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Showing posts from March, 2015

World Bank: Financial Inclusion Important for ASEAN

From Antara News March 23, 2015 Managing Director of the World Bank Sri Mulyani Indrawati said financial inclusion is important for countries in Southeast Asia or the ASEAN region, including the Republic of Indonesia. According to Sri Mulyani, countries in the ASEAN region represent 12.3 percent of the world population and do not have access to banks where Indonesia contributes up to 5.9 percent and Vietnam up to 2.1 percent. Meanwhile, small and medium enterprises contribute between 23 to 58 percent of Gross Domestic Product (GDP). However, it is estimated that less than 15 percent of businesses are expected to have adequate access to bank credits. Sri Mulyani pointed out that the central banks and governments of ASEAN have set ambitious targets for it. "It is important that the private sector is provided with more innovative financial services," Sri Mulyani said. National authorities should encourage the private sector to invest more in

RI Economy Has Brighter Picture: ADB

From The Jakarta Post March 25, 2015 Unlike other global financial agencies, the Asian Development Bank (ADB) has painted a more positive picture of the Indonesian economy this year, arguing that the government’s policy reforms will have an impact on economic growth sooner than expected. The ADB forecast Indonesia to grow by 5.5 and 6 percent respectively this year and 2016, far more optimistic than estimates from the World Bank and the International Monetary Fund (IMF), which said the economy would grow by 5.2 percent this year. The projections are based on the assumption that the new government’s rapid reform momentum is maintained, especially the acceleration in infrastructure building and budget disbursement. Edimon Ginting, ADB Indonesia chief economist  said he expected the country’s economic expansion to be more inclusive and to absorb more jobs, given the current administration’s focus on boosting the manufacturing sector. Currently, every 1 percent of economic growth in Ind

Indonesia Plans Levy of $50/T on Crude Palm Exports Instead of Tax Threshold Cut

From Reuters March 21, 2015 Indonesia will impose a levy of $50 a tonne on exports of crude palm oil when prices fall below a threshold triggering a monthly tax on shipments overseas, the chief economics minister said. When prices of crude palm oil fall below the threshold of $750 a tonne on average, the world's top producer of the tropical oil cuts the monthly tax on its CPO exports to zero. Benchmark Malaysian palm oil futures have fallen more than a fifth over the last year, and ended on Friday at 2,160 ringgit ($579) per tonne. Indonesian officials are preparing new rules for a charge of $50 on every tonne of CPO shipped at the zero export tax rate, Sofyan Djalil told reporters, with the funds going to help pay for biodiesel subsidies announced in recent weeks. The measure will go to Indonesian President Joko Widodo for approval on his March 30 return from overseas trips. Indonesia ramped up biodiesel subsidies last month, in a bid to protect its biofuels industr

Indonesia State Pension to Lift Housing Investment Fivefold

From Bloomberg March 19, 2015 Indonesia’s state pension fund plans to increase its investment in affordable housing by fivefold to fulfill demand from low-income workers. BPJS Ketenagakerjaan will invest 10 percent of its 193 trillion rupiah ($14.7 billion) of assets under management to build homes this year, compared with 2 percent in 2014, President Director Elvyn Masassya said in an interview on Thursday. An estimated 34 percent increase in the pension’s membership this year to 22.3 million people may expand the fund’s assets to 233 trillion rupiah by the end of 2015 and help finance the housing investment, Masassya said. The move is in line with President Joko Widodo’s pledge to address a “dangerous” level of inequality that threatens the stability of the world’s fourth most-populous nation and to boost growth to 7 percent. The country is grappling with an economy expanding at the slowest pace in five years and a currency at near the weakest level since 1998, which prom

World Bank Releases March 2015 Indonesia Economic Quarterly

From Indonesia Investment March 18, 2015 The World Bank released its latest Indonesia Economic Quarterly report on 18 March 2015. In this report, entitled ‘ High Expectations ’, the World Bank states that it praises the early reform progress in several key areas such as fuel subsidies as well as more key reforms that are underway. This raises high expectations about the Indonesian economy in the middle and longer term. However, the government also faces challenges to implement further complex structural reforms amid subdued growth prospects. Rapid economic growth for Southeast Asia’s largest economy is unlikely to occur before 2016 as investment growth remains sluggish and global commodity prices remain low (due to the economic slowdown in China) hence limiting Indonesia’s export performance. Considering this context, the World Bank believes that the only way to trigger speedy economic growth is by doubling government spending in infrastructure immediately (causing a multiplier

BKPM Annuls $23b in Investment Permits

From The Jakarta Post March 20, 2015 Thousands of unrealized investment permits for projects totaling US$23 billion has been repealed by The Investment Coordinating Board (BKPM), a measure taken for the first time in at least seven years. The board annulled 6,541 licenses granted to foreign investors between 2007 and 2012. According to BKPM chief Franky Sibarani, the permits sat unrealized amid a host of obstacles that ranged from problems with land acquisition to the lack of supporting permits from local administrations. The so-called “principal permits” serve as an initial step for investors to complete their projects in Indonesia, where investment is the second-biggest driver of growth after domestic consumption. It usually takes several years for investors to realize their project after acquiring the principle permit. For detailed story, visit here

