The government of Indonesia announced on Tuesday (24/12) that increased levels of foreign direct investments will be allowed in the country’s airports, pharmaceutical industries, power plants, and toll roads. The revision of Indonesia's Negative Investment List (Daftar Negatif Investasi), the list which stipulates which sectors are closed (or partly closed) to foreign investment, is conducted in order to attract more foreign investments from abroad as a means to combat slowing economic growth in Southeast Asia's largest economy.

Read more ›

On Sunday 22 December 2013, Indonesia Investments released its latest 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 during the last seven days on our website. Most of the topics involve economic matters such as a forecast of the performance of the Jakarta Composite Index, the government's fuel subsidy spending, crude palm oil exports, the initial public listing of Sido Muncul Herbal, and more.

Read more ›

Deputy Trade Minister Bayu Krisnamurthi said that the Indonesian government is preparing two strategic steps to anticipate the negative impact of the winding down of the Federal Reserve's quantitative easing program. In January 2014, the Fed's bond-buying program will be reduced from USD $85 billion to USD $75 billion per month. The two strategic steps, which will enhance financial stability in Southeast Asia's largest economy, involve the curtailing of Indonesia's current account deficit and high inflation.

Read more ›

The unemployment rate of Indonesia is forecast to ease to 6.03 percent (7.24 million people) in 2014 from 6.25 percent (7.39 million people) in August 2013. The Indonesian government expects a reduction in the unemployment rate as the country's economic growth is assumed to grow strongly and thus will provide more job opportunities for Indonesians next year. Various institutions, including the IMF, World Bank and the Indonesian government, expect Indonesia's GDP growth in 2014 to range between 5.3 and 6.0 percent.

Read more ›

Indonesia's Finance Minister Chatib Basri expects that Indonesia's economic growth in 2013 will reach 5.7 percent, significantly below the government's initial target of 6.3 percent. Basri announced his expectation at the government's economic evaluation and projection meeting. According to Basri, Indonesia's economic growth is stable, despite its slowing trend. Among the G20 member countries, only China will post higher GDP growth (7.8 percent up to the third quarter). Indonesia's inflation rate is expected to reach 8.5 percent (yoy) at the year-end.

Read more ›

Various analysts believe that the benchmark stock index of Indonesia (the Jakarta Composite Index or IHSG) can make a good jump in 2014 to the level of between 5,000 to 5,300 points (from 4,182 currently) despite the looming end of the Federal Reserve's quantitative easing program (QE3) which may result in temporary capital outflow from Indonesia's capital markets. The analysts believe that positive internal developments will provide solid support for the IHSG. These developments include the trade balance, rupiah exchange rate and general elections.

Read more ›

Head of the Indonesia Investment Coordinating Board (BKPM), Mahendra Siregar, is optimistic that total realized investments in Indonesia will exceed the target that is set for this year. The BKPM, a government institution, aims for investments worth of IDR 390 trillion (USD $32.5 billion) in 2013 and IDR 470 trillion (USD $39.2 billion) in 2014. Siregar is optimistic because many investors, particularly from Japan and the USA, are committed to engage in business expansion at the end of this year as well as next year.

Read more ›

The World Bank released the December edition of its Indonesia economic quarterly report. The title of the report “Slower Growth; High Risks” leaves little to the imagination. The World Bank expects Indonesia’s economic growth to slow to 5.3 percent in 2014 amid external shocks, most notably the Federal Reserve 'tapering'. The report states that “while policymakers in Indonesia have taken steps to encourage near-term macroeconomic stability, further structural reforms are needed to support export performance and encourage long-term faster growth.”

Read more ›

The International Monetary Fund (IMF) detects a slowdown in GDP growth in major emerging market economies and decline in commodity prices, and more recently, a reversal in push factors tied to a prospective exit from extraordinarily easy global monetary conditions, has put pressure on Indonesia’s balance of payments and heightened its vulnerability to shocks. Domestic policy accommodation and rising energy subsidies have also given rise to increased external and fiscal imbalances.

Read more ›

On Sunday (15/12), Indonesia Investments released the latest edition of its newsletter. Our weekly newsletter contains the most important news stories on the subject of Indonesia's economy, politics and social issues that were reported in the last seven days. This week's edition includes analyses of Indonesia's benchmark interest rate, current account deficit and geothermal energy development. Visit our Join Us section if you want to sign up for our free newsletter. Our latest newsletter can be viewed here.

