T

he country'€™s central bank officially opened a representative office on Thursday on the Bangka Belitung (Babel) Islands, dubbed the world'€™s tin capital, particularly to help the province recover from a declining economy caused by a slump in global tin prices.

Bank Indonesia (BI) governor Agus Martowardojo said during the launch event in Pangkalpinang that Babel'€™s economy had been slowing down over the last three years, underperforming the average national economic growth.

Babel'€™s economy grew by only 4.58 percent year-on-year (yoy) in the third quarter of this year, lower than the national economic growth of 5.01 percent in the same period.

'€œThe province'€™s economic downturn has been in line with the weakening of its tin mining because of the global economic downturn, as well as lower demand from China,'€ Agus said.

Babel, which is home to state-owned tin miner Timah, produces around 90 percent of the 100,000 tons of refined tin exported annually from the country. Indonesia is currently the world'€™s second-largest tin producer, after China.

For Babel, tin production has become an important source of income, contributing around 16.73 percent to its total gross domestic products in 2011.

Tin produced in Babel is used globally by electronic device manufacturers, including the world'€™s leading phone makers, Apple and Samsung, which have partnered with China-based Foxconn Technology Group to manufacture their products.

Tin production in Babel, however, has been criticized internationally because lots of the tin has been produced through illegal mining, which often damages the environment and exploits children as laborers.

Both Apple and Samsung have previously admitted that they imported Bangka'€™s tin for their products.

Babel'€™s administration is currently strictly monitoring tin mining in its area. It has also ceased operations of a number of illegal mining enterprises.

The measure is considered a good thing by many, but a bad thing to a number of locals, especially since they face pressure from a high inflation rate in the province.

Hermawan, 38, who works as a driver in Babel, said that the measure had forced a number of miners to halt their activities.

'€œIt leaves tin mining only for large enterprises, while many individual miners '€” most of them are illegal '€” lose their jobs and cannot hardly find other jobs,'€ he said.

The situation got worse because inflation was high, he added.

Babel'€™s inflation rate in the last three years has surpassed the national inflation rate, according to BI'€™s Agus.

Inflation was mainly caused by an infrastructure bottleneck that made Babel less connected with other provinces, he said.

Babel governor Rustam Effendi said that the central government had planned to build a Rp 1.5 trillion (US$123.2 million) port in Pangkalpinang as part of the maritime axis vision.

Agus said that BI would position itself as a strategic advisor in Babel, especially to help the province determine the best measures for dealing with its declining economy.