RI’s Exports to Egypt Rise 21.71%

From The Jakarta Post March 20, 2015 Indonesian exports to Egypt rose by 21.71 percent to US$1.34 billion throughout the 2014 fiscal year from the $1.1 billion recorded in the previous year. The double-digit increase showed Jakarta’s commitment to continue exploring economic and trade activities with Cairo, said Indonesian Ambassador to Egypt Nurfaizi Suwandi. According to the Indonesian embassy’s trade attaché in Cairo, Burman Rahman, the primary Indonesian goods exported to Egypt included crude palm oil (CPO), coffee, tea, yarn, textiles, paper, handicrafts, tires, electronic devices, and vehicle spare parts. There are 17 companies participating at the CIF’s Indonesian stand consisting of 10 Indonesian firms, five Cairo-based companies and two Indonesian-Egypt joint venture firms. “Our batik and textiles have already penetrated the market in Dubai. Now we want to try to enter the Egyptian market,” said Tutu Nurhasanah from PT Syukestex, one of the participants from Indonesia. f

Saudi Arabia Urged to Open Its Market for Indonesian Products

From Antara News March 19, 2015 A.M. Fachir , Indonesian Deputy Minister of Foreign Affairs has appealed to Saudi Arabian Deputy Minister of Foreign Affairs Khalid bin Saud bin Khalid to further open its market for Indonesias products. "From the economic side, the trade volume of Saudi Arabia is much more surplus than ours as Indonesia buys oil from it," he pointed out here, Thursday. Indonesia hoped that the Saudi Arabian government will open its market for Indonesian products as a reciprocal gesture for the bilateral trade relations shared between both countries. According to Fachir, bilateral trade between Indonesia and Saudi Arabia reached about US$8.2 billion, of which Saudi Arabia enjoys a surplus of around US$5 billion. He noted that about 750 thousand to one million Indonesians annually undertake Umrah pilgrimage to Saudi Arabia. For detailed story, visit here

Raw Sugar Imports Restriction to Continue

From The Jakarta Post March 19, 2015 Due to the leakage of several commodities to end consumers had distorted prices in Southeast Asia’s largest consumer of sugar, the government will continue restricting imports of raw sugar amid concerns that. The Trade Ministry will not allocate raw sugar for border areas, regions in the eastern part of the archipelago or for idle mills — places that are considered prone to leakage to end consumers — as stipulated in a ministry regulation issued late last year. The ministry regulation also prohibits refined sugar from being delivered via distributors or sub-distributors, requiring it to be sold directly by refiners to the major user, the F&B industry. The government will also further tighten the issuance of import licenses for raw sugar, as it will issue import quotas on a quarterly basis instead of on an annual basis as previously, Thamrin further said. To anticipates higher consumption by the industry during the fasting month and Idul Fit

Stability and Growth Good News for Indonesia’s Rich

From The Jakarta Globe March 19, 2015 According to a report by the property consultancy Knight Frank, the number of Indonesian billionaires is projected to double over the next decade on the back of the country’s economic growth and political stability, fuelling a demand for property both in the country and abroad. Knight Frank’s “The Wealth Report,” showed there were 24 billionaires in Indonesia last year, followed by 192 centa-millionaires — those with a minimum net worth of $100 million, excluding their primary house. Meanwhile, 650 individuals are regarded as having “ultra high” net worth, which the property consultancy defined as those with net assets exceeding $30 million. According to the survey, 16 percent of Indonesia’s ultra high net worth individuals plan to buy another property in 2015. In total, they invested $153 billion in domestic and overseas properties last year, including office space, residential homes, warehouses, retail space and hotels.  For de

Indonesia's Lippo continues e-commerce push with payment service

From Business Insider March 19, 2015 Indonesian conglomerate Lippo Group plans to launch payment, chat and other online services early next year as it continues expanding in the nascent e-commerce industry of the world's fourth-most populous country, a senior executive told Reuters. Lippo has already earmarked $500 million for a new online department store, and investment in services planned for the first quarter of 2016 will be on top of that, director John Riady said in an interview late on Wednesday. Indonesia has one of Asia's biggest untapped e-commerce markets which is only recently drawing major investors in search of the next Alibaba Group Holding Ltd. Japan's SoftBank Corp late last year led a $100 million investment in Indonesian online marketplace Tokopedia. For detailed story, click here .

Indonesia to resume free-trade talks

From Business Asia One March 19, 2015 Indonesia will resume free trade and economic partnership negotiations with important trading partners as President Joko "Jokowi" Widodo's administration steps up efforts to boost exports amid the country's economic slowdown. Bachrul Chairi, director general for international trade co-operation at the Trade Ministry, said the resumption of the negotiations was one of the government's key programs to improve the country's international trade, which often suffered a deficit due to weak exports. Among the resumed negotiations on free trade agreements (FTAs) and comprehensive economic partnership agreements (CEPAs) include those with Australia, Chile, the European Union (EU), India, Iran, South Korea and Turkey, according to Bachrul. The negotiations have been ongoing for several years, but have shown no significant progress. Some of the trade talks have even been delayed. Bachrul added that the government

Ease of Doing Business? Indonesia Cancels $23B Worth Of Foreign Investment

From The Wall Street Journal March 19, 2015 Indonesia likes to boast that foreign direct investment has hit record highs in recent years, but it could have attracted even more if the government had made it easier for investors to do business here. Indonesia’s Investment Board said Thursday that it cancelled 6,541 licenses issued to foreign investors between 2007 and 2012 because difficulties they faced clearing land, getting permits from local governments to build or having environmental impact assessment plans approved prevented the projects from happening. Among the projects that had their licenses revoked was a $5-billion refinery project funded by Middle-Eastern investors and a $800-million bauxite smelter project from a Chinese investor, said Franky Simbarani, chairman of the investment board, known as BKPM. He declined to name the investors. In total, the planned investment for the revoked projects amounted to $23 billion, BKPM said. That’s just shy of the $28.62

