The company profile of Summarecon Agung (SMRA) has been added to our catalogue of Indonesian Companies in the Business Section. Summarecon Agung is an Indonesian real estate construction and development company. Having around 40 years of experience, the company is one of the leading property firms in Indonesia, particularly with regard to township development. Its projects include residential as well as commercial development (supported by infrastructure and facilities), shopping malls, hotels and golf courses.

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After experiencing slowing growth in recent months, Indonesian cement sales in October 2013 increased 7.9 percent (year-on-year) to 5.58 million metric tons according to data from the Indonesia Cement Association (ASI). As such, cement sales rebounded from the 5.3 percent growth (yoy) in the previous month. The October growth rate was mainly caused by increased cement demand from islands other than Java. In particular, demand from Sumatra rose significantly. Indonesia's second most populous island bought 1.15 million tons of cement.

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Kawasan Industri Jababeka is an Indonesian industrial estate developer that also has stakes in the country's power generation and infrastructure sectors. Between 70 and 80 percent of the company's total sales are derived from its real estate sales. Currently, the company owns strategic land banks on three locations in Indonesia (all on the island of Java): Kota Jababeka, Cilegon Industrial Park, and Tanjung Lesung. Kawasan Industri Jababeka was the first publicly listed industrial estate developer in Indonesia.

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A preliminary company profile of Metropolitan Land (MTLA) has been added to our Indonesian Companies' section. The company is an Indonesian-based real estate and property developer that focuses on residential and commercial property for Indonesia's middle-low, middle and middle-up segments of Jakarta and the areas around Jakarta that are characterized by high population growth rates. The company's real estate development includes residential houses, shop houses, condominiums, hotels, shopping malls as well as sport centers.

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Real Estate Indonesia (REI) advises the Indonesian government to open up the country's property sector to foreign ownership as this is considered to benefit the Indonesian economy through the collection of taxes and foreign exchange earnings. According to Teguh Kinarto, vice-chairman of the REI's Central Board, the state can gain a lot of revenues through taxes, such as the property tax of 10%, luxury tax of 20%, as well as various other taxes. Currently, foreigners can only buy the right to use property in Indonesia, not the right to own.

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The Federal Reserve's decision not to change its quantitative easing program seems to have led to a bullish market in Asia. Indonesia's benchmark stock index (IHSG) rose 4.37 percent to 4,658.2 points after the first session on Thursday's trading day (19/09). All sectoral indices were up, with the property sector in leading position. Big cap stocks, in particular, performed well. Investors are relieved that the Fed did not alter its stimulus program. Thus, funds are expected to continue flowing to emerging markets, including Indonesia.

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Fitch Ratings, the global rating agency, expects slower growth in Indonesia's property sector for the next 12 months. However, for the longer term, the institution still maintains a positive outlook as Indonesia is characterized by high urbanization, a rapidly expanding middle class and low mortgage rates. Since the revival in 2011, the average selling price of Indonesia's residential properties increased by about 30 percent year-on-year, particularly in the Greater Jakarta area.

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According to property consulting services company Jones Lang LaSalle, Jakarta is showing the steepest increase in prices of luxury houses among several Asian cities that have been monitored. In the second quarter of 2013, prices of luxury houses in Jakarta increased 34.2 percent year on year, followed by Beijing with a 18.7 percent price growth rate. The only city that saw a depreciation of luxury house prices was Singapore (-2.1 percent). Luxury house prices in Jakarta grew nine percent compared to the first quarter of 2013.

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Business players in Indonesia's property sector are not happy with the government's intention to collect more tax from the sector in 2014 and onwards. The property sector has been one of the fastest growing sectors in Indonesia's economy in recent years as demand for property has surged significantly among Indonesia's expanding middle class, resulting in massive profit numbers for Indonesian property companies. Meanwhile, the government of Indonesia has been busy taking efforts to increase tax revenues.

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Pembangunan Perumahan (better known as PP) is a government-controlled construction and investment company in Indonesia. The company's lines of businesses consist of construction services in building and infrastructure, property, engineering, procurement and construction (EPC), as well as investment. PP was the second-largest company in terms of largest net income in Semester I-2013. Being a state-controlled entity, it benefits from the government's increased focus on infrastructure development. 

