The economy of Indonesia expanded 5.02 percent year-on-year (y/y) to IDR 8,354 trillion (USD $664 billion) in 2014, the nation’s slowest annual growth pace since 2009, according to the latest data from Statistics Indonesia (BPS). As such, GDP growth failed to achieve the central government’s 5.5 percentage point growth target that was set in the 2014 State Budget. Indonesia’s economic growth has been slowing since 2011 when it still posted a 6.5 percentage point growth rate (y/y). However, growth is expected to rebound from here.

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Indonesian President Joko Widodo officially launched the integrated one-stop service center (in Indonesian Pelayanan Terpadu Satu Pintu, abbreviated PTSP) at the Indonesia Investment Coordinating Board (BKPM) at the start of the week. This new service aims to smoothen and simplify licensing procedures for investment projects. From now on, investors will not need to visit various ministries or government agencies to obtain necessary permits but can simply turn to the BKPM’s one-stop service center.

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The Indonesia Investment Coordinating Board (BKPM) conducted a trial of its new one-stop integrated service on Thursday (15/01). This soft launch was attended by various Indonesian ministers. The introduction of the one-stop service aims to attract more (foreign) investment as it speeds up licensing procedures. Currently, Indonesia is characterized by a high degree of bureaucracy resulting in a lengthy licensing process as investors need to obtain permits from various ministries as well as local government institutions.

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On 17 August 2014, 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 in the last seven days. Most of the topics involve economic topics such as the performance of the rupiah exchange rate, plantations, Freeport Indonesia, economic growth, electricity, property, guidelines for the construction of a PT PMA, and more.

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On 10 August 2014, 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 in the last seven days. Most of the topics involve economic topics such as economic growth in the second quarter, July inflation, the June trade balance, company profiles of PP London Sumatra Indonesia and Perusahaan Listrik Negara, guidelines for the construction of a PT PMA, and more.

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On 3 August 2014, 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 in the last seven days. Most of the topics involve economic topics such as the performance of the rupiah exchange rate, July 2014 inflation, the Lebaran holiday period, foreign direct investment, palm oil export, an analysis of the Asian financial crisis, religion in Indonesia, and more.

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On 29 June 2014, 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 in the last seven days. Most of the topics involve economic topics such as business confidence, the looming middle income trap, a forecast for inflation and the trade balance, the updated company profile of Indosat, a new IPO, news surrounding the presidential election, and more.

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On 22 June 2014, 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 in the last seven days. Most of the topics involve economic topics such as an analysis of the rupiah performance, forecasts for inflation and the trade balance, the presidential election, governance in the mining industry, and more.

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On 15 June 2014, 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 in the last seven days. Most of the topics involve economic topics such as the central bank’s benchmark interest rate policy, car sales, foreign investment, a rupiah exchange rate update, the latest news concerning the presidential elections of 2014, and more.

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The Governor of Indonesia’s central bank (Bank Indonesia), Agus Martowardojo, expects that the country’s trade balance will post a surplus of around USD $600 million in April 2014, roughly similar to the surplus that was recorded one month earlier (USD $673 million). The April 2014 surplus would be supported by an improvement in non-oil & gas exports, stable commodity prices (particularly coal and crude palm oil/CPO), as well as the waning influence of the Minerba Act.

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At the Indonesia Investment Summit 2015, organized in Jakarta on 15-16 January 2015, Bank Indonesia official Arief Mahmud presented several views of the central bank on the current Indonesian economy and the global and domestic challenges that it faces. As is widely known, Indonesia has been experiencing a process of slowing economic growth since 2011 due to sluggish global economic growth in combination with the rebalancing of the domestic economy. However, growth is expected to accelerate in 2015.