Indonesia to Get 42,000 Megawatts of Extra Power Supply

From Antara News March 18, 2015 In the next five years, the government plans to build more power plants with a combined capacity of 42,000 Megawatts across the country, said Sofyan Bashir, president director of state electricity company PLN, told the press at the Presidential Office here on Tuesday evening. The construction of the power plants with a combined capacity of 42,000 Megawatts will cost Rp1,100 trillion, of which Rp608 trillion will be contributed by PLN and Rp508 trillion by the private sector. Hopefully, there will also be additional power supply of 10,000 megawatts in December 2015. The use of local content in the power plants will be increased, he stated. Additional power supply of 35,000 megawatts will be distributed among islands across Indonesia, with Sumatra receiving 9,000 megawatts, Java and Kalimantan receiving 2,000 megawatts and Sulawesi receiving 2,700 megawatts. Moreover, Bashir said President Joko Widodo asked PLN to pay attention to

US Equity Firm Announces $4.5m Investment in Indonesia Recycling Outfit

From The Jakarta Globe March 17, 2015 On Monday, California-based private equity firm Elixir Capital’s ECM Straits Fund announced  that it has agreed to invest $4.5 million in Bintang Timur, a plastic waste management company based in Java. Amir Azahar, managing director of Elixir Capital and the firm’s regional head in Southeast Asia, said that the investment will help the company expand both in Java and Bali. Following the launch in 2014 of Elixir’s ECM Straits Fund, the firm has invested in numerous small and medium enterprises (SMEs) throughout “southern Asia.” The Fund recently announced digital commerce investments in Annelutfen, Turkey’s leading e-commerce business for baby and mother products, and FashionValet, Southeast Asia’s premier online destination for female fashion and top fashion designs. For detailed story, visit here

Jan-April Rice Harvest Seen 4% Higher Than in 2014

From Jakarta Globe March 17, 2015 The Agriculture Ministry estimates that domestic rice production between January and April 2015 will top 32.9 million metric tons unhusked rice, up 4.1 percent from 31.6 million metric tons in the same period last year. The harvest during the rainy season typically accounts for 60 percent of the total domestic production of the staple grain, Hasil Sembiring, the Agriculture Ministry’s director general of food crops, said on Monday. The government has been repairing irrigation canals since the start of the year, which it says should boost production in the following harvest season, between May and July, Hasil said. For detailed story, visit here

Indonesia, South Korea expand green business center cooperation

From Antara March 17, 2015 The government of Indonesia and South Korea have expanded the scope of their green business center (GBC) by inviting other countries to join in the cooperation, the Steering Committee of GBC, Meliadi Sembiring, said here Monday. "Initially GBC was realization of a project from the first ASEAN-European Meeting that was initiated by Indonesia and South Korea," Sembiring added. GBC was established in Indonesia several years ago in Jakarta. GBS has become a business development incubator for Indonesians and Koreas small and medium enterprises as well as a medium for business, training and consultation for both countries. For detailed story, click here .

Indonesia’s Palm Oil Industry in Need of a Makeover

From Inter Press Service March 16, 2015 Over the past three decades, 50 percent of the 544,150 square kilometres that comprise Kalimantan, the Indonesian portion of the island of Borneo, has been taken over by the palm oil industry. “It will expand until it pushes us all into the ocean,” prophesies Mina Setra, deputy secretary-general of the Indigenous Peoples’ Alliance of the Archipelago (AMAN), who has fought for years to preserve an ancient way of life from being bulldozed to make way for mono-crop plantations. For her, the business of producing the oil, a favourite of consumers around the world, needs to fall in line with the principles of sustainability. On its current growth spurt, the industry threatens to undermine local economies, indigenous communities and Indonesia’s delicate network of biodiversity. For detailed story, click here .

Growth Indonesia’s Food & Beverage Industry in 2015 Revised Down

From Indonesia Investment March 13, 2015 Turnover in Indonesia’s processed food and beverage industry is expected to grow 4 to 5 percent year-on-year (y/y) in the first quarter of 2015 from the same period last year. Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (GAPMMI), said that factors have been hampering this industry are the winding down of fuel subsidies, the country’s sluggish export sector, the industry’s dependence on imports of raw materials, people’s weakening purchasing power amid low commodity prices, and a weak rupiah. Due to this weaker context, Lukman expects that turnover growth in full-year 2015 will be limited at about 6 percent (y/y), down from an earlier growth forecast of 8 percent (y/y). In fact, he added that if the context deteriorates than this new growth forecast will need to be revised again. Last year, turnover in Indonesia’s food and beverage industry was IDR 1.020 trillion (USD $82 billion), up from IDR 940 billion

Government to Roll Out Eight New Structural Reform Policies

From Antara News March 13, 2015 Eight new policies will be issued by RI Government to settle structural problems that have come in the way of reducing the current account deficit, Chief Economic Minister Sofyan Djalil stated here on Friday. Sofyan stated that the policies were answers to the negative response from financial market players with regard to the external pressure that has led the rupiah exchange rate to depreciate up to Rp13.2 thousand against the US dollar. He stated that the government will issue an economic policy to improve the performance of balance of trade in the service sector, which has, so far, been the biggest contributor to the deficit. The eight policies to be issued by the government include a finance ministerial regulation that regulates the flexibility of Provisional Anti-Dumping Tax and Provisional Security Import Tax to boost competitiveness of domestic products. To boost direct foreign and domestic investment, other

