Below is a list with tagged columns and company profiles.

Latest Reports Inflation

  • Inflation Update Indonesia: Relatively High Inflation in October

    The pace of inflation in Indonesia may reach 0.36 percent month-to-month (m/m) in October 2014, slightly higher than inflation in the preceding month (0.27 percent m/m). This forecast for October inflation is higher than this month’s historic average. Usually October tends to show low inflation or deflation as the harvest season commences and other inflationary pressures have also eased after the inflation peak in the June-August period (brought about by seasonal matters such as Islamic celebrations and the start of the new school year).

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  • Bank Indonesia’s Governor Supports Higher Subsidized Fuel Prices

    Agus Martowardojo, Governor of Bank Indonesia, is highly supportive of president-elect Joko Widodo’s plan to increase prices of subsidized fuels before the end of the year as this move would help to diminish the country’s structural current account deficit as well as improve the trade balance. Widodo, who will assume office on 20 October 2014, is expected to raise prices of subsidized fuels by between IDR 1,000 and 3,000 per liter, and relocate state funds to social and economic development.

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  • Indonesia Investments' Newsletter of 5 October 2014 Released

    On 5 October 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 September inflation, August trade balance, the IPO of Blue Bird, a rupiah and stock update, a new plantations bill, political developments, and more.

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  • Consumer Confidence in Indonesia Falls Slightly in September

    A survey of Indonesia’s central bank (Bank Indonesia) shows that Indonesian consumer confidence declined slightly to 119.8 points in September 2014 (from 120.2 points in the previous month) on concerns that price increases will limit people’s purchasing power. These concerns are triggered by president-elect Joko Widodo’s plans to raise prices of subsidized fuels before the year-end in an effort to safeguard the country’s financial fundamentals. Widodo (popularly known as Jokowi) will be inaugurated on 20 October 2014.

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  • Economic Update Indonesia: Inflation, Trade Balance & Manufacturing Activity

    Statistics Indonesia (BPS) released various economic data today (01/10) - including inflation, the trade balance and manufacturing activity - that give a good indication about the state of the Indonesian economy. Although not all data was positive, market participants were content, evidenced by an appreciating rupiah exchange rate and rising Indonesian stocks. Based on the Bloomberg Dollar Index, the rupiah appreciated 0.43 percent to IDR 12,135 per US dollar, while the Jakarta Composite Index climbed 0.06 percent on Tuesday (01/10).

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  • 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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  • 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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  • World Bank: Poverty Reduction in Indonesia Slows; Inequality Rises

    The World Bank released a news update which states that poverty reduction in Indonesia continues to slow down, with only a reduction of 0.7 percentage points over the last two years, or the smallest decline in the last decade. Meanwhile the institution says that inequality also increased in recent years, potentially disrupting social cohesion and hence jeopardizing the gains from solid economic growth, which has helped to reduce the poverty rate to 11.3 percent in 2014, compared to 24 percent in 1999.

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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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  • Energy in Indonesia: Pertamina Raised Prices of 12 Kilogram LPG Canisters

    Fully state-owned energy company Pertamina announced that it has raised the selling price of liquefied petroleum gas (LPG) by 23 percent in an effort to cut losses from subsidized gas sales. The company said that it incurred losses of IDR 2.5 to 3.0 trillion in the first half of 2014 as a result of 12 kilogram LPG canisters sales. These LPG sales are heavily subsidized as the government determines a fixed price, below the market value. However, the government does not reimburse this difference in selling price and market value.

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Latest Columns Inflation

  • Indonesia's Foreign Exchange Reserves Fall, Current Account Deficit Grows

    The foreign exchange reserves of Indonesia keep on falling from its historical peak of USD $124.64 billion in August 2011 to USD $92.67 billion at the end of July 2013. This development seems to highlight long-standing weaknesses in Indonesia's sovereign's external finances, as credit agency Fitch Ratings detected on several occasions before. The republic of Indonesia is currently characterized by four deficits, to wit a current account deficit, a balance of payments deficit, a trade balance deficit and a fiscal deficit.

