Market News

Market News - 5-11 February 2017

Self-Sufficiency in Rice Achieved, Indonesia to Become Rice Exporter?” - Indonesia Investments - 10 February 2017

Indonesia's agriculture minister says Indonesia is ready to become a rice exporter after it become self-sufficent in 2016 producing 79.17 million tons of rice. The minister also added that the export destinations for Indonesian rice has already been determined and has already export organic rice to five countries, including Belgium.  The goal of becoming self sufficent has rarely been achieved due to rapidly expanding population and non-optimal techniques. With nearly all Indonesian eating rice everyday, it is a source of national pride to achieve rice self-sufficiency.

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Life Insurance Loses IDR 3.5T, While Overall Insurance Profit Fell 9 Percent” - CNN Indonesia - 10 February 2017

Last year was not a lucky year for the insurance industry. With loss gaining up to IDR 3.5t while the year before that was around IDR 10.23T. Based on the statistic from the Finacial Security Authority (OJK), the overall loss for insurance was 9 percent. For general business insurance, the gross premiums only increased by 10 percent, lower than expected with was around 15-20 percent. 

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Govt Puts Moratorium Against Indian Buffalo Meat Import” - Tempo English - 9 February 2017

The govt temporarily stops the import of buffalo meat from India, due to a tighthening of regulation from countries that are not foot and mouth disease free. The MK ruled to tighten by enacting terms and conditions as well as requirements in the events of an emergency.  Though it can be made possible during situations such as national disasters and depleting meat supply. The govt also decided not to revise the derivative rules of law on Husbandry and Animal Health.

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Moody’s Raises Indonesia Debt Rating Outlook to ‘Positive’” - The Jakarta Post - 9 February 2017

Moody Investors Service has revised the outlook on Indonesian government debt to satbel. It attributed its improved outlook due to emerging signs of reduction in structural constraints on Indonesian rating. As well as it vulnerability to external shpcks  as a result of measures fostering a narrower current account deficit and higher foreign exhange reserves. Meanwhile a downgrade is unlikely even with the psotive outlook. But a rating upgrade would result in further progress in sustainably and demonstrasting enhanced institutional strength.

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Gold Prices Rise Due to Geopolitics Uncertainty” - Antara News - 9 February 2017

In the COMEX division in New York Mercantuke Exchange closed with gold shares rising than of wednesday (Thursday morning local time). It is due to the uncertainty of European and US politics and it turn pushes the gold bars prices. In addition to the USD index decreasing to 0.07 percent and  the Dow Jones Industrial Average going down to  33 points or 0.17 percent. Investors are now slowly moving to the gold shares because of the potential votes on Marine Le Pen and US President Donald Trump new policy.

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Gov't Expects Marine Tourism to Generate USD 4 Billion” - Tempo English - 8 February 2017

Marine tourism is expected to generate up tp USD 4 billion by 2019, four times higher than its current contribution to the tourism industry. Presently, the marine tourism contributes around 40 percent overall to Indonesia's foreign exhange earning from tourism. Indonesia remains unable to untap it marine tourism potential while boasting of its islands and surrounding water. Compared to Malaysia which contributes 40 percent, though it said the sub sector is facing regulatory, human resources and service management problem, hence why it is lower than its neighboor. 

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Suporting Export, Sri Mulyani: Ask investors to trust Indonesian Export Financing Agency” - Kompas - 7 February 2017

Finance minsiter Sri Mulyani has asked investor to keep believing in Indonesia Eximbank (LPEI) which in turn is able to push Indonesian Export  industry. To support the Eximbank will put out bonds as much as IDR 14 trillion or as much as USD 500 million. The hope is so that they are able to reach out to small and medium sized industries. With the market even mre diverse, the Indonesian economic sector will be stronger.

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SOE Assets to Grow 11% in 2017” - Tempo English - 7 February 2017

The ministry of State Owned Enterprises or SOE is predicted by gain a 11.22 percent increase compared to last year. The data showed SOE assets in 2016 increased by 9.8 percent and were higher than the gorvernment's initial target when compared to 2015, and it was helped by assets growth. Meanwhile, SOE liabilities are predicted to hit IDR 4.643 trillion in 2017.