OJK Meets RI’s Biggest Lenders to Prepare for Economic Challenges

From The Jakarta Post March 13, 2015 On Friday, The Financial Services Authority (OJK) met with representatives from the 16 biggest lenders nationwide in Jakarta to discuss the readiness of financial players to face challenges in the domestic economy amid the continuous depreciation of the rupiah. “We want banks to be prepared for the challenges,” OJK chairman Muliaman D. Hadad said as quoted by Among banks represented at the meeting were state lenders Bank Mandiri, Bank Negara Indonesia (BNI), Bank Tabungan Negara (BTN) and Bank DKI Jakarta (Bank DKI), as well as the privately run Bank Central Asia (BCA), Bank CIMB Niaga, Bank Permata, and Bank Danamon. Gatot M. Suwondo, BNI president director added that one of the issues discussed on Friday was the supply of both the domestic currency and the US dollar in the market. For detailed story, visit here

VP: Japanese Companies Very Interested in RI Investments

From The Jakarta Post March 13, 2015 On Friday, Vice President Jusuf Kalla said that Japanese companies were very interested in investing in Indonesia, particularly with the weakening rupiah. Kalla met with a number of Japanese business leaders such as Inpex Corporation chairman Naoki Kuroda, Tokyo Gas president/representative director Michiaki Hirose and Mitsui executive vice president Shintaro Ambe. The vice president was accompanied by Industry Minister Saleh Husin, Investment Coordinating Board (BKPM) chief Franky Sibarani and Vice Presidential Expert Team chief Sofjan Wanandi. Investments on infrastructure and exploration are mainly outside Java, while manufacturing is on Java, he added. Previously on Monday, Japanese Ambassador to Jakarta Yasuaki Tanizaki said his country was optimistic about increasing investment in a number of sectors, saying that a number of Japanese companies viewed Indonesia as a the most interesting market. For detailed story, visit here

Indonesia to Expand Biodiesel Blending to Boost Palm Oil Prices

From Bloomberg March 13, 2015 By Eko Listiyorini and Agus Salim Suhana Indonesia plans to increase blending of palm oil with diesel this year to cut costs of importing fossil fuel and shore up prices of the world’s most-used vegetable oil. The world’s largest palm oil producer will raise the blending rate to 15 percent this year from 10 percent and subsequently to 20 percent, Coordinating Minister for Economic Affairs Sofyan Djalil said in Jakarta on Friday. The Energy and Mineral Resources Ministry may notify higher blending rule next week and it will be effective immediately, Djalil said. Increased use of palm oil in biodiesel may reduce supply of the vegetable oil and support prices, he said. For detailed story, click here .

Indonesia to ease travel to boost foreign exchange reserves

From Business Time March 13, 2015 Indonesia plans to offer visa-free travel to four additional countries this year to help increase foreign exchange reserves as its rupiah currency weakens against the US dollar. The government will offer visa-free travel to tourists from China, Japan, South Korea and Russia, Sofyan Djalil, Indonesia's chief economic minister told reporters on Friday. China and Japan are among the top five tourists sources for Indonesia. The four additional countries will bring total visa-free travel into Indonesia to 19 countries. "The visa-free policy is aimed to attract tourists because it is the quickest way to bring in foreign exchange," Mr Djalil said. The policy will be among a new set of regulations the government is expected to issue soon to help narrow the country's current account deficit and strengthen the rupiah. Detailed story, click here .

RI Told to Develop Aviation Master Plan

From The Jakarta Post March 12, 2015  Indonesian stakeholders has called by The International Air Transport Association (IATA) to participate in the development of an aviation master plan based on global standards to ensure that the country is served by an aviation industry performing at its best. “Indonesia’s aviation potential is huge. By 2034, it is expected to be the sixth-largest market for air travel. By then, some 270 million passengers are projected to fly to, from and within the country. That’s three times the size of today’s market,” IATA director general and CEO Tony Tyler said in Jakarta on Thursday. The IATA has identified three top priorities, namely safety, capacity and regulation, that need to be improved in order to enhance the country’s aviation sector. Indonesia was assessed as below the global average in the International Civil Aviation Organization’s (ICAO) Universal Safety Oversight Audit Program (USOAP), Tyler added that the IATA was investing resources to im

Continued depreciation seen as Indonesia's best strategy for rupiah

From The Business Times March 10, 2015 To prevent the often-volatile rupiah from collapsing when United States interest rates begin to rise, analysts say Bank Indonesia should just keep doing what it is doing - let the currency slowly depreciate. The rupiah is in the spotlight as investors prepare for the Federal Reserve to start lifting rates from near zero as early as June. It is one of Asia's highest-yielding currencies, with a history of turbulence and vulnerability to foreign capital flows. In 2013, Indonesia's central bank burned up foreign-exchange reserves as the rupiah plunged 21 per cent after then-Fed Chairman Ben Bernanke said its bond-buying would be reduced. This time should be different, analysts believe, because the economy is stronger. Lower inflation has allowed the central bank to cut rates and Bank Indonesia (BI) has let the rupiah gradually depreciate. For detailed story, click here .

