Indonesia's central bank expects that the country's monthly inflation rate will ease to below one percent in August. However, in order to meet this expectation the bank stresses that there needs to be an improvement in the food product supply through imports and good distribution practice. The latter, particularly, is problematic due to Indonesia's lack of quality and quantity in infrastructure. In July, monthly inflation rose 3.29 percent due to the start of the new school year and impact of higher subsidized fuel prices.

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Pembangunan Perumahan (better known as PP) is a government-controlled construction and investment company in Indonesia. The company's lines of businesses consist of construction services in building and infrastructure, property, engineering, procurement and construction (EPC), as well as investment. PP was the second-largest company in terms of largest net income in Semester I-2013. Being a state-controlled entity, it benefits from the government's increased focus on infrastructure development. 

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According to Indonesia's police department, heavy traffic caused by the Idul Fitri celebrations resulted in the deaths of more than 471 people as well as 740 seriously injured people in over 2000 traffic accidents. Most accidents are caused by drivers that fall asleep during the journey. Idul Fitri marks the end of the holy fasting month (Ramadan) and is one of the major national holidays in Indonesia. This year Idul Fitri fell on Thursday 8 August and, as usual, is accompanied by the tradition that Indonesians travel back to their places of birth.

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Alam Sutera Realty (ASRI) is an Indonesian real estate company that develops and manages a large-scale township which includes residential and commercial properties as well as ancillary facilities and infrastructure. The company has large real estate projects in Serpong, Cibitung, Cianjur (all on Java), Tanjung Pinang (Riau) and Sanur (Bali). In the first half of 2013, the company's profits increased by 52 percent to IDR 800 billion (USD $80.0 million) as Indonesia's property sector has been booming.

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Nine Indonesian construction companies that have released their financial results over the first six months of 2013 show a combined net profit of 849 billion (USD $83.2 million). State-controlled Wijaya Karya (Wika) still leads the ranking in terms of net profit. Interestingly enough, another state-controlled company, Adhi Karya, posted the largest YoY percentage growth in net profit (135.6 percent). Lastly, state-controlled Pembangunan Perumahan is second-largest company in terms of largest net income in Semester I-2013.

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The city center streets of Indonesia's capital city of Jakarta, which are normally characterized by heavy traffic jams, are becoming quiet. As the holy Islamic fasting month (Ramadan) is getting towards the end, people are traveling back to their places of origin for the Lebaran celebrations. This annual tradition is known as 'mudik'. Usually, the people spend a few days at their hometowns before traveling back to their places of work. This period also means that businesses (including the stock exchange) are mostly closed until 12 August 2013.

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Wijaya Karya (Wika) is one of Indonesia's construction companies. The company is involved in engineering and construction work in both Indonesia and abroad. Its businesses include civil engineering, building construction, and construction of industrial plants as well as energy facilities. Being a state-controlled company, Wika has a close connection to the government and as such is one of the first choices to participate in government infrastructure projects. Shares of Wika have grown over 37 percent in 2012.

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Although the combined performance of the four listed Indonesian cement companies in the first six months of 2013 is good with net profit rising 13.7 percent from the same period in 2012, the individual companies posted mixed results. Net profit of Semen Indonesia, Indonesia's largest cement producer, rose 22.9 percent, while net profit of Indocement Tunggal Prakarsa, the country's second-largest cement producer, rose 11.8 percent. The other two cement producers, Holcim Indonesia and Semen Baturaja, posted a decline in net profit.

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Indonesia's biggest taxi operator, the Blue Bird Group, is planning to conduct an initial public offering (IPO) in the fourth quarter of this year. The company expects to reap between USD $600 and $800 by selling 20 to 40 percent of the company's stock equity. If the company will indeed manage to meet this target, then the IPO of Blue Bird will be the largest since the publicly listing of Indofood CBP Sukses Makmur, which raised USD $696 million in October 2010. It has been reported that Credit Suisse, Rothschild and UBS will act as underwriters.

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Indonesia Investments has updated the financial highlights of state-controlled enterprise Adhi Karya (ADHI). The company is engaged in construction services, infrastructure development, property, real estate and engineering, and procurement & construction. Its infrastructure projects include roads, bridges, irrigation, power plants and ports, while its building projects include high rise buildings, hotels, hospitals and schools. Shares and net income of the company have surged in 2012 amid Indonesia's booming property sector.

