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Today's Headlines State Budget

  • Indonesia's Parliament Approves Government's 2017 State Budget

    Indonesia's House of Representatives (DPR) approved the central government's 2017 State Budget (APBN 2017) in a plenary session on Wednesday (26/10). This budget is considered realistic with the economic growth target set at 5.1 percent (y/y), government spending at IDR 2,080.5 trillion (approx. USD $160 billion), government revenue at IDR 1,750.3 trillion (approx. USD $135 billion), and the budget deficit at 2.41 percent of gross domestic product (GDP).

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  • Indonesia's 2017 Economic Growth Target Set at 5.1%

    The central government of Indonesia and Commission XI within Indonesia's House of Representatives (DPR) agreed to set the nation's economic growth target at 5.1 percent (y/y) in the draft state budget for 2017. This target is 0.2 percentage points below the GDP growth target that was mentioned by Indonesian President Joko Widodo in a speech last month (based on a financial note) and is also below the 5.2 GDP growth target that was set in the Revised 2016 State Budget. Less optimistic forecasts are especially caused by a cut in government spending.

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  • Fiscal Update Indonesia: Can the 3% of GDP Budget Deficit Cap Be Widened?

    A commission in Indonesia's House of Representatives advises the government to replace a law that sets a maximum budget deficit limit of 3 percent of gross domestic product. This law was implemented in 2003 after Indonesia experienced the devastating effects of the Asian Financial Crisis in the late 1990s. Traumatic experiences made the government decide to prioritize prudent fiscal policies. Although it is unclear what the exact consequences are if the government would breach this cap (perhaps an impeachment bid could be launched), governments always respected the cap.

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  • Fiscal Credibility: Indonesia's Tax Target Realistic in 2017 Budget Draft

    Indonesia has finally become more realistic in terms of setting its tax revenue target. In the 2017 State Budget draft proposal that was sent for approval by the central government to Indonesia's House of Representatives (DPR) earlier this week, it set the 2017 tax revenue target at IDR 1,271.7 trillion (approx. USD $97.1 billion), down 3.6 percent from the target of IDR 1,318.9 trillion worth of tax revenue in the 2016 budget. A more realistic tax revenue target will enhance Indonesia's fiscal credibility.

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  • Indonesia's 2017 State Budget Proposal Considered Realistic

    Earlier this week Indonesian President Joko Widodo sent the proposal for the 2017 State Budget to Indonesia's House of Representatives (DPR). The proposed budget is regarded far more realistic compared to previous budgets drafted by the Indonesian government and therefore speculation immediately suggested that former World Bank managing director Sri Mulyani Indrawati, who became Indonesia's new finance minister in the latest cabinet reshuffle, had big input in this more pragmatic 2017 budget.

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  • Politics Indonesia: Joko Widodo to Decide for another Cabinet Reshuffle?

    There has been rising speculation in Indonesia in recent months that Indonesian President Joko Widodo will decide for another cabinet reshuffle as several ministers are held responsible for the disappointing performance of their ministries (that have reacted too slow to implement new government guidelines, for example those guidelines set in the series of economic policy packages that have been released since September 2015). On 12 August 2015, Widodo had already reshuffled his cabinet, replacing six ministers.

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  • Tax Revenue Realization Indonesia Update: In Need of Revision

    Up to 9 June 2016 tax revenue realization in Indonesia reached IDR 364.1 trillion (approx. USD $27.4 billion), or 29 percent of the target that was set in the 2016 State Budget. This disappointing score is the result of (1) a too ambitious tax income realization target set by the government, (2) low commodity prices (particularly crude oil; curbing tax income from the nation's exports), (3) taxpayers' tax restitution (which rose 32.5 percent y/y in the January-June period), and (4) Indonesia's slower-than-expected economic growth.

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  • Gov't & World Bank Cut Indonesia's 2016 GDP Growth Forecast to 5.1%

    In line with expectations, the government of Indonesia revised down its economic growth target in 2016 from 5.3 percent (y/y) to 5.1 percent (y/y) amid subdued private consumption, slower-than-expected private investment, and low commodity prices. Meanwhile, the World Bank also cut its forecast for Indonesia's economic growth in 2016 to 5.1 percent (y/y), down from its earlier prediction of 5.3 percent (y/y). The World Bank also slashed its outlook for global growth from 2.9 percent (y/y) to 2.4 percent (y/y) this year.

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  • Government Trims Indonesia's GDP Growth Target in 2017 State Budget

    The government of Indonesia revised down its forecast for economic growth in 2017 to the range of 5.3 - 5.9 percent (y/y). On Friday (20/05) Indonesian Finance Minister Bambang Brodjonegoro informed parliament about the change in the growth outlook (related to the 2017 State Budget). Initially, the government projected Indonesia's 2017 GDP growth in the range of 5.5 - 5.9 percent (y/y). Brodjonegoro did not explain, however, why the government decided to revise down its GDP growth forecast in the 2017 State Budget.

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  • Weak Tax Collection, Indonesia Wants to Cut Government Spending

    Due to weaker-than-expected revenue in 2016, the government of Indonesia has to cut government spending by IDR 50.6 trillion (approx. USD $3.8 billion) this year. Indonesian Finance Minister Bambang Brodjonegoro informed that the government is currently in the middle of discussing revisions of the 2016 State Budget (APBN 2016). Weaker-than-expected government revenue is primarily the cause of weaker-than-targeted tax revenue. The government will also revise its inflation, average rupiah rate, and average oil price targets. Despite the expected cut

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Latest Columns State Budget

  • Update on Infrastructure Development in Indonesia under Joko Widodo

    The Finance Ministry of Indonesia announced that it plans to inject USD 1.63 billion into state-owned financing company Sarana Multi Infrastruktur and to transform this company into an infrastructure bank in a move to boost infrastructure development across Southeast Asia’s largest economy. The central government needs private capital to fund its massive infrastructure program for the next five years as it can only account for 30 percent of required investment. For the remainder it relies on private capital and state-owned enterprises.