Retail Sales Gains Speed as Cement and Motorcycle Sectors Take a Hit

From Jakarta Globe March 10, 2015 In January, Indonesia’s retail sales picked up pace on the back of sales of information and communication equipment, as well as food, beverages and tobacco. Bank Indonesia survey showed on Tuesday, January’s retail sales accelerated to 10.4 percent from a 3.3 percent growth pace in December. The central bank revised December retail sales from an initial 4.3 percent. The poll, which surveyed more than 650 retailers in 10 major cities, found that respondents expect sales to continue to accelerate in February.  Retail, motorcycle and cement sales were used to gauge the strength of domestic consumption, which accounts for a half of the country’s $850 billion economy. Domestic cement sales declined by 8.2 percent year-on-year to 4.13 million metric tons in February, data from Indonesia Cement Association (ASI) showed. ASI chairman Widodo Santoso attributed the decline to heavy rain that disrupted distribution and weakened commodity prices

Indonesia to impose anti-dumping import duties to strengthen rupiah

From Reuters March 10, 2015 By Gayatri Suroyo Indonesia will impose a series of regulations, including temporary anti-dumping import duties, to help narrow the current account deficit and prop up a weakening rupiah in Southeast Asia's largest economy, the finance minister said on Tuesday. The rupiah slipped as low as 13,090 to the dollar on Tuesday, the lowest since August 1998. After Malaysia's ringgit, the Indonesian currency is the worst performing emerging Asian currency so far this year, with a 5.2 percent loss against the dollar, Thomson Reuters data showed. "The condition currently is stable, maintained, but despite that, we in the government always watch the movement of the rupiah and of course we have to make policies to strengthen the currency," Finance Minister Bambang Brodjonegoro told reporters, adding that the regulations will address the problem of Indonesia's current account deficit. Under the new regulations, the finance mini

Toyota, Daihatsu to Boost Locally Made Car Exports

From The Jakarta Globe March 10, 2015 To encounter the rising costs brought on by a weakening Rupiah, Toyota Motor Manufacturing Indonesia and Astra Daihatsu Motor, local units of the Japanese car manufacturers, plan to boost exports of fully assembled cars by 10 percent this year. TMMI plans to export 107,000 cars this year from 97,300 vehicles in 2013, while ADM has set an export target of 176,000 cars from 160,000 cars a year earlier. Indonesia’s currency has dropped 5.2 percent so far this year to trade at Rp 13,047 against the US greenback on Tuesday. For detailed story, visit here

A ‘Holistic’ Road Map Needed to Improve Indonesia’s ICT Competitiveness

From Jakarta Globe March 9, 2015 Executives from global management consulting firm McKinsey & Company said on Monday, Indonesia can improve its global competitiveness ranking in the information and  communications technology sector against its regional peers should the country identify the sector as a development priority. Indonesia is the fourth-most-populous nation and its $850 billion economy ranks the 16th biggest in the world. However, when it comes to ICT capabilities, the country ranks low, sitting at 85th out of the 148 nations reviewed in the World Economic Forum’s Global Information Technology Report 2014. Malaysia, Thailand and Singapore rank higher than Indonesia in the WEF’s report, sitting at 50th, 78th and 19th places respectively. Government agencies must work together in setting up an ICT agenda and road map linked to the country’s economic and social development priorities in the short term, she said. This also includes efforts to enable small and medium enterp

Depreciating Rupiah Brings Potential Benefits to Manufacturing, Service Sector Industries: Minister

From The Jakarta Post March 8, 2015 Manufacturing and service-sector industries could take advantage of the current fluctuation of the rupiah exchange rate that had continued to weaken against the US dollar, predicted Minister Bambang Brodjonegoro. Additionally, major players in the manufacture industry, such as Australia and Japan, were recently facing difficulties in developing their manufacturing sectors competitively. Bambang said a number of incentive was ready to be given by the government to manufacturing industry players, namely tax allowances and tax holidays. In a newly revised government regulation, 95 percent of tax allowances and tax holidays would be allocated for the manufacturing industry. By giving incentives to and promoting potentials of the sectors, it was hoped that Indonesia’s current account that had not yet run optimally and still experienced a deficit could improve and help the strengthening of economic fundamentals. For detailed story, visit here
From The Jakarta Post March 7, 2015 Small and medium enterprise players from Indonesia, Malaysia and Singapore gathered in Batam, Riau Islands, on Saturday in a bid to develop possible business partnerships. “This is a good opportunity for the players to get to know each other and develop business opportunities among them,” Riau Island head of economic development Syamsul Bahrum said in Batam as quoted by Antara news agency. A business gathering was important to increase economic activities among the three countries ahead of the Asean Economic Community (AEC), which is slated to be implemented at the end of this year, Syamsul said. “This gathering is the embryo of future cooperation among players from the three nations,” he explained. For detailed story, visit here

Indonesia sees economic growth at 5 per cent or below in Q1

From Business One - Reuters March 6, 2015 Indonesia's economy will grow 5 per cent or slower in the first quarter, Finance Minister Bambang Brodjonegoro said on Friday. Indonesia's gross domestic product expanded 5.02 per cent for the full year in 2014, and the economy grew a slightly better than forecast 5.01 per cent in the fourth quarter from the same period a year earlier. Indonesia's economic growth slipped to its weakest in five years in 2014 as weak exports and investments dragged, underlining the challenges facing the country's new President Joko Widodo.

