It was decided at the Board of Governors' Meeting (on 13 March 2014) to hold the benchmark interest rate (BI rate) at 7.50 percent, the lending facility rate at 7.50 percent and the deposit facility rate at 5.75 percent. The policy is consistent with ongoing efforts to guide inflation back towards its target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level. Recent developments indicate that the rate of inflation is under control and the current account deficit is shrinking.

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Amid a political crisis in the Ukraine, the oil price has risen significantly and the US dollar is appreciating against other currencies, particularly emerging market currencies, including the Indonesian rupiah exchange rate. Besides the US dollar, demand for other safe havens (gold, yen as well as US Treasuries) also increased due to Russian presence in the Ukraine (Crimea peninsula). Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.35 percent to IDR 11,632 per US Dollar at 11:40 a.m. local Jakarta time.

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After recording three months of consecutive trade surpluses at the end of 2013, Indonesia's trade balance slipped back into deficit in January 2014. Indonesia - Southeast Asia's largest economy - posted a USD $430.6 million deficit in the first month of 2014. Exports fell 5.79 percent (year-on-year) to USD $14.48 billion, while imports fell 3.46 percent to USD $14.92 billion. The decline in exports were caused by the implementation of the ban on raw minerals (per 12 January 2014). Mineral ore exports fell over 70 percent (month-to-month).

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Inefficiencies at the Tanjung Priok port, Indonesia's main port (located in the heart of Jakarta) and which handles about two-thirds of the country's international trade, are a major cause for logistics costs in the domestic economy. Indonesia's logistics costs account for about 24 percent of GDP, thus significantly higher compared to its regional peers. The long dwell time at Tanjung Priok is one of the largest concerns, particularly as trade flows continue to grow. The average import container dwell time increased from 4.8 days in 2010 to 6.4 days in 2013.

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Indonesia's President Susilo Bambang Yudhoyono will officially appoint Muhammad Lutfi as the new Trade Minister on Friday (14/02), thus replacing Gita Wirjawan who requested to step down as Trade Minister on 31 January 2014 in order to focus solely on his presidential bid. Muhammad Lutfi will only have eight months time to head the Trade Ministry because a new Indonesian government will be inaugurated in October (legislative and presidential elections are scheduled for April and July 2014).

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Market participants were pleased to see the trade balance of Indonesia posting an unexpected USD $1.52 billion surplus in December 2013, almost twice as high than previous forecasts. This December surplus is the highest monthly surplus since December 2011. Exports rose 6.56 percent from November 2013 and 10.33 percent from December 2012, while imports rose 2.04 percent from November 2013 but declined 0.79 percent from December 2012. Although showing an easing trend, Indonesia posted a trade deficit of USD $4.06 billion in full 2013.

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The central bank of Indonesia (Bank Indonesia) expects that the country will record another monthly trade surplus in December 2013. Perry Warjiyo, Deputy Governor of Bank Indonesia, said that the December trade balance is estimated to record a USD $785 million surplus, thus slightly improving from the USD $776.8 million surplus in November 2013. If Bank Indonesia's forecast is realized then it would be the third consecutive month in which Indonesia posts a trade surplus. This is important  to improve the country's financial stability.

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Last Friday, the International Monetary Fund (IMF) released its January 2014 Commodity Market Monthly. This report provides an update on global commodity prices. According to the report, global commodity prices rose 2.4 percent in December 2013, with increases in most main indices. During 2013, commodity prices increased 0.8 percent, with gains concentrated in the energy sector, up 3 percent from December 2012. Metals prices declined 7 percent due to continued increases in new capacity.

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After two long days of intense negotiations, Director of the World Trade Organization Roberto Azevedo announced that the discussions have resulted in the Bali declaration on Saturday morning (07/12). The agreement between the participants were put in 10 documents, known as the Bali Package, and cover trade facilitation (trade liberalizations), agriculture, cotton and development. Azevedo stressed the importance of the agreement when he said "[for the] first time in our history, the WTO has truly delivered."

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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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Indonesia has always been hesitant to join free-trade deals with other nations on fears that domestic industries cannot compete with foreign counterparts, which could lead to an influx of cheaper, yet higher-quality foreign products. During his visit to the White House, Indonesian President Joko Widodo said Indonesia intends to join the Trans-Pacific Partnership (TPP) trade deal. Back home, this statement led to concern. What are the negative consequences for Indonesia when joining this deal?

