Below is a list with tagged columns and company profiles.

Today's Headlines Fuel Subsidies

  • Higher Interest Rates in 2015 Could Further Limit GDP Growth of Indonesia

    The economy of Indonesia, which has been slowing since 2011, will have difficulty to rebound in 2015 as the central bank’s key interest rate (BI rate) is expected to be raised again to avert capital outflows brought on by higher interest rates in the US and to combat accelerated inflation after domestic subsidized fuel prices have been raised by the new government led by president-elect Joko Widodo (Jokowi). After a GDP growth pace of 6.5 percent (y/y) in 2011, economic growth in Southeast Asia’s largest economy fell to 5.8 percent (y/y) in 2013.

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  • Indonesia Investments' Newsletter of 28 September 2014 Released

    On 28 September 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 Indonesia’s fuel subsidies, US interest rates, poverty, inequality, GDP growth, palm oil, rice, the Anas Urbaningrum graft case, as well as the passing of a new bill that ends direct voting in the regions, and more.

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  • Jokowi to Cut Fuel Subsidies; Government Sets Aside Social Funds

    Indonesian Finance Minister Chatib Basri stated that the Indonesian government plans to set aside a total of IDR 10 trillion (USD $837 million) in the state budgets of 2014 as well as 2015 to support the poor people of Indonesia through social safety programs. This is yet another indication that prices of subsidized fuels will be raised before the end of the year. Recently, it has been increasingly speculated that Indonesian president-elect Joko Widodo (“Jokowi”) will raise these prices by IDR 3,000 (USD $0.25) per liter.

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  • Budgetary Commission Proposes to Reduce Indonesia’s Energy Subsidies

    The Budgetary Committee of Indonesia’s parliament announced on Monday (22/09) that it proposes the government to spend 1.6 percent less on energy subsidies in 2015. Originally the government allocated IDR 363.5 trillion (USD $30.4 billion) for energy subsidies (which involves fuel and electricity subsidies) in 2015, up from IDR 350.3 trillion (USD $29.3 billion) in 2014. This would be good news for president-elect Joko "Jokowi" Widodo as he would imply have more fiscal room for his reform programs.

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  • Indonesia Investments' Newsletter of 21 September 2014 Released

    On 21 September 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 Indonesia’s fuel subsidies, the Federal Reserve’s FOMC meeting, the IPO of Blue Bird, August car sales, foreign investments in the insurance sector, a palm oil update, the current account deficit, and more.

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  • Car Industry Update Indonesia: Car Sales Increase in August 2014

    Indonesian car sales, an important indicator to measure consumer confidence and domestic consumption, surged 24.1 percent (year-on-year) to 96,728 vehicles in August 2014. However, this growth pace is heavily influenced by public holidays and thus does not signal a marked improvement in Indonesian consumer confidence. In August last year, Indonesian car sales fell because of the limited amount of working days amid the Lebaran holiday (Idul Fitri), causing reduced production and distribution of cars and motorcycles.

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  • Indonesia Investments' Newsletter of 14 September 2014 Released

    On 14 September 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 Indonesia’s fuel subsidies, economic growth in 2015, monetary policy of Bank Indonesia, the Anas Urbaningrum corruption case, emerging Indonesian companies on a global scale, and more.

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  • Indonesia’s Fuel Subsidy Issue: Joko Widodo to Raise Fuel Prices in 2014?

    Indonesian newspaper Investor Daily reported in today’s edition (11/09) that Joko Widodo (who will become Indonesia’s 7th president on 20 October 2014) plans to raise prices of subsidized fuel in November or December 2014. Reportedly, the price of gasoline (premium) will be raised by IDR 1,000 (USD $0.08) to IDR 7,500 (USD $0.64) per liter and the price of diesel (solar) by IDR 1,000 as well to become IDR 6,500 (USD $0.55) per liter. Meanwhile Widodo will enhance the social safety net to protect the poor.

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  • Bank Indonesia’s Dilemma: Reducing or Maintaining the BI Rate at 7.50%?

    There are mixed opinions about the interest rate policy of the central bank of Indonesia (Bank Indonesia). Tomorrow (11/09), at the Board of Governor’s Meeting, the central bank will decide whether or not to change the country’s interest rates. Indonesia’s benchmark interest rate (BI rate) has been held at 7.50 percent for ten consecutive months. This relatively high figure managed to ease high inflation (which emerged after prices of subsidized fuel prices were raised in June 2013). However, it also further slowed economic growth.

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  • Indonesia Investments' Newsletter of 7 September 2014 Released

    On 7 September 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 Indonesia’s fuel subsidies, August inflation, July trade balance, the conflict between the government and Nusa Tenggara Newmont, Jero Wacik’s possible involvement in a corruption case, and more.

