearls for centuries and the main reason why pearls were such of high value in the past.

On the other hand, cultured pearls are formed through human intervention in a pearl farm.

One of Indonesia’s major sea pearl producing areas is Lombok, West Nusa Tenggara (NTB), which cultivates Pinctada maxima oyster species, also known as Pearl Queen.

Cultivation process starts with oyster larvae which are kept in tanks with the capacity of five tons of sea water, holding some 9 million larvae until they are three week old.

The hatchery is conducted indoor with great care. Larvae are fed with planktons whose quality is closely monitored.

After three weeks, the larvae are moved to another tank and are only ready to be placed on the sea only after reaching a diameter of 1 millimeter or 40 days.

Two year old oysters are ready to undergo core insertion with nucleus coming from freshwater mussel from Mississippi River in the United States.

Each insertion process needs a mussel donor to provide mantle tissue to envelope the nucleus which will determine the color of the harvested pearl.

After three months, the oysters are scanned using X-Ray to select the wanted pearl size.

Once a month, the oyster shell is cleaned on the floating cage to cleanse worms, pests and other impurities which will affect oyster development and pearl yield before being returned to other floating cage in the waters off East Lombok.

The entire process can take up to four years and each oyster produces only 1 or 2 pearls. This long process is why the price of sea pearl is so expensive, other than its beauty.

Because the process of cultivating sea pearl is long, complex, capital-intensive and needs high technology, not many producers in Lombok can stay in the industry.

Most players left the business not only due to economic crisis, but also because Chinese fresh water pearls are saturating the market with cheaper price and better quality resembling sea pearls.

From 39 producers, now there are only 6 to 8 producers left in Lombok. Some of them managed to stay thanks to their marketing networks abroad, Kompas.com reported in April 2015.

Currently Indonesia only contributed some 26% from the world’s market need and the figure can be increased to 50%.

Indonesian maritime resources still allow further development when we consider cultivation area, labor force, and equipment needed for pearl cultivation.

One of existing pearl producers is located in Malaka subdistrict, Pemenang district in North Lombok regency, NTB, which also opens showroom and pearl education tour.

The producer, an Australian company, spots the opportunity to combine pearl industry with education tourism and can be emulated by local pearl producers.

Indonesian South Sea Pearl has its own uniqueness with stunning and long-lasting color and luster so that they are highly sought in the international markets. The pearls are traded in both loose and jewelry forms.

Indonesian South Sea Pearl Farm Location

The production centers of Pinctada maxima are spread in various provinces such as:

  • Lombok and Sumbawa in West Nusa Tenggara (NTB);
  • Buleleng, Karangasem and Negara in Bali;
  • Central Sulawesi;
  • Banywangi and Madura in East Java;
  • Alor, Kupang, Labuan Bajo, Larantuka, Maumere in East Nusa Tenggara (NTT);
  • Gorontalo;
  • Lampung;
  • Aru, Banda, Seram, Tanimbar and Tual in Maluku;
  • Halmahera in North Maluku;
  • Bitung and Manado in North Sulawesi;
  • Kendari in Southeast Sulawesi;
  • and Raja Ampat in West Papua.

There were 23 companies cultivating sea pearls recorded in 2013, consisted of 17 national companies and 6 foreign companies, of which 21 companies have joined the Asosiasi Budidaya Mutiara Indonesia (ASBUMI), or the Indonesian Association of Pearls Cultivation.

The Maritime Affairs and Fishery Ministry is upbeat the value of pearl export will increase considering that Indonesia has several supporting factors such as cultivation area, manpower, supporting equipment and technology.

The realize the objective the ministry has taken several steps such as establishing the Sea Shell Broodstock Center in Karangasem, Bali, in 2011. The broodstock center, handling pearl oyster and abalone, joined the broodstock center for vaname (whiteleg) shrimp which was established in 2008.

The ministry’s Pearl Sub-Commission and regional administrations have implemented partnership pattern with four pillars to protect Indonesian pearl producers. The pillars are: fishermen or cultivators, scientists, businesses and empowerment of coastal communities for pearl cultivation such as in Buleleng, Bali.

Indonesia has higher potential of pearl export.

Indonesia was the world’s 10th largest exporter of pearl with a share of 1.26% in 2014.

Hong Kong led the tally with a market share of 51.31% and followed by Japan in the second place at 10.31%.

United Arab Emirates was third with a market share of 9.88%, China and Australia shared the fourth place with a market share of 5.37%.

Hong Kong enjoyed an average growth rate of 27% in the 2010-2014 period followed by Japan which recorded 3.79% while United Arab Emirates had an impressive growth rate of 265.97%.

At the fourth place was China whose growth was contracted by 17.52% while Australia also suffered decreasing growth of 15.10%.

The world’s export of pearl in 2014 worth US$2.28 billion, down from by US$2.36 billion of decreasing by 3.66% from 2013.

The world’s export of pearl had an average growth of 14.60% from US$1.46 billion in 2010 to US$2.28 billion in 2014.

The world’s three major pearl commodities in 2014 were pearls cultured worked which were categorized under Harmonized System (HS) code 710122 with products worth US$1.83 billion or 80.59% of market share, followed by HS 710121 pearls cultured unworked at US$291.12 million (12.79%) and HS 710110 pearls natural whether or not worked or graded at US$150.65 billion (6.62%).