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  • Slowing Growth in Indonesian Cement Sales Continues in Semester II

    Cement sales in Indonesia grew by seven percent to 32.9 million tons in the period January to July 2013. This pace of growth is significantly lower compared to the double-digit cement growth rate last year and thus forms another sign of cooling economic growth in Southeast Asia's largest economy (cement sales are a good indicator to measure the state of economic growth of a country). A slowdown in domestic cement sales is likely to continue in the second half of 2013, partly due to a decline in infrastructure projects.

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  • Despite Higher Idul Fitri Consumption, Indonesia May Not Reach GDP Target

    Although the holy fasting month of Ramadan and subsequent Idul Fitri celebrations always provide a boost for national economic growth in Indonesia as domestic consumption tends to peak, analysts believe that it will not contribute significantly to the government's 6.3 percent GDP growth target this year. During Ramadan and Idul Fitri (known as Lebaran), Indonesian consumers generally spend more on food products, clothes, shoes, tickets for transport and hotels than in other months, and thus lead to increased economic activity.

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  • Possible End to Quantitative Easing Will Impact on Emerging Economies

    Worldwide, most stock indices fell on Wednesday (07/08), particularly Japan's Nikkei index, after it has been speculated that the Federal Reserve may phase out the third round of its quantitative easing program in September 2013. This program, involving a monthly USD $85 billion bond-buying package, aims to spur US economic growth while keeping interest rates low. However, one important side effect has been rising stock markets around the globe. Now the end of QE3 is in sight, investors shy away from riskier assets.

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  • Indonesia's Inflation Rate Accelerates to 3.29% in July 2013

    Indonesia’s inflation rate in July 2013 was significantly higher than analysts had previously estimated. The country’s July inflation figure accelerated to 3.29 percent. On year-on-year basis, it now stands at 8.61 percent, the highest inflation rate since many years. Particularly food commodity and transportation prices rose steeply. The main reason for Indonesia's high inflation is the reduction in fuel subsidies. In late June, the government increased the prices of subsidized fuels in order to relieve the ballooning budget deficit.

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  • Despite High July Inflation and Trade Deficit, Indonesia's IHSG Slightly up

    As I stated before, mixed sentiments continue to influence the performance of Indonesia's main stock index (IHSG). During Thursday's trading day (01/08), the index moved sideways. News that the Federal Reserve intends to continue its bond-buying program made a good impact. However, this positive sentiment was offset by the release of Indonesia's high July inflation rate as well as the country's continued trade deficit. At the end of the day, the IHSG managed to post a gain as it received support from rising stock indices in Asia.

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  • Facing Higher Inflation: Indonesia's Stock Market under Pressure

    Last week (22-26 July 2013), Indonesia's main stock index (IHSG) ended 1.39 percent down at 4,658.87. The daily value of transactions on the regular market narrowed to an average of IDR 3 trillion (USD $300 million) from IDR 3.84 trillion in the previous week. Foreigners still recorded net sales amounting to IDR 92.9 billion (USD $9.3 million). Lack of positive sentiments, financial results of companies that were below expectation and the continued weakening of the rupiah against the US dollar resulted in the decline of the index.

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  • Investment Realization in Indonesia USD $19.8 billion in Semester I-2013

    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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  • Market Waits for Indonesia's Inflation Data and Financial Company Reports

    Indonesia's main stock index (IHSG) increased 3.98 points to close at 4,724.41 on the last trading day (19/07). During last week, the index rose a limited 1.97 percent amid the context of a weakening IDR rupiah (Indonesia's currency even fell below the psychological boundary of IDR 10,000 against the US dollar). The IHSG's performance last week was mainly supported by rising shares in the country's finance, property, construction and metal mining sectors, while the cement and plantation sectors were corrected.

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  • Weakening Rupiah due to Indonesia's Fundamentals and Profit Taking

    The Indonesian rupiah (IDR) is experiencing one of its worst losing streaks in a decade. On Friday (19/07), the currency weakened to IDR 10,070 against the US dollar, which implies a devaluation of 4.14% in 2013 so far. The central bank of Indonesia, Bank Indonesia, does all it can to support the currency: the country's lender of last resort supplies dollars to the market triggering the reduction of foreign reserves from USD $105 million at end-May to $98 million at end-June, and raised its benchmark interest rate (BI Rate) by 50 bps to 6.50%.

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