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Latest Columns Fuel Subsidies

  • Actual Energy Subsidy Spending by Indonesian Government Well Below Target in 2022. Why?

    The Energy and Mineral Resources Ministry of Indonesia reported that government spending on energy subsidies in full-2022 reached IDR 157.6 trillion (or approx. USD $10.5 billion), well below the target that was set by the central government for 2022 (namely at IDR 211.1 trillion or approx. USD $14.1 billion). So, this certainly is good news for the government’s budget balance.

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  • Rising Logistics Costs after Higher Prices of Subsidized Fuels in Indonesia

    It has been more than a week since the Indonesian government raised its subsidized fuel prices (Pertalite, Pertamax, and automotive diesel fuel) by an average of slightly over 26 percent. One of the most interesting things is to see whether this decision leads to overall growing prices in Indonesian society. After all, fuel is crucial for the movement of goods and services, and has a significant impact on logistics costs.

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  • Perennial Fuel Subsidy Dilemma; After Raising Prices, Indonesia Needs to Brace for High Inflation

    While one month ago we read (in Indonesian media) that Indonesian President Joko Widodo vowed no increase in prices of subsidized fuels before the end of 2022, the situation suddenly changed. Based on reports in Indonesian media in the second half of August 2022 there were growing signs that the government was busy preparing a significant increase in prices of subsidized fuels (involving Pertalite and Pertamax gasoline fuels as well as automotive diesel oil) to safeguard a healthy budget balance for the government.

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  • Indonesia's Energy Subsidy Spending Far Above Target in 2018

    Ahead of the legislative and presidential elections (scheduled for April 2019) the Indonesian government is unwilling to impose impopular measures. One of the side-effects is that subsidy spending has gone beyond the target that was set in the 2018 State Budget. Lets take a closer look at spending on energy subsidies in Indonesia so far this year.

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  • Indonesia's BI Rate Cut Not Enough to Boost Household Consumption?

    The decision of Indonesia's central bank (Bank Indonesia), last week, to cut its key interest rate (BI rate) by 0.25 percent to 7.00 percent and to cut the reserve-requirement ratio for commercial banks' rupiah deposits by 1 percent to 6.5 percent is a decision that should boost household consumption in Indonesia in 2016, improve people's purchasing power, give rise to a stronger automotive and property sector, and boost liquidity at local banks (hence providing room for an acceleration of credit growth in Southeast Asia's largest economy).

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  • Economic Update Indonesia: November Inflation Expected at 0.2%

    After having experienced two consecutive months of deflation in September and October, Indonesia is expected to see inflation again in November, primarily on higher food prices (chicken meat and rice). Agus Martowardojo, Governor of Bank Indonesia, expects an inflation rate of 0.2 percent (month-on-month) in November. This would mean that inflation in full-year 2015 is likely to reach 3 percent (y/y), in line with earlier estimates and within - or perhaps slightly below - Bank Indonesia's target range of 3 - 5 percent (y/y) of inflation in 2015.

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  • What are the Stimulus Measures in Indonesia's Third Economic Policy Package?

    The government of Indonesia unveiled the last installment of a series of three stimulus packages on Wednesday (07/10). The first two installments had been unveiled last month. In general, these stimulus packages aim to boost economic growth of Indonesia (which has slowed to a six-year low) and restore investors' confidence in the Indonesian rupiah and stocks. When markets believed that the Federal Reserve would soon raise its key interest rate, Indonesia was plagued by severe capital outflows pushing the rupiah to a 17-year low.

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  • Indonesia’s Current Account Deficit Explained: Why, What, When & How?

    Since late 2011 Indonesia has been plagued by a structural current account deficit (CAD) that has worried both policymakers and (foreign) investors. Despite Indonesian authorities having implemented policy reforms and economic adjustments in recent years, the country’s CAD remains little-changed in 2015. The World Bank and Bank Indonesia both expect the CAD to persist at slightly below 3 percent of the nation’s gross domestic product (GDP) in 2015, alarmingly close to the boundary that separates a sustainable from an unsustainable deficit.

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  • Indonesian Stocks & Rupiah: Gaining on S&P Rating Outlook Upgrade

    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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  • Inflation Update Indonesia: "April Inflation Higher than Usual"

    Inflation in Indonesia is expected to accelerate to 6.80 percent year-on-year (y/y) in April 2015, from 6.38 percent y/y in the previous month, according to the central bank of Indonesia (Bank Indonesia). As global oil prices have somewhat recovered from their recent lows, they add inflationary pressures in Indonesia (higher transportation costs). On a month-on-month (m/m) basis, Indonesian inflation is expected to be around 0.35 percent in April. This figure would be in sharp contrast to ‘normal’ April inflation.

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