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Today's Headlines Indonesian Government

  • Indonesia's New Fiscal Policies to Curb Imports and Support Exports

    Indonesia's New Fiscal Policies to Curb Imports and Support Exports

    On Monday (09/12), the government of Indonesia outlined the long-awaited extension of its economic policy package that was released in August 2013. This extension involves new fiscal policies, aimed at reducing imports and supporting exports, that will be implemented at the start of 2014. An improving global economy in combination with the government's August package and yesterday's extension package is expected to reduce Indonesia's wide current account deficit to a sustainable level of below 3 percent of gross domestic product (GDP).

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  • Income Tax on Imported Goods Raised to 7.5% to Limit Indonesian Imports

    Income Tax on Imported Goods Raised to 7.5% to Limit Indonesian Imports

    In order to improve the country's trade balance (particularly to curb the large current account deficit), the government of Indonesia will raise income tax on imported products through the issuance of a new ministerial regulation (issued by the Finance Ministry). Currently, there are two income tax tariffs on imported goods (see below). According to Finance Minister Chatib Basri, goods that will fall under the new regulation are consumption goods (except for food products). The new income tax tariff is expected to be implemented next week.

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  • Poverty Reduction: One of the Ambitions in Indonesia's RPJMN Plan

    Poverty Reduction: One of the Ambitions in Indonesia's RPJMN Plan

    The government of Indonesia aims to reduce the country's poverty rate to between 6.5 and 8.0 percent by 2019. The government, through its Ministry of National Development Planning (Bappenas), is currently busy finalizing the targets of the National Medium-Term Development Plan 2015-2019 (RPJMN 2015-2019). This RPJMN is the third phase of implementation of the National Long-Term Development Plan 2005-2025 (RPJPN 2005-2025) which forms the basis for ministries and government agencies when formulating their policies.

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  • Indonesian Foreign Exchange Reserves at USD $97.0 billion in October 2013

    Indonesian Foreign Exchange Reserves at USD $97.0 billion in October 2013

    Indonesia's foreign exchange (forex) reserves totalled USD $97.0 billion at the end of October 2013, up USD $1.3 billion from the previous month (USD $95.7 billion). Consequently, the current level of foreign exchange reserves is equivalent to 5.5 months of imports and the government’s foreign debt payment. Bank Indonesia considers the current stockpile of forex reserves adequate to bolster external sector resilience and is above international adequacy standards.

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  • Indonesian Government Planning to Revise the Negative Investment List

    The Indonesian government is in the process of revising the country's Negative Investment List (the list that states which sectors of the economy are closed to foreign investment). Head of the Indonesia Investment Coordinating Board (BKPM), Mahendra Siregar, said that a number of (sub) sectors, previously closed to foreign investment, will be opened up this year. These sectors include telecommunication, financial institutions, pharmaceuticals, tourism, airport and seaport transportation services and management, healthcare, and advertising.

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  • Indonesian Government Offers 27 Infrastructure Projects to Investors

    Two Indonesian government departments - the Ministry of National Development Planning and the Ministry of Economy - have selected 27 infrastructure projects that will be offered to the private sector in 2014. These 27 projects are considered top priority projects and will be offered during the International Indonesian Infrastructure Conference and Exhibition in the form of public-private partnerships (PPPs) with the Indonesian government. The total value of these projects combined is estimated at USD $47.5 billion.

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  • Indonesian Government May Issue its First Ever Euro Bonds in 2014

    In anticipation of tighter US dollar supplies, the government of Indonesia is considering the issuance of euro-denominated bonds in 2014. This would be the first time for the government to issue bonds in the currency. Robert Pakpahan, head of the debt office within Indonesia's Finance Ministry, said that they are discussing both euro- and yen-denominated sovereign bonds, equivalent to USD $6 billion. The bonds will be used to cover the country's budget deficit, which is set at 1.69 percent of GDP or IDR 175.4 trillion (USD $15.5 billion) in 2014.

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  • Indonesia's Palm Oil Sector not Happy with New Plantation Size Limit

    Business players within Indonesia's palm oil sector have expressed concern about a recently introduced law that stipulates limits to plantations sizes, including oil palm plantations. The government of Indonesia issued law Permentan No 98/Permentan/OT.140/9/2013 that sets maximum boundaries to the surface area of eleven commodities. The palm oil industry of Indonesia now argues that targets mentioned in the country's palm oil roadmap cannot be met. For example, the production target of 40 million tons of palm oil by 2020 is in jeopardy.

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  • New Economic Policy Package Will Be Released at the End of October

    The government of Indonesia will release a second economic policy package at the end of October. This new package, which aims to provide attractive tax incentives to investors, is in addition to the package that was released in August 2013 when sharp rupiah depreciation and a rapidly falling stock index occurred as panic emerged after the Federal Reserve hinted at an end to its quantitative easing program. In combination with a widening current account deficit and high inflation, it resulted in large capital outflows from Indonesia.

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  • Indonesian Government Sets Limits to Plantation Sizes of 11 Commodities

    The Indonesian government has limited the surface area of plantations that can be owned by a company or by a group of companies that have one shared management. This new regulatory framework, stipulated in Permentan No 98/Permentan/OT.140/9/2013 with regard to plantation estates' licensing guidelines, is applied to 11 commodities: tea, sugarcane, oil palm, coconut, cotton, rubber, coffee, cacao, cashew nuts, pepper as well as cloves. The new law has been approved by the minister of Justice and Human Rights Amir Syamsudin.

