INDONESIA OUTLOOK

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PLN: Gas Tender Held to Accelerate 35,000 MW Power Plant Project

From The Jakarta Post April 2, 2015 PLN, State electricity company has said that its plan to hold the prequalification tender for the procurement of liquefied natural gas (LNG) aims to accelerate a 35,000 Megawatt (MW) power plant construction project. PLN’s director for strategic procurement and primary energy, Amin Subekti, said the company would hold a tender not only to ensure smooth power plant construction but also to secure its gas supply. PLN would auction not only the supply of gas but also its transportation and supplying infrastructure as well as its regasification facilities. He said PLN had announced studies on the prequalification process, followed by consultation sessions held at the company’s headquarters in Jakarta on Wednesday. Moreover he explained that in the end, the tender winners would create consortiums in which each of them would be permitted to procure gas domestically or through imports, to accommodate and to store, to transport and regasify the gas i...

March Inflation Limits Bank Indonesia’s Room to Cut Interest Rates

From The Jakarta Globe April 1, 2015 Inflation increased slightly in March, data from the Central Statistics Agency, or BPS, showed on Wednesday, as prices were pushed up by higher prices for fuel and rice and continued weakening of the rupiah. Analysts said stronger inflation would limit Indonesia’s central bank’s ability to further reduce its key interest rate. The BPS announced March’s headline inflation rate was 6.38 percent, compared with 6.29 percent a month earlier. “This is broadly in line with our forecast and the consensus median,” said Dian Ayu Yustina, a Jakarta-based economist with Bank Danamon Indonesia. The administration of President Joko Widodo has reformed the fuel price policy to a regulated price that can fluctuate according to the global oil price and the exchange rate. Looking forward to the rest of the year, analysts Wai Ho Leong and Angela Hsieh from Barclays said the path of inflation was still benign. They projected inflation to average 6...

World Bank: Financial Inclusion Important for ASEAN

From Antara News March 23, 2015 Managing Director of the World Bank Sri Mulyani Indrawati said financial inclusion is important for countries in Southeast Asia or the ASEAN region, including the Republic of Indonesia. According to Sri Mulyani, countries in the ASEAN region represent 12.3 percent of the world population and do not have access to banks where Indonesia contributes up to 5.9 percent and Vietnam up to 2.1 percent. Meanwhile, small and medium enterprises contribute between 23 to 58 percent of Gross Domestic Product (GDP). However, it is estimated that less than 15 percent of businesses are expected to have adequate access to bank credits. Sri Mulyani pointed out that the central banks and governments of ASEAN have set ambitious targets for it. "It is important that the private sector is provided with more innovative financial services," Sri Mulyani said. National authorities should encourage the private sector to invest more in ...

RI Economy Has Brighter Picture: ADB

From The Jakarta Post March 25, 2015 Unlike other global financial agencies, the Asian Development Bank (ADB) has painted a more positive picture of the Indonesian economy this year, arguing that the government’s policy reforms will have an impact on economic growth sooner than expected. The ADB forecast Indonesia to grow by 5.5 and 6 percent respectively this year and 2016, far more optimistic than estimates from the World Bank and the International Monetary Fund (IMF), which said the economy would grow by 5.2 percent this year. The projections are based on the assumption that the new government’s rapid reform momentum is maintained, especially the acceleration in infrastructure building and budget disbursement. Edimon Ginting, ADB Indonesia chief economist said he expected the country’s economic expansion to be more inclusive and to absorb more jobs, given the current administration’s focus on boosting the manufacturing sector. Currently, every 1 percent of economic growth in...

Indonesia Plans Levy of $50/T on Crude Palm Exports Instead of Tax Threshold Cut

From Reuters March 21, 2015 Indonesia will impose a levy of $50 a tonne on exports of crude palm oil when prices fall below a threshold triggering a monthly tax on shipments overseas, the chief economics minister said. When prices of crude palm oil fall below the threshold of $750 a tonne on average, the world's top producer of the tropical oil cuts the monthly tax on its CPO exports to zero. Benchmark Malaysian palm oil futures have fallen more than a fifth over the last year, and ended on Friday at 2,160 ringgit ($579) per tonne. Indonesian officials are preparing new rules for a charge of $50 on every tonne of CPO shipped at the zero export tax rate, Sofyan Djalil told reporters, with the funds going to help pay for biodiesel subsidies announced in recent weeks. The measure will go to Indonesian President Joko Widodo for approval on his March 30 return from overseas trips. Indonesia ramped up biodiesel subsidies last month, in a bid to protect its biofuels industr...

Indonesia State Pension to Lift Housing Investment Fivefold

From Bloomberg March 19, 2015 Indonesia’s state pension fund plans to increase its investment in affordable housing by fivefold to fulfill demand from low-income workers. BPJS Ketenagakerjaan will invest 10 percent of its 193 trillion rupiah ($14.7 billion) of assets under management to build homes this year, compared with 2 percent in 2014, President Director Elvyn Masassya said in an interview on Thursday. An estimated 34 percent increase in the pension’s membership this year to 22.3 million people may expand the fund’s assets to 233 trillion rupiah by the end of 2015 and help finance the housing investment, Masassya said. The move is in line with President Joko Widodo’s pledge to address a “dangerous” level of inequality that threatens the stability of the world’s fourth most-populous nation and to boost growth to 7 percent. The country is grappling with an economy expanding at the slowest pace in five years and a currency at near the weakest level since 1998, which prom...