According to Maritime Affairs and Fisheries Ministry, Indonesia has become the world’s largest producer of South Sea Pearl since 2015 with a market share of 43%. Value wise, Indonesia was ranked ninth with an export of US$29.43 million or 2.07% from the world’s total pearl export worth some US$1.41 billion.

The top exporters were Hong Kong, China, Japan, Australia, Tahiti, the United States, Switzerland and United Kingdom.

Meanwhile, Indonesia’s top pearl markets were Japan, Hong Kong, Australia, South Korea, Thailand, Switzerland, India, New Zealand and France.

Indonesia actually has a very potentials of pearl export but many are not recorded. Indonesia only recorded an export of US$28.74 million worth of pearls in 2013.

Maritime and Fisheries Minister Susi Pudjiastuti said Indonesian pearl export value should have reached US$732 million, or six times of Australian pearl trade. The estimate was based on the assumption that Indonesia has larger territory than Australia, Kompas.com quoted Susi as saying.

She said that if Australia claimed that its potential of sea pearl reached 13%, Indonesia should have 80% “If Australia has US$122 million [in pearl trade], we must have six times [of that figure],” she said.

Therefore, Susi called on the Customs and Excise Directorate General to prevent smuggling activities, especially pearl, because it is damaging the economy.

Pearl smuggling caused the potential loss of revenue in the maritime sector as the export is not recorded and there are no paid taxes, both individual and corporation.

Indonesia is well known for its maritime resource with huge potentials for sea pearls. The quality of Indonesian sea pearls has been recognized by the international market but unfortunately the popularity of Indonesian sea pearls has been hijacked by other countries also producing sea pearl.

An Australian expert on marine life said Indonesia is the center of South Sea Pearl. For comparison, Chinese fresh water pearl oysters can produce up to 40 pearls in such a short period of time and worth between US$1 and US$15 each.

On the other hand, South Sea Pearls from Indonesian Pinctada maxima command higher price. The oyster can only produce one pearl, which is sold at between US$25 and US$100 per gram of pearl. The huge price difference causes Indonesian consumers to buy and import imitation and fake pearls instead of South Sea Pearl.

Meanwhile, pearl exporters face another problem in the absence of government issued pearl certification. Without certification, other countries often claim Indonesian pearls at the international traders.

Precious pearls are available in the wild but in very limited number. Sea pearls command higher price than fresh water pearls. Cultured pearls are the majority of pearls being sold in the market. Imitation pearls are being traded more despite of its poor quality. In general, imitation pearls can be easily differentiated from genuine pearls.

According to the Maritime Affairs and Fisheries Ministry, Indonesia has become the world’s largest producer of South Sea Pearl since 2005 with a market share of 43%. Value wise, Indonesia was ranked ninth with an export of US$29.43 million or 2.07% from the world’s total pearl export worth some US$1.41 billion.

The top exporters were Hong Kong, China, Japan, Australia, Tahiti, the United States, Switzerland and United Kingdom.

Meanwhile, Indonesia’s top pearl markets were Japan, Hong Kong, Australia, South Korea, Thailand, Switzerland, India, New Zealand and France.

The Government of Indonesia through the Maritime Affairs and Fisheries Ministry is taking various steps to further promote Indonesian pearls by strengthening the brand of Indonesian South Sea Pearl (ISSP).

Dubai International Jewelry Week (DIJW)

One effort is by taking part at various international trade fairs such as the Dubai International Jewelry Week (DIJW). It is expected that such participations will be widely recognized in the international markets which in turn increase the export performance.

The Maritime Affairs and Fisheries Ministry facilitated four companies as co-exhibitors at the Indonesian Pavilion to take part in the 2015 DIJW which was held at the Dubai World Trade Centre on Dec. 9-12.

The companies were Rosario Mutiara and Nurhikmah Pearls from Jakarta, MJM Jewelry from Mataram, West Nusa Tenggara, and Maisya Jewelry from Bogor, West Java, as reported by the Indonesian Trade Promotion Center (ITPC) in Dubai.

During the exhibition, the co-exhibitors recorded business transactions worth US$74,622 consisting of US$29,190 or 39% for loose pearls and the remaining US$45,432 for pearl jewelry.

The buyers came from various countries such as host United Arab Emirates, Australia, Belgium, China, Germany, India, Kuwait, the Philippines, Qatar, and the United States.

It is projected that closer cooperation and better coordination between Dubai ITPC and the Maritime Affairs and Fisheries Ministry to reap better results in the future.

In 2016, the DIJW will be held on Dec. 7-10. Indonesia is expected to participate with larger pavilion which has more booths. Active role from the Asosiasi Budidaya Mutiara Indonesia (ASBUMI), or the Indonesian Association of Pearls Cultivation, will allow more companies to take part in the exhibition considering Indonesia is the largest producer of South Sea Pearl at 43% therefore further strengthening Indonesian South Sea Pearl brand image in the international market.

Based on data from the World Gold Council, the United Arab Emirates is the world’s fifth largest gold consumer with a value reaching US$2.5 billion, some of which was imported from Indonesia. The import in 2013 was US$38 million and skyrocketed to US$502, or an increase of 496.3%, in 2004.

The figures showed that Indonesia has huge potentials to export more Indonesian jewelry (gold, silver, precious metal and other jewelry) to United Arab Emirates, especially Indonesian South Sea Pearl to substitute gold.

Writer : Dwi Wiedhayat

Published by : DIRECTORATE GENERAL OF NATIONAL EXPORT DEVELOPMENT – Ministry of Trade of The Republic of Indonesia