Both Industry minister M.S. Hidayat and Economic minister Hatta Rajasa confirmed that on Friday (21/06) the government will announce the increase in price of subsidized fuel after it had already been approved by the House of Representatives (DPR) last Monday (17/06). Immediately after the announcement, the price of fuel is set to be raised. It has been reported that the government's announcement will be revealed at midnight, implying that the price hike is effective starting from Saturday.

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After a long plenary session on Monday (17/06), Indonesia's House of Representatives (DPR) and the government have agreed to the revised 2013 State Budget (APBN-P). The revision was needed as original macroeconomic assumptions began to fall out of tune with reality. Due to global and domestic conditions a number of assumptions needed to revised down. Most controversial decision that was taken is the increase in price of subsidized fuel by 44 percent to IDR 6,500 (USD $0.66) per liter.

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Late on Monday evening (17/06), the increase in the price of subsidized fuel, as stated in Law No. 19/2012, was approved by Indonesia's House of Representatives (DPR) through a voting session as political parties could not agree collectively on the price hike as well as on cash programs for the poor to mitigate effects of the higher fuel price. Demonstrations against the price hike were staged in various regions. In Medan (North Sumatra), Jambi (Central Sumatra) and Ternate (North Moluccas), it led to clashes between the police force and protestors.

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The plenary session of Indonesia's House of Representatives (DPR) is still ongoing as the various political parties could not agree yet on the increase in the price of subsidized fuel. Five political parties agree to the price hike, while four others have rejected it. If the political parties can not agree to the proposal, then it will be decided by individual voting starting from midnight (Indonesian time). The price hike has been long awaited as a measure to relieve pressure on Indonesia's budget deficit.

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Today (15/06), it was reported in Indonesia's media that the government will announce details regarding the new price of subsidized fuel on Monday (17/06) after a plenary session of the House of Representatives (DPR). The Union of Indonesian Workers (Konfederasi Serikat Pekerja Seluruh Indonesia) has announced that it will stage a large demonstration on 17 or 18 June at the DPR/MPR building (the seat of the government) in Indonesia's capital city as well as smaller demonstrations in various cities across the archipelago.

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The central bank of Indonesia (Bank Indonesia) decided today to raise its benchmark interest rate by 25 basis points to 6.0 percent. The decision was made amid concerns about the inflationary impact of a hike in subsidized fuel prices (planned this June) as well as increasing uncertainty in global financial markets as central banks' may scale back stimulus programs. The Indonesian rupiah has weakened considerably in 2013 and forms the worst performer in Asia after the Japanese yen among the 11 most-traded currencies tracked by Bloomberg.

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To ease pressures on the IDR rupiah, Indonesia's central bank has used about USD $2.0 billion of its foreign exchange reserves to support the currency as the country's continuing trade deficit as well as concerns about the possible increase in price of subsidized fuel in June has caused much uncertainty about the level of inflation in the near future and puts downward pressure on the rupiah. Indonesia's foreign exchange reserves fell to USD $105.2 billion in late May 2013 from USD $107.3 billion at the end of April.

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Indonesia's minister of Economy, Ir. M. Hatta Rajasa, stated that the government of Indonesia intends to realize economic growth of at least 6.2 percent in the second quarter of 2013 in order to remain on track for 6.3 percent growth for full year 2013. Although he reminded that it will take hard effort to realize this target, his message contained more optimism than Finance minister Chatib Basri's statement earlier this week who sees 6.0 percent of economic growth as the limit in Q2-2013.

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In recent months, positive fundamentals have coloured stock indices green. Despite volatility, these positive fundamentals remain today. Therefore, analysts of JP Morgan emphasize that people should not turn their backs to stock markets now. Risks are obviously always present but the analysts stress that people should not be too concerned about ongoing volatility. In fact, volatility should be used to one's advantage by purchasing when the index is low. Below are five arguments that JP Morgan mentions as reason to keep buying stocks.

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According to data released by Statistics Indonesia (Badan Pusat Statistik, abbreviated BPS), a non-departmental government institution, Indonesia's inflation figure eased 0.03 percent (month-to-month) in May 2013. The Head of BPS, Suryamin, said that it was the first time since ten years that the country experienced deflation in the month of May. The deflation figure is particularly triggered by the government's policy to allow for more imports of certain food products (such as onions, garlic, tomatoes, and chili).