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Latest Columns Indonesian Government

  • Economic Packages Indonesia: Key to Success Lies in Regions

    Economic Policy Packages Indonesia: Key to Success Lies in Regions

    Infrastructure development and deregulation are the two main recipes used by the Indonesian government - under the leadership of Joko Widodo - to attract investment. By making it easier and cheaper to obtain permits and by providing better infrastructure (implying investors need to invest less in additional infrastructure facilities while logistic costs ease) Indonesia's investment climate improves. As such, the ease of doing business in Indonesia will improve accordingly. However, good coordination and cooperation between the central and regional governments is required.

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  • Government Issues Indonesian Retail Government Bonds (ORI)

    Government Issues Indonesian Retail Government Bonds (ORI)

    In an attempt to strengthen the domestic investor base and to meet financing of the Revised 2014 State Budget (APBN-P 2014), the government offers Indonesian Retail Government Bonds (Obligasi Negara Ritel Indonesia, abbreviated ORI) again. This is the 11th time, the government issues ORI bonds since its first launch in 2006. The ORI series ORI011 is offered in the period 1-16 October 2014 with a coupon rate of 8.5 percent and a tenor of three years. The minimum allowed order is IDR 5 million and the maximum IDR 3 billion per individual.

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  • Indonesian Government Proposes Additional Fuel Subsidy Spending

    Indonesian Government Proposes Additional Fuel Subsidy Spending

    The sharply depreciated Indonesian rupiah exchange rate in the second half of 2013 in combination with the decline in domestic oil lifting has led to a soaring of fuel subsidy spending in 2014. In the 2014 State Budget (APBN 2014), the ceiling of energy subsidy spending for 3-kg LPG and fuels was set at IDR 210.7 billion (USD $18.3 billion). However, in the 2014 Revised State Budget Draft, the government proposes to raise the subsidy ceiling to IDR 285 trillion (USD $24.8 billion), thus swelling IDR 74.3 trillion from the initial ceiling.

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  • Preliminary Analysis Parliamentary Election Result in Indonesia

    A Preliminary Analysis of the Parliamentary Election Result in Indonesia

    Although several quick counts of today's legislative election in Indonesia still continue, the big picture is clear. The current opposition party PDI-P will win Indonesia's 2014 parliamentary election, followed by Golkar and Gerindra. This is no surprise as most surveys that were released ahead of the election indicated that these three political parties would be the major contenders. As a whole, the election went relatively smoothly, with only a few minor incidents. The official result will be announced on 9 May 2014.

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  • Third Economic Policy Package Being Prepared by Indonesian Government

    Third Economic Policy Package Being Prepared by Indonesian Government

    Indonesian Economic Minister Hatta Rajasa said that the government is currently engaged in preparing a third economic policy package that aims to reduce the country's current account deficit. In August and December 2013, the government had already implemented two policy reform packages as Indonesia's wide current account deficit and high inflation in combination with the looming end of the Federal Reserve's quantitative easing program led to large capital outflows, thus resulting in sharp rupiah depreciation.

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  • Can Joko Widodo Accelerate the Democratization Process in Indonesia?

    Can Joko Widodo Accelerate the Process of Democratization in Indonesia?

    With Indonesia's presidential election approaching (9 July 2014), investors - both domestic and foreign - have become more hesitant to commit to large investments, instead preferring to wait for the election results first. Obviously, investors want to see a 'market friendly' president to lead Southeast Asia's largest economy for (at least) the next five years; a ruler who can safeguard a conducive investment climate. For the Indonesian people, a just ruler is needed; one who can improve Indonesia's political and social issues.

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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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  • Analysis: What Caused Indonesia's Slowing Economic Growth in 2013

    Analysis: What Caused Indonesia's Slowing Economic Growth in 2013

    On Wednesday 5 February 2014, Statistics Indonesia (BPS, a non-departmental government institute) is expected to release Indonesia's official GDP growth figure for the year 2013. It is estimated that the outcome will be the lowest GDP growth figure since 2009 when Southeast Asia's largest economy grew 4.6 percent after feeling the impact of the global financial crisis. In 2013, again, Indonesia felt the negative influence of external troubles. And in combination with domestic factors, Indonesia's economic growth is expected to be around 5.7 percent in 2013.

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  • Official Press Release Bank Indonesia: Interest Rates Left Unchanged

    Today, Bank Indonesia kept its benchmark interest rate (BI rate) at 7.50 percent at the Board of Governors’ meeting. The lending facility rate and deposit facility rate were maintained at 7.50 percent and 5.75 percent respectively. An assessment of the economy in 2013 and outlook for 2014-2015 indicated that such policy is consistent with ongoing efforts to keep inflation within the target of 4.5±1 percent in 2014 and 4±1 percent in 2015, as well as to help reduce the current account deficit to a sustainable level.

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  • Government of Indonesia Targets to Implement 3 More New Policies in 2013

    Government of Indonesia Targets to Implement 3 New Policies in 2013

    Indonesia's Finance Minister Chatib Basri stated that the government of Indonesia is busy preparing three new policies that aim to restore financial stability as well as attract foreign direct investments. These three new policies involve the higher sales tax on imported luxury cars, a revision of Indonesia's negative investment list, and the higher income tax on imported consumption goods. These three new policies are in addition to the policy package that was introduced by the Indonesian government in August 2013.

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