Indonesia's public debt - as a percentage of the nation's gross domestic product (GDP) - currently stands at 27 percent, or roughly IDR 3,200 trillion (approx. USD $241 billion). This debt is manageable and actually quite low compared to other key emerging economies or advanced economies. For example, Malaysia's and Brazil's public debt-to-GDP ratios reached 56 percent and 70 percent, respectively. Meanwhile, the ratios of the USA and Japan stand at 105 percent and 246 percent, respectively. However, the level of debt is not that important. The important question is how is this debt used?

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Angkasa Pura II, the state-owned airport services company that operates airports in the western part of Indonesia, says the 3rd runway of the Soekarno-Hatta International Airport, located just outside Indonesia's capital city of Jakarta, will be finished in late-2017. This third runway, expected to cost IDR 4 trillion (USD $300 million), is part of a big expansion and renovation plan aimed at raising the airport's passenger capacity and flight frequency. Construction of the runway should start in early 2017 provided the land acquisition process has been completed.

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On 27 March 2016, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as infrastructure development, the current account deficit, updates on various sectors including property and banking, the controversial decision regarding the Masela LNG plant, land reclamation, and much more.

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In its bid to enhance connectivity across the Indonesian archipelago, the government of Indonesia is eager to boost toll road development. Enhanced connectivity is key to curtail the nation's high logistics costs hence improving the competitiveness of domestic businesses while also making the investment climate more attractive. Besides business interests, enhanced infrastructure development is also important from a social point of view (for example, people's access to healthcare is improved). In this column we take a look at the developments of the Balikpapan-Samarinda toll road on the island of Kalimantan.

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Indonesia's current account deficit is expected to rise to USD $26 billion, or 2.6 percent of the nation's gross domestic product (GDP), in 2016. This increase is expected because rising investment and infrastructure development in Indonesia will require more imports from abroad. In 2015 Indonesia's current account deficit was recorded at USD $17.8 billion (2.06 percent of GDP), improving from a USD $27.5 billion deficit (3.09 percent of GDP) in the preceding year (when Indonesia touched a record high current account deficit, and which seriously undermined investors' confidence in the nation's assets).

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An improvement has been detected in Indonesia's car sales. According to the latest data from the Indonesian Automotive Industry Association (Gaikindo) car sales in Indonesia totaled 88,250 units in February 2016. Although this figure is 0.6 percent down from sales in the same month one year earlier, the percentage fall is the slowest since August 2014. Noegardjito, Secretary of Gaikindo, said this limited decline came on the back of Indonesia's improving economy. However, February was still the 18th consecutive month of contracting car sales in Southeast Asia's largest economy.

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Indonesia's steel and iron producers urge the government to limit imports of steel into Indonesia as these imports are a burden on the domestic steel industry. Data from the Indonesian Iron and Steel Industry Association (IISIA) show that steel imports from China - the world's largest steel producer - into Indonesia jumped 94 percent year-on-year (y/y) to 3 million tons in 2015. This surge is particularly caused by foreign contractors working on infrastructure projects in Indonesia.

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Indonesian President Joko Widodo inaugurated 11 bonded logistics centers on Thursday (10/03) as part of Indonesia's second economic stimulus package that was unveiled on 30 September 2015. These bonded logistics centers aim to curtail the country's notoriously high logistics costs which makes businesses in Indonesia less competitive and the general business climate in Southeast Asia's largest economy less attractive. The official opening ceremony for the 11 centers (mostly located on the island of Java) was held in Jakarta.

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Cement sales in Indonesia rose 3 percent year-on-year (y/y) to 4.45 million tons in February 2016 from the same month one year earlier. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said Indonesia's rising cement sales were caused by the ongoing development of infrastructure projects across the archipelago. Three regions showed a marked increase in cement sales last month: Sumatra (+16.5 percent y/y to 2.13 million tons), Sulawesi (+33 percent y/y to 841,000 tons) and the Moluccas & Papua (+31 percent y/y to 125,000 tons).

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Japanese companies remain committed to invest in Indonesia - particularly into infrastructure, power and manufacturing - according to the Kansai Economic Federation (Kankeiren), one of Japan's private, non-profit representative economic organizations. Kankeiren Chairman Shosuke Mouri met Indonesia's Chief Economics Minister Darmin Nasution on Monday (07/03) in Jakarta. Japan is one of the biggest investors in Indonesia. During the period 2010-2015 the country invested a combined total of USD $14.9 billion in Indonesia.

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After having grown rapidly in the years 2010-2013, infrastructure development in Indonesia lost its momentum in 2014. This was due to limited available government funds, uncertainty caused by the legislative and presidential elections, and the nation's slowing economic growth. After Joko Widodo became Indonesia's seventh president in October 2014, it was expected that infrastructure development would revive. However, it didn't. But Widodo made one important move by seriously reducing energy subsidies, hence making more funds available for infrastructure development.

