The most controversial and heatedly debated news story from Indonesia in the past week was parliament’s approval of a new bill that puts an end to direct voting in the regions. This means that it are not the people but instead the regional legislatures that will elect mayors, district heads and governors. Critics say this is a major setback for the democracy process of Indonesia and will make local elections prone to corruption, collusion and nepotism as Indonesia’s legislatures - both at the national and regional level - are believed to be corrupted to a high degree.

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Indonesian stocks and rupiah exchange rate weakened considerably on Friday (26/09) after Indonesian parliament approved a new bill that puts an end to direct local elections. Moreover, market sentiments were negative after stocks on Wall Street plunged on Thursday because of increasing concern about the global economy as well as consumers’ problems with Apple's latest software updates and new product launches (iPhone 6 and iPhone 6 Plus) resulting in a 3.8 percent slide of Apple shares.

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A new Asian Development Bank (ADB) report says that the Indonesian economy is expected to slow on weak export performance in 2014 before picking up in 2015 as external demand improves and the new government’s reform agenda takes hold. In an update of its Asian Development Outlook 2014, the ADB trimmed its forecast for 2014 growth in Indonesian gross domestic product (GDP) to 5.3 percent from 5.7 percent expected in April. The ADB expects a growth pace of 5.8 percent in 2015, down from 6.0 percent in April.

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Low cost carrier Indonesia AirAsia, the Indonesian unit of Malaysia's AirAsia, carried 4.08 million air passengers in the first half of 2014, a growth of 12 percent from the same period last year (3.64 million passengers). However, this growth figure failed to achieve the company’s initial target as it had to reduce flights and routes in an effort to cut back on expenses amid high operational costs. Although the firm managed to pass on part of expensive fuel costs to passengers (fuel surcharge), operational costs for specific routes are high.

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Ahead of the Federal Reserve’s Federal Open Market Committee (FOMC) meeting, the Indonesian rupiah exchange rate depreciated 1.26 percent to IDR 11,971 per US dollar based on the Bloomberg Dollar Index on Monday (15/09). Indonesia’s currency depreciated sharply ahead of the FOMC’s two-day meeting as investors are awaiting for the results on Thursday. As August US retail sales rose at the fastest pace in four months, a winding down of the US bond-buying program and looming US interest rates have resulted in a strong US dollar.

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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 has jumped four places in the World Economic Forum’s Global Competitiveness Index 2014-2015. In the latest edition Southeast Asia’s largest economy is ranked 34th (from 38th in last year’s edition of the index). Since the 2012-2013 edition, when Indonesia was ranked 50th, the country has risen steadily. The Global Competitiveness Index measures the institutions, policies, as well as factors that set the sustainable current and medium-term levels of economic prosperity among 144 countries around the world.

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Newly elected presidential pair Joko “Jokowi” Widodo and running mate Jusuf Kalla, the pair that will guide Indonesia for the next five years starting from October 2014, propose to raise the target for economic growth in Southeast Asia’s largest economy from 5.6 percent to 5.8 percent in 2015. Furthermore, the pair would like to set a stronger average rupiah rate at IDR 11,600 per US dollar over 2015 (from IDR 11,900 as set in the Revised 2015 State Budget). Several reasons are behind these ambitious targets.

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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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The Indonesian rupiah exchange rate appreciated 0.86 percent to IDR 11,678 per US dollar on Monday (11/08) according to the Bloomberg Dollar Index. The rupiah was supported by internal and external factors. On the internal side, the rupiah strengthened as the Constitutional Court is expected to dismiss defeated presidential candidate Prabowo Subianto’s appeal. Former army general Subianto challenged the official election result, claiming that massive violations occurred at polling stations and during the counting process.

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Despite the suicide bombs attack in Jakarta on Wednesday evening (24/05) that killed 3 police officers (and the two militants) at a Jakarta bus station, the Jakarta Composite Index rose after opening on Friday (26/05), while the rupiah only weakened slightly against the US dollar (Thursday was a public holiday). It is yet another example of the fact that markets around the globe have become used to the existence of militant attacks. Particularly a relatively small attack will not lead to any negative sentiments.