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The Finance Ministry of Indonesia announced that it plans to inject USD 1.63 billion into state-owned financing company Sarana Multi Infrastruktur and to transform this company into an infrastructure bank in a move to boost infrastructure development across Southeast Asia’s largest economy. The central government needs private capital to fund its massive infrastructure program for the next five years as it can only account for 30 percent of required investment. For the remainder it relies on private capital and state-owned enterprises.

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In his presentation at the Indonesia Investment Summit 2015, organized in Jakarta on 15-16 January, Standard Chartered Bank Senior Economist Fauzi Ichsan said that despite the challenges amid global uncertain times, there remains plenty room and opportunity for Indonesia to grow robustly on the long-term. In fact, by 2030 Ichsan believes that Indonesia will be among the world's top ten countries in terms of largest economies. For investors it is important to understand the challenges and key pillars of economic growth.

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Takehiko Nakao, President of the Asian Development Bank (ADB), estimates that the Indonesian economy will grow 5.6 percent year-on-year (y/y) in 2015, lower than the target that has been set by the Indonesian government in the 2015 State Budget (5.8 percent y/y). Nakao is slightly less optimistic as he expects a slowdown in government spending this year. On a positive note, Nakao’s forecast implies a sharp improvement in Indonesia’s economic growth in 2015 from an estimated 5.1 percentage point (y/y) GDP growth in 2014.

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The Indonesian government changed the funding scheme for the construction of the Soekarno-Hatta International Airport Railway project (which will connect Soekarno Hatta International Airport, located nearby Jakarta, and Halim Airport in Jakarta). Previously, it was planned that this project, valued at IDR 26 trillion (USD $2.1 billion), would be offered through a public-private partnership (PPP) construction in which the Indonesian government would finance 55 percent of the costs. Now, however, the project is offered fully to the private sector.

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The Governor of Indonesia’s central bank, Agus Martowardojo, said that he expects inflation to accelerate to 6.1 percent year-on-year (y/y) in November 2014, significantly up from 4.83 percent y/y in the previous month. Accelerated inflation is caused by the multiplier effect triggered by the recent subsidized fuel price hike in Southeast Asia’s largest economy. On 18 November 2014, the government introduced higher prices for subsidized fuels in a bid to reallocate public spending from fuel consumption to structural development.

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Last week, Indonesian President Joko Widodo introduced higher subsidized fuel prices in Southeast Asia’s largest economy in a bid to shift generous public spending from fuel consumption to productive and structural economic and social development. Prices of subsidized low-octane gasoline (premium) and diesel (solar) were raised by over 30 percent, or IDR 2,000 (USD $0.17) per liter, starting from 00:00 on Tuesday (18/11). Widodo aims to reallocate these funds to infrastructure, social welfare and the maritime sector.

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A total of 35 American companies are interested to invest a combined USD $61 billion in Indonesia over the next five years according to a survey conducted by the Paramadina Public Policy Institute, the American Chamber of Commerce in Indonesia (AmCham Indonesia), the Indonesian Employers Association (Apindo), and the Indonesian Chamber of Commerce and Industry (Kadin Indonesia). These 35 US companies have already invested a total of USD $65 billion in Indonesia over the period 2004 to 2012.

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The number of air passengers in Indonesia will most likely fail to meet its growth target in 2014. Based on government data, the number of air passengers in Southeast Asia’s largest economy reached 47.5 million in the first eight months of 2014, a 5.82 percentage point growth from the same period last year. However, the Indonesia National Air Carrier Association (INACA) initially targeted annual passenger growth in the range of 12-15 percent for 2014. Amid slowing economic growth, people’s purchasing power has declined.

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Investment in Indonesia’s processed food and beverage industry is expected to grow at least ten percent to IDR 55 trillion (USD $4.6 billion) in 2015 from an estimated investment realization of IDR 50 trillion in 2014. Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (GAPMMI), said that investments in this sector have been solid due to rising consumption of food and beverages in Southeast Asia’s largest economy. Particularly foreign investments have been strong in 2014 and are expected to continue next year.

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Today (20/10), Central Jakarta seems to have changed into one big party as Joko Widodo was inaugurated as Indonesia’s seventh president earlier this morning. For the remainder of the day celebrations will be held at Monas (National Monument) and surrounding areas. However, it is of vital importance that Widodo (popularly known as Jokowi) will start to focus on this presidential duties tomorrow as the country is facing a number of economic challenges. What are these challenges?

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