Indonesian stocks continue to fall on today’s trading day (28/04). After having declined 3.49 percent yesterday, the benchmark Jakarta Composite Index fell a further 1.00 percent during the first trading session on Tuesday. Investors, particularly foreign ones, are still concerned about weak first quarter financial results of listed Indonesian companies, signalling that the country’s economic growth in Q1-2015 will be disappointing too. Furthermore, the market is waiting for results of the Federal Reserve’s two-day policy meeting which is set to start today.

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The benchmark stock index of Indonesia - Jakarta Composite Index (IHSG) - fell sharply on Monday (27/04) amid mixed regional stock markets. Three main factors caused the weak performance of Indonesian stocks. Firstly, several key companies posted weak first quarter corporate earnings. Secondly, Indonesia’s economic growth in the first quarter may fall below 5 percent (y/y), which would be a six-year low. Lastly, Indonesia is getting bad press around the globe due to imminent executions of convicted foreign drug traffickers.

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On the sidelines of the 24th World Economic Forum (WEF) on East Asia, Indonesia’s Chief Economic Minister Sofyan Djalil said that - despite global challenges - the government maintains its economic growth target of 5.7 percent (y/y) in 2015. However, he added that it will require great effort to achieve this target. One key strategy to achieve the target is to attract foreign investment through several policies including tax incentives and by easing the country’s bureaucratic hurdles for investment permits.

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Two important indicators to measure the condition of an economy are car and cement sales as both statistics provide valuable information about people’s purchasing power (and consumer confidence) as well as infrastructure and property development. In the first quarter of 2015, Indonesia’s car and cement sales declined (compared to the same period in the preceding year), triggering concern that economic growth will fall accordingly. In the first quarter of 2014, Indonesia’s GDP growth had already slowed to 5.14 percent (y/y).

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The deadline for tenders for various infrastructure projects in Indonesia has been extended by the Public Works and Public Housing Ministry because it needs more time to determine the number of projects to be offered and to calculate new budget allocations for these projects. Ministry official Hediyanto W. Husaini said that his ministry is optimistic that by early May 2015 all construction projects can be tendered. Currently, only 9,578 construction projects (about 70 percent of total planned projects) can be tendered.

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The World Bank released its latest Indonesia Economic Quarterly report on 18 March 2015. In this report, entitled ‘High Expectations’, the World Bank states that it praises the early reform progress in several key areas such as fuel subsidies as well as more key reforms that are underway. This raises high expectations about the Indonesian economy in the middle and longer term. However, the government also faces challenges to implement further complex structural reforms amid subdued growth prospects.

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The Indonesian government will speed up construction of the 2,700 kilometers-long Trans-Sumatra toll road by revising Presidential Regulation No 100/2014 on Toll Road Construction in Sumatra and by accelerating the land acquisition process. The Trans-Sumatra toll road will become the main highway on Sumatra that connects Banda Aceh in the north to Bandar Lampung in the south through 24 sections stretching across ten provinces. President Joko Widodo said that construction of the highway is to start in April 2015.

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On Tuesday (03/03) the governments of Indonesia and the Netherlands launched a comprehensive five-year public-private partnership (PPP) for enhancing coastal safety at the northern coastal line of Central Java. By joining forces in this 5 million euro project (financed by the Dutch Sustainable Water Fund), mangrove restoration, small scale hard-engineering, and sustainable land use are to result in reduced erosion risk at the coastal area. Key to the project is the use natural protection to strengthen sustainable coastal engineering.

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Indonesian Transportation Minister Ignasius Jonan said that the Cilamaya port project in Karawang (West Java) may be tendered this year to the private sector. The central government is currently engaged in the preparation of the terms of reference (TOR) for the project. Through the construction of the Cilamaya port, which will occupy 2,000 hectares of land some 65 kilometers east of Jakarta, the government aims to reduce the country’s logistics costs and ease traffic at the Tanjung Priok port, the largest Indonesian seaport, in Jakarta.

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The Indonesian government wants to limit investment opportunities in the country’s cement industry in an attempt to maintain a healthy business climate. Indonesian Industry Ministry official Harjanto said that Indonesia’s current cement production capacity is more than enough to meet domestic demand. Given that most established cement producers have expansion plans the influx of new cement producers leads to an oversupply thus reducing companies’ profit margins. The nation’s cement production capacity stands at 77 million tons per year.

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It has been more than a week since the Indonesian government raised its subsidized fuel prices (Pertalite, Pertamax, and automotive diesel fuel) by an average of slightly over 26 percent. One of the most interesting things is to see whether this decision leads to overall growing prices in Indonesian society. After all, fuel is crucial for the movement of goods and services, and has a significant impact on logistics costs.

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When writing this introduction, the 2021 United Nations Climate Change Conference (also known as COP26) had just started in Glasgow (Scotland). Indonesian President Joko Widodo is among the delegates who is slated to speech about the importance of preventing – and adapting to – climate change, and to seek ways to obtain climate financing as Indonesia is unable to finance the huge and costly energy transition by itself.

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On 30 September 2021 Indonesia’s House of Representatives (Dewan Perwakilan Rakyat, DPR) approved the 2022 State Budget (Anggaran Pendapatan dan Belanja Negara, APBN) that had previously been proposed by the cabinet. And with 14.2 percent of total government spending being reserved for infrastructure development in the 2022 State Budget, the Indonesian government confirms that it remains committed to much-needed infrastructure development.

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Sovereign wealth funds (SWFs) have existed for many decades around the world. By establishing a SWF – and inject capital into the SWF – governments can strengthen their national economies and generate wealth for future generations. In fact, a SWF is essentially a state-owned investment fund typically funded using excess capital.

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As regards Indonesia’s investment and business environment, there were a couple of interesting developments in February 2021. These were developments that – in our opinion – help to strengthen the economy of Indonesia in a fundamental way, albeit it will take a few years (as well as the assistance of other reforms) to fully enjoy the fruits of this labor.

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On 28 August 2020 Indonesian President Joko Widodo officially opened Yogyakarta International Airport (YIA), a brand new airport that is located in Kulon Progo in the Special Region of Yogyakarta; a region known as one of Indonesia’s main tourism centers. Many in fact call Yogyakarta the ‘heart and soul of Indonesia’.

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Those who have visited Indonesia should be well aware of the lack of infrastructure development across the country. Those who have been in urban centers (such as the capital city of Jakarta, Bandung or Surabaya) must have had the experience of being stuck in traffic as the number of road users (mostly cars and motorcycles) outpaces available road surface.

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Across the world, concern over the COVID-19 pandemic grew in September 2020 as the number of new COVID-19 cases continued to rise rapidly. Worldwide, at the end of September 2020, some 34 million people have been infected with the virus, while more than one million people have died after contracting the virus.

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One characteristic of the Indonesian economy is that the state-owned enterprises (SOEs) play an important role in this USD $1.0 trillion economy. They not only play an important role because some of them rank among Indonesia’s biggest companies (in terms of profit, sales and assets), thereby generating plenty of money for the government (in the form of tax revenue or dividend) while at the same time creating jobs for millions of Indonesians.

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On 25 September 2019, only a few days before Indonesia’s House of Representatives (in Indonesian: Dewan Perwakilan Rakyat, or DPR) finished its 2014-2019 term, it approved the 2020 State Budget bill (UU APBN 2020).

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