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According to data from the Indonesian Cement Association (ASI), domestic cement sales have fallen 5.8 percent to 3.3 million tons in August 2013 (from the same month last year). Being an important indicator of economic expansion (as cement sales inform about the development of property and infrastructure projects in the country), these lower cement sales confirm the slowing pace of economic growth in Indonesia. Compared to July 2013, cement sales in Indonesia fell by a massive 32 percent.

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Cement sales in Indonesia grew by seven percent to 32.9 million tons in the period January to July 2013. This pace of growth is significantly lower compared to the double-digit cement growth rate last year and thus forms another sign of cooling economic growth in Southeast Asia's largest economy (cement sales are a good indicator to measure the state of economic growth of a country). A slowdown in domestic cement sales is likely to continue in the second half of 2013, partly due to a decline in infrastructure projects.

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Indonesia's main stock index (IHSG) increased 3.98 points to close at 4,724.41 on the last trading day (19/07). During last week, the index rose a limited 1.97 percent amid the context of a weakening IDR rupiah (Indonesia's currency even fell below the psychological boundary of IDR 10,000 against the US dollar). The IHSG's performance last week was mainly supported by rising shares in the country's finance, property, construction and metal mining sectors, while the cement and plantation sectors were corrected.

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Starting from 1 September 2013, the minimum down payment for the purchase of a second house or apartment (bigger than 70 m²) in Indonesia will be raised to 40 percent. Indonesia's central bank (Bank Indonesia) implements this new rule to avoid a possible credit bubble in Indonesia's property sector. The country's property sector has been booming in recent years, giving rise to many new property projects, soaring profits for property companies (as well as impressive stock performance) and significantly rising property prices.

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After finishing last week with three consecutive days of gains, Indonesia's main stock index (IHSG) reached up to 4,633.11. However, its movement is still rather volatile. Property, finance and consumption stocks were sold by investors after seeing the benchmark interest rate raised by Bank Indonesia (by 50 bps to 6.50 percent) on Thursday (11/07), while metal stocks formed the main supporter of the index at the end of the week. Trading volume in the regular market hit 5.2 trillion and foreigners recorded net purchases of IDR 288 billion.

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In line with the general trend in the Asian region, Indonesia's main stock index (IHSG) rose 0.63 percent to 4,633.11 on Friday (12/07). One of the sectoral indices that did not follow this trend was Indonesia's property sector, which fell 0.66 percent on Friday. Since early June (and in line with large capital outflows), Indonesian property shares have experienced a significant fall of about 20 percent. Moreover, Bank Indonesia's decision to raise its benchmark interest rate by 50 bps to 6.50 percent will most likely add downward pressure on the sector.

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Indonesia's main stock index (IHSG) took another large blow on Wednesday (03/07). The index fell 3.20 percent to 4,577.15 points as investors were worried after reading the revised outlook of the World Bank. The institution downgraded its forecast for economic growth in Indonesia in 2013 from 6.2 percent to 5.9 percent. Higher inflation, because of the recent subsidized fuel price hike, is expected to result in lower domestic consumption. The IDR rupiah posted a slight weakening to IDR 9,941.

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On Friday (14/06), the main stock index of Indonesia (IHSG) jumped 3.32 percent to 4,760.74 points as financial market participants were optimistic about the effects of the higher central bank interest rate that was announced the day before. Moreover, Indonesia's IHSG was supported by a green wave across Asian stock markets, which was partly due to a strong rebound in markets in the United States on Thursday (13/06). Stocks in Indonesia's banking and property sectors were the top-gainers on Friday's trading day.

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On the very last trading day of May (31/05), Indonesia's main stock index (IHSG) closed at 5,068.63 points. During the month, the index showed a volatile performance as it reached its peak at 5,251.29 and its low at 4,907.59 points. Overall, the IHSG continued to rise in May despite various negative sentiments. Foreign investors recorded a net sell of IDR 7.9 trillion (USD $806.12 million). However, optimistic domestic investors kept Indonesia's index in the green zone.

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In the first five months of 2013, Indonesia’s main stock index (IHSG) rose 16.62 percent to a near record high level at 5,068.63 points on Friday (31/05/13). Initially, both analysts and investors were concerned that Indonesia would experience its traditional ‘May Cycle’, the term which refers to the usual fall of Indonesia’s index in the month of May. However, reality proved different as the index recorded a small gain of 7.71 points (0.15 percent) last month.

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