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Dozens if not hundreds of trade fairs, expos and trade show events for all sectors of business take place in Indonesia throughout each year. There are the Indonesian Infrastructure week (IIW), ILDEX Foodtech expo, International furniture expo, Indonesia marine expo (IME), to name a few. Exploring market opportunities by participating in (international) trade fairs is a great starting point for many enterprises that are thinking of, or already anticipating of, doing business in Indonesia. Your fair presence can be part of a broader positioning strategy how to enter the Indonesian market, and target certain key government and corporate clients.

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Since late 2011 Indonesia has been plagued by a structural current account deficit (CAD) that has worried both policymakers and (foreign) investors. Despite Indonesian authorities having implemented policy reforms and economic adjustments in recent years, the country’s CAD remains little-changed in 2015. The World Bank and Bank Indonesia both expect the CAD to persist at slightly below 3 percent of the nation’s gross domestic product (GDP) in 2015, alarmingly close to the boundary that separates a sustainable from an unsustainable deficit.

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Indonesia posted a higher-than-expected USD $454.4 million trade surplus in April 2015. Previously, analysts predicted to see an April trade surplus of around USD $120 million. However, the USD $454.4 million trade surplus was smaller than the (revised) USD $1 billion trade surplus recorded in March. Moreover, the April surplus (the country’s fifth consecutive trade surplus) is primarily caused by a large drop in imports, signalling that Indonesia’s economic performance remains sluggish at the start of Q2-2015.

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The Customs Identification Number (NIK) in Indonesia is a personal identity number given by the Directorate General of Customs and Excise to users of customs services, such as importers and exporters. This customs number gives customs users the possibility to access or connect with the customs system. The registration of a Customs Identification Number is required in order to perform customs activities. Without such number trading companies are (in most cases) not able to perform import or export activities.

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An Import Identification Number (API) is required in case a company wishes to import goods into Indonesian territory. Without such number a company is not allowed to perform any import activities. Minister of Trade Regulation number 27/M-DAG/PER/5/2012 regarding Provisions on Importer Identification Number (API) as amended by Minister of Trade Regulation number 59/M-DAG/PER/9/2012 (Trade Regulation) regulates the types of API based on the intended use for the product imported.

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The central bank of Indonesia expects that Indonesia’s current account deficit will decline to below the three percent of gross domestic product (GDP) mark by the end of this year supported by sharply falling global oil prices and Indonesia’s recent subsidized fuel price hike. Hendar, Deputy Governor of the central bank, said that for every USD $1 decline in global oil prices, the country’s current account deficit narrows by about USD $170 million. Indonesia’s current account deficit fell to 3.1 percent of GDP in Q3-2014 (from 4.06 percent of GDP in Q2-2014).

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After having recorded a trade deficit for several months, Indonesia finally posted a USD $20 million trade surplus in October 2014, according to data from the country’s Central Statistics Agency (BPS) released on Monday (01/12). Exports in October amounted to USD $15.35 billion, while imports were recorded at USD $15.33 billion. The improvement in Indonesia’s trade balance was mainly on the back of growth in the country’s non-oil & gas sector exports. This sector saw a surplus of USD $1.13 billion (up from USD $760 million in September).

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Governor of the central bank of Indonesia (Bank Indonesia), Agus Martowardojo, commented on Indonesia’s troubled current account balance on Tuesday (12/08). Martowardojo said that he expects the balance to improve in 2014. Last year, the current account deficit of Southeast Asia’s largest economy reached 3.3 percent of gross domestic product (GDP); a level which is generally regarded as unsustainable. This year, the deficit may ease to 3 percent of GDP. For investors the current account balance is an important matter. Why?

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According to Statistics Indonesia (BPS), the country’s trade balance in June 2014 recorded a deficit of USD $0.30 billion after the USD $0.05 billion surplus in the previous month. The performance of Indonesia’s trade balance was influenced by shrinkage of the country’s non-oil & gas surplus amid a lower oil & gas deficit compared to May 2014. Meanwhile, inflation was up 0.93 percent (month-to-month) in July 2014; a good performance amid the Ramadan and Idul Fitri festivities. Annual inflation eased to 4.53 percent (year-on-year).

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