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Last week it was officially announced that China Railway International Co. Ltd, subsidiary of China Railway Group Ltd, together with a consortium consisting of Indonesian state-owned enterprises (which include Pilar Sinergi BUMN Indonesia, Wijaya Karya, Kereta Api, and Jasa Marga) will build Indonesia's first ever high-speed railway, valued at over USD $5 billion, between the capital city of Jakarta and Bandung (in West Java), a route that stretches for approximately 150 km.

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Republik Rakyat Tiongkok (RRT) telah memenangkan sebuah kontrak untuk membangun jalur kereta berkecepatan tinggi antara Daerah Khusus Ibukota Jakarta dan Bandung (Jawa Barat), mengalahkan Jepang dalam proses ini. Pada awal bulan ini, Pemerintah Indonesia secara tak terduga memutuskan untuk menunda proposal dari Jepang dan RRT untuk konstruksi jalur kereta berkecepatan tinggi bernilai miliaran rupiah antara kedua kota karena proposal-proposal ini mencakup bantuan keuangan atau jaminan dari Pemerintah Indonesia. Terlebih lagi, Indonesia menganggap kereta super cepat tidak diperlukan untuk rute yang relatif pendek (150 km).

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Merespon ekonomi global yang melambat, Presiden Joko Widodo telah mengumumkan paket kebijakan ekonomi yang baru yang bertujuan untuk mendongkrak pertumbuhan ekonomi Indonesia di tengah ketidakjelasan yang tinggi dalam konteks global. Pada hari Rabu (09/09), Joko Widodo (dikenal dengan panggilan Jokowi) memberikan sejumlah detail mengenai fase pertama ini dalam sebuah pidato di Istana Negara di Jakarta.

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Government-led infrastructure development is regarded by most analysts and policymakers as the key to overcome Indonesia’s slowing economic growth as infrastructure development will cause a multiplier effect in the economy (triggering growth in other industries such as cement and property while job availability grows accordingly). In the second quarter of 2015, Indonesia’s gross domestic product (GDP) growth slowed to 4.67 percent (y/y), a six-year low.

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Indonesia adalah pemegang saham terbesar ke-8 di Asian Infrastructure Investment Bank (AIIB) yang baru saja didirikan. Kementerian Keuangan Indonesia mengumumkan di awal minggu ini bahwa Indonesia akan menginvestasikan 672,1 juta dollar AS di AIIB selama lima tahun ke depan. AIIB adalah sebuah lembaga keuangan multilateral yang baru (dipelopori oleh Republik Rakyat Tiongkok) yang menyediakan dana untuk proyek pembangunan infrastruktur di wilayah Asia Pasifik.

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A total of 1,555,609 foreign tourists have visited the island of Bali, the most popular tourist destination in Indonesia, in the first five months of 2015, an 11.3 percentage point growth from the same period last year. Given that the number of foreign tourists usually peaks in the period June-September it is most likely that the government’s target of welcoming 4 million foreign tourists on Bali in 2015 will be achieved, or exceeded. Most tourists that visit Bali originate from Australia, China and Japan.

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Data terakhir dari Asosiasi Semen Indonesia (ASI) menunjukkan bahwa konsumsi semen di Indonesia menurun 3,8% (year-on-year) menjadi 22,9 juta ton di lima bulan pertama tahun 2015 (dari 23,8 juta ton semen di periode yang sama tahun lalu). Kejatuhan ini adalah penurunan paling tajam dalam konsumsi semen Indonesia sejak 2009 waktu permintaan jatuh hampir 7% pada basis year-on-year (y/y) karena dampak dari krisis finansial dunia. Penurunan saat ini disebabkan oleh perlambatan perekonomian Indonesia dan jatuhnya harga-harga komoditi di luar Jawa.

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Although most emerging market stocks fell, Indonesian stocks and the rupiah showed a solid performance on Thursday (21/05). The rupiah appreciated 0.40 percent to IDR 13,122 per US dollar according to the Bloomberg Dollar Index, while the benchmark stock index of Indonesia (Jakarta Composite Index) rose 0.39 percent to 5,313.21 points. Most emerging stocks fell due to weak data from China (despite a series of stimulus). However, Indonesian stocks were supported by news about its credit rating and dividend announcements.

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Indonesia is not the easiest place to invest for foreign investors. This is reflected by the World Bank's Doing Business 2014 index in which Indonesia ranks 120th. In a business forum, held last week in Beijing, Chinese businessmen expressed a number of matters that blocked or seriously delayed their investments in Indonesia. For Indonesia (both domestic and foreign) investment realization, particularly in infrastructure, is important as investments is considered the main driver for the country’s economic growth in 2016.

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