BEI: Flow of Foreign Funds Shows Investors` Confidence

From Antara  March 6, 2015 President Director of Indonesia Stock Exchange (BEI) Ito Warsito believes that the flow of foreign funds into the countrys capital market reflects investors confidence in Indonesia. "On Thursday (March 3), foreign investors recorded a net purchase of Rp11,547 billion. They have added funds to the secondary market since the beginning of January," Warsito said here on Friday. "Foreign investors make long-term investments. They are not concerned about the weakening value of the rupiah," he explained. The situation will enable the Indonesian Composite Index (IHSG) to record a positive performance in 2015, according to the BEI president director. An analyst from Asjaya Indosurya Securities, William Suryawijaya said that the JCI can remain positive, sustained by selective buying amid domestic economic data to be released, including that on the foreign exchange reserves that are expected to increase in February

BKPM Takes on Licensing in Transport and Construction

From The Jakarta Post March 6, 2015 After the Transportation Ministry and Public Works and Public Housing Ministry transferred their licensing power to the agency, the Investment Coordinating Board (BKPM) has further expanded its authority in providing business licenses. The two ministries are among 22 state institutions that have delegated their authority on permit issuance to the BKPM as part of the establishment of a one-stop service. Heldy Satrya Putera, deputy at the tertiary-sector deregulation directorate at BKPM, said the one-stop service, the PTSP, had enabled the investment board to issue several permits related to the transportation, public works and public housing sectors. During the promotional event, property developers grouped under Real Estate Indonesia (REI) criticized the long and complicated process of permit issuance in the sector, claiming that for one project, they had been required to file proposals for 44 permits with regional administrations. Meanwhile, the

European businesses have positive perspective on Indonesian investment policy

From Antara March 6, 2015 The Europe-ASEAN Business Alliance (EABA) holds a positive view on the investment policy in Indonesia, which continues to facilitate business investments. "We, as a representative of European companies in Indonesia, hold a positive view of the resolved policies in Indonesia," Director EABA Sahala Sianipar told reporters after attending a meeting with Industry Minister Saleh Husin here on Friday. Sianipar, along with business delegations from Europe, is delighted with President Joko Widodos policies to improve the national infrastructure. According to him, infrastructure development could increase investment performance, which would then boost economic growth. "We are happy with the governments plan to improve the infrastructure, which is important," he said. Moreover, Industry Minister Saleh Husin confirmed the government will continue to improve the quality of investment and business policies in Indonesia. Vice

E-commerce in South-East Asia

From The Economist March 6, 2015 TROPICAL rain pounds on the roof of a cavernous warehouse near Jakarta, Indonesia’s capital. Inside, youngsters in orange T-shirts haul around clothes, luggage and electrical goods for Lazada, an e-commerce firm, which has just moved in. The 12,000 square metre space is three times the size of the depot it has vacated, but it already looks full. Three years ago Lazada’s entire stock filled a storeroom the size of a studio flat, recalls Magnus Ekbom, its twenty-something boss in Indonesia. Internet shopping accounts for less than 1% of all purchases in South-East Asia—a region twice as populous as America, where the proportion is nearly 10%. But surging smartphone use and a broadening middle class mean the market is set to multiply; perhaps fivefold by 2018, reckons Frost & Sullivan, a consulting firm. Since it launched in 2012 Lazada has laid claim to six South-East Asian countries, largely unchallenged by e-commerce giants such as Amazon

Indonesian government steps up support for tech startups

From AsiaOne By: Nikkei Asian Review March 5, 2015 Rudiantara, Indonesia's new minister of communications and information technology, unveiled plans in February for a $1 billion national fund for tech startups. The ministry is trying to convince several domestic conglomerates to pledge this amount by the end of the year. Afterward, it plans to invite private venture capital firms to help manage the funds. The minister has also promised to reduce the red tape companies have to overcome when they apply for business permits and licenses. Detail story, visit here

Indonesia completes land acquisition for Japan project

From: Bangkok Post By: Kyodo News March 5, 2015 The Indonesian government has completed land acquisition for the construction of a controversial thermal power plant project funded by Japan, Indonesian media reports said Thursday. "It's all done," the state-run news agency Antara quoted Agrarian and Spatial Planning Minister Ferry Mursyidan Baldan as saying Wednesday. "Yesterday (Tuesday) afternoon, I signed the remaining five certificates," he reportedly said, adding that the government issued a total of 25 land certificates to acquire the space needed to build the power plant in Batang Regency in Central Java Province. Detail story, visit here

Rupiah Update: Indonesian Authorities Say ‘No Need for Alarm’

From Indonesia Investments March 5, 2015 As the Indonesian rupiah exchange rate depreciated beyond the psychologically-sensitive IDR 13,000 per USD threshold on Wednesday (05/03), both Indonesian Finance Minister Bambang Brodjonegoro and Bank Indonesia Governor Agus Martowardojo stated that there is no need for panic as the performance of the rupiah against the US dollar is still in line with the performance of other currencies versus the US dollar. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.28 percent to IDR 13,028 by 13:35 pm local Jakarta time. For detailed story, click here .