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  • Poverty Eradication and Unemployment Reduction Below Target in Indonesia

    After Indonesia's outlook for economic growth in 2014 was revised down from 6 percent to between 5.8 and 6 percent, the government also revised targets of poverty and unemployment reduction. In the 2014 State Budget (APBN 2014), the government set the targeted poverty rate at 9.0 to 10.5 percent of Indonesia's total population. However, the government revised down this poverty rate to between 10.54 and 10.75 percent, which is also far below the target that was set in the National Medium Term Development Plan (RPJMN) at 8 to 10 percent.

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  • Macroeconomic Assumptions in Indonesia's State Budget Revised Down

    Only 50 days since the start of the fiscal year 2014 have passed and the government has already shown that it is not convinced to meet targets of basic macroeconomic assumptions set in the 2014 State Budget (APBN 2014). Therefore, the Indonesian government has lowered the outlook for all basic macroeconomic assumptions in the 2014 State Budget. On Thursday 19 February 2014, the government formally presented the downward revision of economic targets in the State Budget to the House of Representitative's Budget Agency.

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  • Poverty Rate of Indonesia Expected to Rise in 2013 due to Higher Inflation

    Indonesia's poverty rate is expected to jump to between 11.13 and 11.37 percent of the total Indonesian population in 2013 due to inflationary pressures. Inflation may reach 9.2 percent at the year end. The new poverty forecast is significantly higher than the government's original target of 9.5 to 10.5 percent as set in the country's State Budget. The revised forecast was presented by Indonesia's Ministry of National Development Planning (Bappenas). Poverty basket inflation is expected to rise accordingly.

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  • Indonesian Government Revises State Budgets of 2013 and 2014

    The government of Indonesia has revised the macroeconomic assumptions that are stated in the State Budgets (APBN) of 2013 and 2014 after a meeting with the budgetary body of the House of Representatives (Badan Anggaran DPR) on Wednesday (28/08). It is the third time that the 2013 State Budget has been revised in order to put it more in line with recent global developments. As the government was also too optimistic when drafting the 2014 Budget, it felt the need for a revision (only 12 days after the announcement of the Budget).

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  • Realization of Indonesia's Budget Deficit in the First Half of 2013

    Realization of Indonesia's budget deficit in the first half of 2013 reached IDR 54.5 trillion (USD $5.5 billion) or 0.58 percent of the country's gross domestic product (GDP). The figure is still well below the target that is set in the revised state budget of 2013, namely IDR 224.2 trillion (USD $22.6 billion) or 2.38 percent of GDP. As a percentage of GDP, the outcome of the deficit in the first half of 2013 was lower than that in the first half of 2012. However, if we compare it with the years 2010 and 2011, the budget deficit in the first half of 2013 is high.

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  • Central Bank of Indonesia Outlines its Macroeconomic Assumptions

    Indonesia's central bank (Bank Indonesia) expects that economic growth of Indonesia in 2013 will not meet the government's target as has been set in the revised State Budget (APNB-P). Last month, both government and parliament of Indonesia agreed on a revised GDP growth assumption of 6.3 percent. However, Bank Indonesia believes that, due to slowing domestic consumption and investments in the current global economic context, the growth is more likely to fall between 5.8 and 6.2 percent.

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  • Indonesia Composite Index (IHSG): Bearish Trap or Bullish Trap?

    Last week, Indonesia's main index (IHSG) rebounded 303 points to 4,818.90. After weeks of foreign outflows, Indonesia finally experienced capital inflows again during the last two days of the week. For example, on Friday (28/06) foreigners bought IDR 960 billion (USD $97.0 million) more Indonesian shares than they sold. However, considering the full week, foreigners still recorded net selling amounting to IDR 1.02 trillion (USD $103 million). Do these last couple of days tell us that the bearish market is over? Lets take a closer look.

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  • End to Uncertainty: Indonesia's Fuel Prices Have Been Raised

    It is official. As of Saturday 22 June 2013, after months of uncertainty and speculation, the price of Indonesia's subsidized fuel has finally been raised. Starting from 0.00 am (midnight) on Saturday, all Indonesians have to pay a higher price of gasoline and diesel. Gasoline has been raised by 44 percent to IDR 6,500 (USD $0.66) and diesel by 22 percent to IDR 5,500 (USD $0.56) per liter. The minister of Energy and Mineral Resources, Jero Wacik, made the announcement on late Friday evening, after which the hike took effect immediately.

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  • Indonesia's Budget Deficit Reaches IDR 25.9 trillion as of May 2013

    Data released by a department of Indonesia's Ministry of Finance showed that the country's budget deficit amounted to IDR 25.9 trillion (USD $2.64 billion) on 31 May 2013. This figure is equivalent to 16.9 percent of the target that is set in the 2013 State Budget (IDR 153.3 trillion). The IDR 25.9 trillion deficit translates to 0.27 percent of Indonesia's gross domestic product (GDP). The maximum amount of deficit - as stipulated by the State Budget Law of 2013 - that is allowed to be maintained is equivalent to 1.65 percent of GDP.

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