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Pemerintah mengakui sulit mengejar target pertumbuhan yang ditetapkan dalam APBN-P 2014 yakni sebesar 5.5 persen. Wakil Menteri Keuangan Bambang Brodjonegoro bahkan memperkirakan Indonesia harus bekerja keras mengejar pertumbuhan di level 5.3 persen. “Kita mencoba realistis. Mudah-mudahan di semester II bisa memperbaiki jadi sedikit bisa ke 5.3 persen. Outlook range kami di 5.2-5.3 persen,” tutur Bambang, pekan ini.

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On Monday (23/06), the World Bank released its latest analysis regarding the Indonesian economy. In its report, titled ‘Indonesia: Avoiding the Trap’, the World Bank states that Indonesia needs to implement a six reforms in priority areas in order to avoid the so-called middle income trap (referring to the situation where a country gets stuck at a certain income level). Without these critical reforms, the country’s economic growth will slow and may not be able to escape the middle income trap.

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Chairman of Indonesia's Chamber of Commerce and Industry (Kadin) Suryo Bambang Sulisto stated that the most crucial problem which Indonesia is facing currently as well as in the foreseeable future is unemployment. Sulisto said that while the population of Indonesia has grown continuously in the past decade, unaffected by family planning programs, employment opportunities have not grown accordingly. In fact, they have declined. At end-2013, Indonesia's unemployment rate stood at 6.3 percent (of the total labor force).

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The Indonesia Investment Coordinating Board (BKPM) said that total realized investments in Indonesia in the third quarter of 2013 was recorded at IDR 100.5 trillion (USD $8.89 billion). Of this total figure, IDR 67.0 trillion (USD $5.93 billion) was accounted for by foreign direct investment (FDI), while the remainder (IDR 33.5 trillion) was classified as domestic direct investment (DDI). The total investment realization of IDR 100.5 trillion was the highest ever quarterly investment figure since the BKPM releases these quarterly results.

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The slowdown of Indonesia's economic growth is expected to continue into the third quarter of 2013. The Indonesian government predicts that economic growth will fall below the GDP growth figure realized in the second quarter (5.8 percent). Acting Head of the Fiscal Policy Agency Bambang Brodjonegoro stated that the main factor that causes the country's slowing economic growth in Q3-2013 is reduced household consumption. Domestic consumption in Indonesia accounts for about 55 percent of the country's GDP growth.

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Growth of Gross Fixed Capital Formation (GFCF) in Indonesia has continued to slow down in the first six months of 2013. In the first quarter of 2013, GFCF rose 5.78 percent but in the second quarter the pace fell to 4.67 percent. These results are much lower than last year's quarterly growth rates as can be seen in the table below. In fact, the growth rate in Q2-2013 constitutes the lowest growth rate in the last 13 quarters. In Q2-2013, all sectors experienced weakening investments except for domestic machinery and equipment.

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Investment realization in Indonesia grew 30.2 percent to IDR 192.8 trillion (USD $19.8 billion) in the first six months of 2013 (compared to the same period last year). This result implies that 49.4 percent of the investment target for full 2013 has been achieved. The Indonesia Investment Coordinating Board (BKPM) aims to collect IDR 390.3 trillion in investments this year. This target is divided in domestic direct investment (DDI) of IDR 117.7 trillion and foreign direct investment (FDI) of IDR 272.6 trillion.

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Indonesia's central bank (Bank Indonesia) expects that economic growth of Indonesia in 2013 will not meet the government's target as has been set in the revised State Budget (APNB-P). Last month, both government and parliament of Indonesia agreed on a revised GDP growth assumption of 6.3 percent. However, Bank Indonesia believes that, due to slowing domestic consumption and investments in the current global economic context, the growth is more likely to fall between 5.8 and 6.2 percent.

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Various high government officials, including president Susilo Bambang Yudhoyono, Finance minister Agus Martowardojo and National Development Planning minister Armida Alisjahbana stated that Indonesia's economy is estimated to grow between 6.3 and 6.8 percent in 2014. Its main economic pillars of support are thought to be (foreign and domestic) investments, domestic consumption, and government expenditure. Poverty is targeted to be reduced to ten percent of the population.

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