Read more ›

Although recently having slowed, Indonesia has experienced solid economic growth over the past ten years, with the country’s gross domestic product (GDP) almost doubling between 2001 and 2012. However, robust economic growth also resulted in significant environmental degradation and accelerated depletion of Indonesia’s natural resources. Sri Mulyani Indrawati, World Bank Group Managing Director (and former Indonesian Finance Minister), emphasized that Indonesia needs to shift from a ‘brown’ to a ‘green’ growth model.

Read more ›

The Indonesian economy, from the expenditure side, is highly dominated by domestic demand. From Q1-2010 to Q1-2015, the average role of domestic demand reached 99.5 percent, with the lowest level at 96.8 percent. The positive side of this situation is that the Indonesian economy is relatively resilient to external factors. History shows that despite the US subprime mortgage crisis and financial crisis in Europe, economic growth in Indonesia remained relatively high and consistent compared to other countries.

Read more ›

Within a couple of days Statistics Indonesia (BPS) is scheduled to release Indonesia’s GDP growth figure for the first quarter of 2015. Despite economic growth forecasts for full-year 2015 - both of the Indonesian government and international institutions such as the World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB) - signalling a rebound from the five-year low of 5.02 percent (y/y) in 2014, various analysts expect to see further slowing economic growth in Q1-2015.

Read more ›

The Asian Development Bank (ADB) released a report today (24/03) in which it discusses recent economic developments in Indonesia. According to the report, Indonesia’s economic growth is projected to accelerate over the two years ahead provided that the Indonesian government continues to implement structural policy reforms. Such reforms - which include the acceleration of infrastructure development, reduction of logistical costs, and enhancing budget implementation - should lead to an improvement of the investment climate.

Read more ›

In a surprise move, the central bank of Indonesia (Bank Indonesia) decided to lower its key interest rate (BI rate) by 25 basis points to 7.50 percent at the Board of Governor’s Meeting on Tuesday (17/02). The deposit facility rate (Fasbi) was also lowered by 25 basis points (to 5.50 percent), while the lending facility rate remained steady at 8.00 percent. In a press release the central bank stated that the current policy direction is estimated to moderate the country’s wide current account deficit further, while inflation remains under control.

Read more ›

In a World Bank blog, World Bank economist Alex Sienaert posted an update on the economy of Indonesia. After Statistics Indonesia (BPS) released the country’s latest GDP growth figures in early February, two important revisions regarding Indonesia’s GDP statistics have been made: (1) BPS has shifted the basis of the computation from the year 2000 to 2010, and (2) it adopted a significantly updated methodology and presentation of the statistics (updating national accounts from the 1993 System of National Accounts [SNA] to SNA 2008).

Read more ›

Although Indonesia’s economic growth slowed further in 2014, there is optimism that growth will accelerate in 2015 despite sluggish global economic conditions (curbing Indonesia’s export performance) and Bank Indonesia’s relatively high interest rate environment. Indonesia’s central bank has raised its BI rate several times over the past one and a half years in an effort to combat high inflation (caused by fuel price hikes), curb capital outflows ahead of US monetary tightening, limit the current account deficit and support the rupiah.

Read more ›

The Indonesian rupiah exchange rate appreciated and Indonesian stocks rose on Wednesday (04/02) on the back of rallying oil prices, a successful bond auction, easing tensions in Europe, and weak US factory orders. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.21 percent to IDR 12,630 per US dollar on Wednesday (04/03). Meanwhile, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) climbed 0.45 percent to 5,315.28 points.

Read more ›

In his presentation at the Indonesia Investment Summit 2015, organized in Jakarta on 15-16 January, Standard Chartered Bank Senior Economist Fauzi Ichsan said that despite the challenges amid global uncertain times, there remains plenty room and opportunity for Indonesia to grow robustly on the long-term. In fact, by 2030 Ichsan believes that Indonesia will be among the world's top ten countries in terms of largest economies. For investors it is important to understand the challenges and key pillars of economic growth.

Read more ›

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.

Read more ›