Foreign Funds Keep Flowing In

From The Jakarta Post March 5, 2015 “While the rupiah has depreciated against the US dollar like many other Asian currencies, the rupiah is largely stable on a real effective exchange rate basis,” Chua Hak Bin, an economist with Bank of America Merrill Lynch, said on Tuesday. A fixed-income analyst with Trimegah Securities, Dini Agmivia Anggraeni predicted that foreign investors could still tolerate rupiah swings of up to 5 percent on the year-to-date average rupiah value of 12,800 per US dollar. “Foreign investors appear to remain optimistic on the rupiah outlook,” she said. On Tuesday, foreign analysts were gathered by BI senior deputy governor Mirza Adityaswara  in Singapore for a briefing that focused on the central bank’s monetary stance and its rupiah-intervention strategy. “To encourage this shift toward manufacturing exports and discourage unnecessary imports, the central bank is inclined toward an undervalued rupiah,” Saktiandi Supaat, Maybank analysts wrote in a report d

RI aims to export fresh fruits to New Zealand

From The Jakarta Post March 5, 2015 Foreign Minister Retno LP Marsudi and her New Zealander counterpart Murray McCully have agreed to enhance the two countries’ relationship in many sectors including agriculture, trade, investment and defense. The agreements were reached when the two concluded the 7th Indonesia-New Zealand Joint Ministerial Commission (JMC) in Auckland on Tuesday. Retno and McCully agreed to increase Indonesian exports of fresh fruits in the agriculture sector, such as mangosteen, salak and mango, while at the same time working to improve the breeding of New Zealand cattle. By 2024, Retno and McCully also agreed to boost bilateral trade to Rp 40 trillion (US$3.08 billion). Cooperation in the geothermal sector was also highlighted during their discussions and they agreed to accelerate current projects, according to the release. For detailed story, visit here

Jakarta at Night

Photo by  scorecimsa

What Makes E-commerce Work in Indonesia?

From Wall Street Journal By Resty Woro Yuniar March 3, 2015 E-commerce companies in Indonesia have found a recipe for success by going after a growing pool of consumers with access to the Internet but not the brick and mortar shops selling what they want. “E-commerce is growing because Indonesians are finding it increasingly easy to get online, and the offline stores have not been able to keep up with their demand,” said Susie Sugden, a co-founder of Vela Asia, a premium fashion e-commerce retailer that offers hard-to-find local and international brands, such as Lee Cooper and Jack Nicklaus. The company recently received $1.5 million in investment funding from Singapore-based venture capital firm Majuven. The investment was one of dozens that have occurred in the Indonesian e-commerce sector over the past year, including the biggest so far in Indonesian ecommerce, a $100 million investment in Tokopedia by Japan’s Softbank and U.S.-based Sequoia Capital. “E-commerce al

Crude Oil’s Collapse Seen Causing Indonesia to Miss Biofuel Goal

From Bloomberg By Yoga Rusmana and Eko Listiyorini. March 1, 2015. The collapse of crude oil amid a global surplus has led a decline in fossil-fuel costs that’s cut the appeal of producing energy from plants. Indonesia’s new government led by Joko Widodo approved an increase in the biodiesel subsidy last month, spurring analysts including Mandiri to forecast the change would help to raise domestic palm oil use at a time of expanding output and weaker demand from buyers such as China. “It’s a hard time for biodiesel producers,” Bangun said in an interview on Feb. 18 at the Jakarta headquarters of the group, which represents everyone in the industry from growers to makers of cooking oil and chemicals. While the increase in the subsidy will add to the appeal of biodiesel, demand will be sluggish because of pressure from low crude prices, he said. Palm futures on Bursa Malaysia Derivatives, where the benchmark contract trades, lost 15 percent to 2,373 ringgit ($654) a to

Tupperware’s Sweet Spot Shifts to Indonesia

From NYT By Joe Cachrane. February 28, 2015 Indonesia is, in many ways, in Tupperware’s sweet spot. As the economy has taken off in recent years, an expanding middle class now has more disposable income for containers of all shapes and sizes that are sturdier than those found in local markets. And, as in 1960s America, many women stay at home to keep house and raise their children, creating a captive audience for parties run by saleswomen who have begun to sidle past conservative social mores and into the work force. In a testimonial for “Chain of Confidence,” Ms. Upi said that when she started out as a Tupperware saleswoman, she had to deliver products to customers using public transportation minivans. But within two years, she says, she was earning enough that she bought a new car and a house. “I became more confident, knowledgeable and disciplined,” she said. Ms. Amelia, the saleswoman at the Villa Mutiara party, had a similar tale. Six years ago, she was trying t

Ministry Indicates Change In Regulation for Miners

From The Jakarta Globe March 4, 2015 On Wednesday an official at the Energy and Mineral Resources Ministry said The government plans to revise a regulation to allow miners to submit their request to renew contracts 10-years before the contracts’ expiry date. The government will revise the existing regulation, which says miners can only submit their request to renew existing contracts before the contracts expire at the earliest 2 years and at the latest  six months before the contracts expire, Said Didu, a member of the national smelter development team at the Energy and Mineral Resources Ministry.. On Freeport, Didu particularly said that Freeport needs assurance over their operations after their contract of works expire in 2021. Didu said business certainty is important before making a huge investment. The American mining giant has already agreed to a $2.3 billion copper smelter in East Java as it prepares to spend $15 billion for the expansion of its mining operation

Australian Beef Intestines Are Off the Menu With Indonesian Ban

From Bloomberg March 3 2015 Shoppers at butcher Aji Seno’s stall in east Jakarta care more about the price of his beef lungs, livers and intestines than where the offal comes from. Not so the country’s new president. Joko Widodo, who pledged to make Indonesia less reliant on food imports in last year’s presidential campaign, has banned imports of most secondary cuts of meat and will allow only state-owned enterprises to bring in the products in times of shortages. Businesses predict a supply crunch, higher prices and the risk of monopolies and a black market. “This is Indonesia man, everyone loves offal,” said Seno, whose cuts from Australian cattle sell for 25 percent less than those from Indonesian ones. “If there’s no imported offal, then the price of local offal will rise. I won’t know how to sell it.” More detailed story, visit here .

