INDONESIA OUTLOOK

From Bloomberg Dec 6, 2013 Indonesian policy makers are grappling with a depreciated exchange rate, elevated inflation and diminished foreign capital inflows undermining President Susilo Bambang Yudhoyono’s legacy of economic stability before he steps down next year. His failure to fix infrastructure gaps in his two terms has added to price pressures, threatening his party’s chances at elections in 2014. The government will allow foreign ownership of as much as 100 percent on airports, airport services and ports, Mahendra Siregar, chairman of the Investment Coordinating Board, told reporters today. For ground and freight terminals, it may be as high as 49 percent, while a cap on overseas holdings in 10 other industries may be eased, he said. The World Bank said last month downside risks to Indonesia’s economic outlook are sizeable, as higher borrowing costs and inflation may have a greater-than-expected effect on domestic demand. Exports have dropped for 18 consecutive months. “Ext...

From Wall Street Journal Feb 14, 2013 PT Astra International plans to continue dominating Indonesia's booming car and motorcycle markets by spending billions of dollars on expansion and becoming the first auto maker to sell a car priced to reach the country's emerging middle class. Astra controls 54% of the passenger-car market through joint ventures with Japan's Toyota Motor Corp., Daihatsu Motor Co. and Isuzu Motor Ltd., and holds 58% of the motorcycle-and-scooter market through a joint venture with Honda Motor Co.  To expand the pool of Indonesians who can afford a car, Astra plans next quarter to introduce models with sticker prices as low as $8,000 through its joint ventures with Toyota and Daihatsu. Currently, the least-expensive passenger cars in Indonesia sell for at least $12,000. "We will be the first offering affordable vehicles," he said. "This year, [auto-sales growth] should at the very least be flat, provided this ne...

From Focus Taiwan Feb 16, 2013 Indonesia has adopted a series of incentives in its trade policies to create favorable conditions for Taiwanese businesses to invest there, an Indonesian official said Friday. The policies introduced to encourage investment include a 10-year preferential tax treatment offer and tax subsidies for 129 industries, Indonesian Minister of Trade Gita Wirjawan said during a press briefing in Jakarta. Gita said there are vast business opportunities in Indonesia's rich natural resources and that the introduction of many of the country's trade, investment and financial policies was designed to pave the way for investors seeking to do business there. Gita said the preferential trade policies and extensive natural resources can create favorable investment conditions for both domestic and foreign investors. For detailed story, visit here

From Bloomberg Feb 13, 2013 Fast Retailing Co., the apparel retailer headed by Japan’s richest man, will open its first Uniqlo branded store in Indonesia by June and plans to add 10 outlets in three years to tap an expanding middle class. The new Jakarta store will be among Uniqlo’s five largest in Asia after South Korea, Taiwan, Hong Kong and Singapore, Naoki Otoma, Fast Retailing’s group executive vice president, said in an interview in Jakarta today. The casual clothing maker, led by billionaire President Tadashi Yanai, has expanded outside Japan to reduce reliance on its home market. It joins other consumer brands including Apple Inc. in seeking growth in Southeast Asia’s largest economy, which has expanded more than 6 percent for nine quarters. With Indonesia’s economy steadily expanding “we’re a bit late to enter this market,” Otoma said. Investment climbed 18.7 percent to 83.3 trillion rupiah ($8.6 billion) in the last quarter from a year earlier, M. Chatib Basri, chairman ...

From Business Week Feb 14, 2013 The lime-green Yamaha Mio motorbike that Suryadi bought in 2011 to commute to his job pumping gas in Jakarta would have cost 11.8 million rupiah ($1,220) had he bought it outright. Instead he financed the purchase with a loan at 16 percent interest. Now the 44-year-old father of three is making monthly payments to  Bank Danamon Indonesia (BDMN)  that eat up about one-fifth of his salary. He’ll end up paying 46 percent more than the cost of the bike by the time he retires the loan. “I don’t have the money to pay in cash,” says Suryadi, who like many Indonesians goes by one name. “Paying in installments is all I can afford.” Amid growth that the Organisation for Economic Co-operation and Development projects will average 6.4 percent during the next four years, cash-strapped borrowers like Suryadi have helped make Indonesian lenders the most profitable among the 20 biggest economies, according to data compiled ...

From the Jakarta Globe Feb 14, 2013 This is the fifth Valentine’s Day I have spent in Indonesia. So I have been thinking about five things which I, and other Europeans, love about this marvelous country. First, Europeans love Indonesian people. I am lucky to have made many great friends in this country. Indonesians are famous for their smiles and are usually very polite. But I also really like it when Indonesians, as they often do, tell me frankly what they really think. I have particularly enjoyed my visits to Indonesian universities and the debates I have had with young students there. Students are articulate and fearless in expressing their opinions. If they disagree with me, they will say so. I find this very refreshing.  European companies also love the energy, skills and hard work of Indonesia’s people, which is why more than a million Indonesian people are employed at some 1,000 firms from Europe which have invested in this country.  Second, Europe...

From Times Union Feb 15, 2013 Indonesia is the large archipelago located between Southeast Asia and Australia. Indonesia’s GDP grew at a CAGR of 5.6% for a total of $890.67 billion at current prices in 2012. The country is recognized for its strong economic growth, prudent fiscal management, and a sound macroeconomic policy framework in recent years. Lucintel estimates the economy of Indonesia would reach $2 trillion by 2018. The country has a risk rating of BBB by different credit rating agencies. Lucintel's study encompasses the major drivers. Indonesia has low dependence on foreign trade. The major source of domestic consumption in the country is its burgeoning middle class. This factor insulates Indonesia from being dependent on exports and become vulnerable to economic risks. Indonesia ranks among the more stable economies of the Asia Pacific region. The country has an advantageous position in terms of its young population. The level of education ...