INDONESIA OUTLOOK

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 ...

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...

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...

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...

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...

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

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...