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Less than 24 hours after having raised the overnight deposit facility rate (known as Fasbi) by 25 bps to 4.25 percent, Indonesia's central bank (Bank Indonesia) also raised its benchmark interest rate (known as the BI rate) by 25 bps to 6.0 percent. Both these policy responses were conducted in order to support the IDR rupiah, which is one of the worst performing Asian currencies against the US dollar in 2013. Indonesia's central bank expects growing inflationary pressures as the Indonesian government intends to cut fuel subsidies this June.

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Despite continued foreign selling of Indonesian stocks on today's trading day (12/06), we see that there is an end in sight to the sell of. During the last three days, Indonesia's main index (IHSG) had fallen considerably. The fall was led by the big cap companies that generally are target of most foreign investment. As stock prices of these companies had experienced a free fall in previous days, it made them attractive for limited buying. However, negative sentiments that have coloured the stock market recently, have not waned yet.

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On the very last trading day of May (31/05), Indonesia's main stock index (IHSG) closed at 5,068.63 points. During the month, the index showed a volatile performance as it reached its peak at 5,251.29 and its low at 4,907.59 points. Overall, the IHSG continued to rise in May despite various negative sentiments. Foreign investors recorded a net sell of IDR 7.9 trillion (USD $806.12 million). However, optimistic domestic investors kept Indonesia's index in the green zone.

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In the first five months of 2013, Indonesia’s main stock index (IHSG) rose 16.62 percent to a near record high level at 5,068.63 points on Friday (31/05/13). Initially, both analysts and investors were concerned that Indonesia would experience its traditional ‘May Cycle’, the term which refers to the usual fall of Indonesia’s index in the month of May. However, reality proved different as the index recorded a small gain of 7.71 points (0.15 percent) last month.

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Asian stock markets were mixed on Thursday (30/05). Particularly Hong Kong's Hang Seng Index (HSI) was negatively influenced by Wednesday's falling stock indices in Europe and the USA. In this context, Indonesia's main index (IHSG) was hit as well and fell 1.37 percent to 5,129.65 points. Moreover, the continuing decline of the IDR rupiah makes market participants less enthusiastic to purchase Indonesian stocks. Foreigners were also anxious to sell part of their stock portfolios.

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Throughout the month of May, the level of volatility of Indonesia's main stock index (IHSG) has been remarkable and interesting. At the start of the month we were shocked by Standard & Poor's downgrade of Indonesia's credit rating outlook as well as Moody's warning to take similar measures as Indonesia had been slow to deal with its subsidized fuel policy. These issues were able to drag the index down. Moreover, the threat of higher inflation triggers concerns that the index would show its traditional fall in the month of May.

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Although Indonesia’s government stresses the need to relieve pressure on the state budget (by raising the price of subsidized fuel next month), it plans to allocate an additional IDR 16.1 trillion (USD $1.65 billion) to this year’s fuel subsidy budget. The additional allocation, which covers fuel, LPG and vegetable fuels, will raise government expenditure on fuel subsidies to IDR 209.9 trillion (USD $21.50 billion) from the IDR 193.8 trillion drafted in the original 2013 state budget (APBN 2013). Total energy subsidies will grow to IDR 309.9 trillion this year.

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Last week, Indonesia's main stock index (IHSG) moved remarkably well. The index managed to set a new record high at 5145.68 points on Friday (17/05/13) as it was pushed up by its strongest pillar of support, the consumer sector. Indonesia's consumer sector rose as much as 8.23 percent last week, while the largest obstacle to growth was the country's mining sector, which experienced a correction of 3.31 percent. What are the underlying reasons of last week's gain towards yet another record high? And is it sustainable?

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Positive American and European stock indices on Tuesday (14/05/13) made a good impact on Asian stock indices on Wednesday (15/05/13), including Indonesia's main index (IHSG) which is heading towards the 5,100 points line. Although many foreign investors were eager to sell their Indonesian assets, support from other Asian stock indices kept the IHSG within the green zone. At the end of the trading day, it stood at 5,089.88 points, a 0.16 percent rise.

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One of the sectors that showed exceptional growth in 2012 was Indonesia's property market. On average, net profit of companies engaged in Indonesia's property sector grew 68 percent during the full year. Of the 45 property companies that are listed on the Indonesia Stock Exchange (IDX), 26 posted net profit growth that exceeded 50 percent. But the success story did not end there. In the first quarter of 2013, the property sectoral index of the IDX continued its fast pace by rising over 41 percent.

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