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The central bank of Indonesia (Bank Indonesia) maintained its benchmark interest rate - the 7-day reverse repurchase rate - at 4.75 percent at the policy meeting on 17-18 May 2017, a decision that is in line with analysts' forecasts. Bank Indonesia said the decision is consistent with its efforts to maintain macroeconomic and financial system stability "by driving the domestic economic recovery process", while continue to monitor external threats stemming from US policy directions and geopolitical conditions, specifically in the Korea Peninsula, as well as domestic threats stemming from inflationary pressures and ongoing consolidation in the banking and corporate sectors.

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The central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (seven-day reverse repo rate) at 4.75 percent at the April policy meeting (19-20 April 2017), while its deposit facility rate and lending facility rate stayed at 4.00 percent and 5.50 percent, respectively. Bank Indonesia considers the current interest rate environment appropriate to face global uncertainties as well as rising inflationary pressures at home.

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Bank Indonesia, the central bank of Indonesia, is expected to maintain its benchmark interest rate (the seven-day reverse repurchase rate, or reverse repo) at 4.75 percent in the remainder of 2017. Priasto Aji, economist at the Asian Development Bank (ADB), says Bank Indonesia may not need to adjust its key interest rate at all this year even though there is looming further monetary tightening in the USA.

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The central bank of Indonesia (Bank Indonesia) left its interest rate policy unchanged at the March 2017 policy meeting. This decision was in line with expectations especially after Bank Indonesia officials had stated that they see few room for monetary easing in the foreseeable future considering the US Federal Reserve is likely to raise its key rate several times this year (which could encourage capital outflows from Indonesia), while inflationary pressures in Indonesia are rising.

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Stock markets in Asia are mixed, yet tepid on Friday (16/12) after the US Federal Reserve raised its interest rate regime for the second time in a decade on Wednesday (14/12). Although the Fed's move was widely anticipated (and therefore already "priced in" to a high degree) it still resulted in some capital outflows from Asia's stock markets on Thursday (13/12). Japan, as usual, is the notable exception as US dollar strength (or yen weakness) makes Japan's export-oriented stocks more attractive.

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Indonesian President Joko Widodo said market participants should reduce their focus on the US dollar as benchmark for Indonesia's rupiah currency. Instead of the US dollar, it is better to use China's renminbi, the European Union's euro, or Japan's yen as a benchmark for the rupiah as these rates better reflect the fundamentals of Southeast Asia's largest economy. The rupiah has come under pressure against the US dollar after Donald Trump's victory in the 2016 US presidential election.

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The Bank of Indonesia recently resorted to a sudden cut in interest rate (by 25 bps to 4.75 percent) at its 20th October 2016 meeting. This followed a 25 bps reduction in September and thus this is the sixth time this year that the Indonesian central bank has elected to loosen monetary policy.

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Indonesia's benchmark Jakarta Composite Index experienced another tough day on Monday (14/11). After Indonesian stocks plunged 4.01 percent on Friday, stocks fell another 2.2 percent today. Not only Indonesia, but most Asian markets are hit by the selloff, particularly the emerging markets of Southeast Asia. Investors are re-evaluating their emerging market assets now Donald Trump has been elected the next US president (and who can rely on a Republican-controlled US Congress). To make matters worse, current uncertainty is expected to persist in the next couple of months.

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Bank Indonesia (BI) is the central bank of the Republic of Indonesia, and was known as "De Javasche bank" or "The Java Bank" in the colonial period.  Bank Indonesia was founded on 1 July 1953 from the nationalization of De Javasche Bank. As an independent state institution, Bank Indonesia is fully autonomous in formulating and implementing each of its assumed tasks and most policy goals tend to center around the ability to stabilize prices in the economy.

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