New Healthcare Insurance Scheme Strengthens Demand for Low-Cost Medicines in Indonesia, Finds Frost & Sullivan

From PR Newswire March 3 2015 JAKARTA, Indonesia, March 3, 2015 /PRNewswire/ -- Indonesia is rapidly evolving into one of the most attractive healthcare markets for investors. In spite of the initial regulatory hurdles in setting up manufacturing units in Indonesia, companies from every healthcare sector, including hospitals, medical devices, pharmaceuticals and diagnostics, continue to look at the country as a major investment destination. New analysis from Frost & Sullivan, Indonesia Healthcare Outlook ( ), finds that Greater Jakartaremains the most promising market due to strong infrastructure support, accessibility, and the presence of major hospitals.Kalimantan and Papua (outer Jakarta) too offer attractive potential. The manufacturing hub, currently in Bandung and Surabaya, is likely to move to newer areas such as Sei Mangke in North Sumatra and Tanjung Lesung in Banten as well as to the existing free-trade zone in the Riau Islands of Bata

GM to Stop Sales of Spin in Indonesia

From The Jakarta Post March 02, 2015 US auto giant General Motors (GM) has said it will stop selling minivan Spin following the closure of its plant in Bekasi, West Java, in June this year. Despite the step, the firm vowed to guarantee service for minivans owned by Indonesian customers, General Motors Manufacturing Indonesia acting president director Pranav Bhatt said on Monday. "We will continue to support our customers in Indonesia from an after-sales perspective," he told reporters at the Industry Ministry's offices. Bhatt added that after it had transformed into a national sales company, GM's Indonesian unit would focus on sports utility vehicles and pick-ups. GM last week announced it would stop manufacturing multi-purpose vehicle (MPV) Spin in Indonesia after feeling the heat from stiff competition in one of Southeast Asia's largest auto markets. Earlier the firm said it would build a new plant through a US$700 million deal with Chines

Indonesian Rupiah Affected by China Central Bank’s Interest Cut

From  Indonesia Investment March 2, 2015 The Indonesian rupiah - in line with other emerging Asian currencies - feels the negative impact of China’s interest rate cut. According to the Bloomberg Dollar Index, the rupiah had depreciated 0.40 percent to IDR 12,984 per US dollar at 11:10 am local Jakarta time on Monday (02/03), coming very close to the psychological boundary of IDR 13,000. Last Saturday (28/02), China’s central bank announced to cut its one-year deposit rate and the one-year lending rate by 25 basis points each to 2.50 percent and 5.35 percent, respectively. It was the second time in less than four months that the central bank of the world’s second-largest economy (People’s Bank of China) cut its benchmark interest rates, in another attempt to boost the country’s sluggish economic growth and combat possibly looming deflation. The central bank’s latest move came a few days before the annual meeting of China's parliament. The People’s Bank of China also raised t

Frost & Sullivan Forecasts Indonesia's 2015 Vehicle Sales to Grow 5% to Reach 1.268 million units

From The Jakarta Globe February 28, 2015 Total vehicle sales in Indonesia potentially grow by 5 percent year-on-year to reach 1.268 million units in 2015, expected by Frost & Sullivan. It mainly driven by infrastructure development spending by the Government and higher purchasing power from the middle class population. Mr. Vivek Vaidya , Vice President, Automotive & Transportation Practice, Asia Pacific at Frost  & Sullivan said that the estimated stable growth of the Indonesian economy at 5.5 percent this year will also help drive vehicle sales. However, he added that the global economic uncertainty is likely to have a significant impact on the automotive sector as imports of both parts or components and completely built-up (CBUs) will become more expensive. "The increase in cost of automotive imports could have a significant impact as high value parts and aggregates are still imported for many models," he said. The imported CBUs particu

Indonesian Authorities Revise Economic Assumptions in 2015 Budget

From Indonesia-Investment January 28 2015 The Indonesian government, central bank (Bank Indonesia) and Commission XI of the House of Representatives (DPR) agreed to revise several macroeconomic targets in the Revised 2015 State Budget (APBN-P 2015). The revisions include the country’s economic growth (GDP) pace, the average rupiah exchange rate, and inflation target. In essence, the revisions indicate that Indonesian authorities have become less optimistic about the Indonesian economy in 2015 amid external pressures. Most importantly, Indonesia’s GDP growth was downgraded from 5.8 percent year-on-year (y/y) to 5.7 percent (y/y), while the average rupiah rate was downgraded from IDR 12,200 per US dollar to IDR 12,500 in the Revised 2015 State Budget. These changes are the result of external pressures as global economic growth remains sluggish thus pushing global commodity prices down (and therefore limiting Indonesia’s foreign exchange earnings from commodity exports).

U.S. Raises Concerns Over 'made in Indonesia' Smartphone Law

From Reuters February 23, 2015 The United States is pressing Indonesia to relax local-content rules it believes will handicap efforts of tech firms such as Apple to expand into one of the world’s last big markets where demand for high-end smartphone has yet to really take off. The regulation, which would come into force on Jan. 1, 2017, requires companies that sell smartphones and tablets in the fast-growing economy of 250 million people to produce about 40 percent of their content locally. Apple’s supplier Foxconn, whose flagship listed unit is Hon Hai Precision Co Ltd, has been dragging its feet as it negotiates with the Indonesian government over a proposed investment that would include manufacturing smartphones. There was no immediate response from Apple and Samsung did to requests to comment on the local-content rule. The American Chamber of Commerce (AmCham) raised concerns about the rule in a Feb. 12 letter to Rudiantara. "We fear that the appr