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Asia Shares Track Wall Street Higher, Dollar Becalmed” - Tempo English - 6 February 2017

Asian shares gathers momentum on Wall street while the US dollar hobbled down by lack of progress on US Fiscal stimulus. MSCI index of Asia Pacific outside Japan inched up 0.3 percent while Australia with 0.5 percent and Japan Nikkei rose 0.7 percent respectively.China Central Bank has also raised short-term interest rate. Even though US jobs jumped more than expected in January, its wages growth is still low. The outlook is cautious for the dollar having lost 2.3 percent. Oil prices also spiraled up since the US sanctions on some Iranian individuals.

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“Stock Index (JCI) Opens at 8.75 Points After Positive Outlook” - Media Indonesia - 6 February 2017

Due to market optimism, the index price in the Indonesian Stock Exchange on Monday opened at 8.75 percent. While 45 leading stocks moved up higher of 2.95 points. However, market participants are expected to remain cautious given the global sentiment is not concrete. Especially with the new US administration sanctions on several Iranian entities could threaten global economy and stability.

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Market News - 29 January-4 February 2017

“Globail Oil Price decline amidst concern of US Productions” - Metro TV News - 3 February 2017

Global oil prices declined on thursday (Friday morning local time). The US oil reserve soared unexpectedly to 6.5 million barrel, going up 5 percent . The addition of the oil reserve exceeds analyst expectation. Therefore the investors are concerned that a rising US production will offset several decline in production from other major manufacturers.

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“Europe's Investments in Indonesia Reach US$13.3 Billion” - Tempo English - 2 February 2017

The Investment Coordinating Board (BKPM) notes that European investments has reached USD 13.3 billion in the last five years. Also that the goevrnment will push for other developments in 2017 in other parts of the country. Business sectors that aremost likely to invest are the auto industry, telecommunication, energy, mineral, aviation, and auto component. Other sectors include basic chemicals and pharmaceutical. The top five investing countries are Netherlands, the UK, France, Luxembourg, and Germany.

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“Sugar Price Ceiling of Rp 12,500 per Kg Effective in March” - The Jakarta Post - 2 February 2017

Starting march, he trade ministry will impose th price ceiling of sugar 50 IDR 12.500/kg. Raw sugars will by manufactured by local producers before going to distributers, hoping that by doing this the sugar price will go down. Nonetheless, traders felt that they should have been informed about the margin distributions, and more importantly the retail price instead of the wholesale price. The trade minister however have said that the decision was made to help control the price of sugar.

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“Indonesian Manufacturing Industry Improves, PMI Survey Reveals” - Jakarta Globe - 2 February 2017

After months of contraction the Indonesian manufacturers indicated that the health of the industry has improved.The PMI surveyed that it increased to 50.4 in January. The participants of the survey include over 300 industrial companies. Overall, around 82 percent of the survey participants expecting a higher output this year. 

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“Oil Palm Production Falls Only Slightly Despite Severe Drought” - The Jakarta Post - 1 February 2017

Despite the prolonged drought, the production of palm oil only fell 3 percent compared to two years ago. Howecer the reserve stock of 2016 has dropped drastically because of a government policy that was activated in that same year.Though CPO prices were weak in the beginning of 2016 it kept on rising till the end of 2016. The reason was because of the increase of demand for biodiesel and the food industry amidst an increase of global population.

 

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“Post-Harvest: Indonesian Bureau of Logistics Allocated IDR 2.3 Trillion for Infrastructure Development” - Kompas - 1 February 2017

The Indonesian Bureau of Logistics (Bulog) has prepared around IDR 2.3 trillion for 2017.The fundings comes from the government capital and its own internal funds. The alocations of the funds are for infrastucture development after harvest, such as drying, processing, and packaging. These funds and alocations process will be handled directly by the bureau of logistics.

 

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“Pelindo II Eyes Cooperation with 3 Major Global Shipping Lines” - Tempo - 31 January 2017

Pelindo 2 will cooperate with 3 global shipping lines and transform Tanjung Priok as an intenational hub. The aim is to lower logistics cost by cargo consolidation service, as well as to compete with the neighbooring countries. Tanjung Priok's status will be effective in the second half of 2017.

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“Indonesia Seeks ‘Back Up' of US Investment: BKPM” - The Jakarta Post - 30 January 2017

Indonesia may have to put more effort to attract US investors in the wake of the new presidency. With possible new regulations and policies for the investors by their government; as well as pressure to invest domestically in their own country. Indonesia, at the same time, has to try and seek “back up” investors from other countries while working extra hard to draw interest of the US.

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"Government Launches Import Facility for Export-Oriented SMEs” - The Jakarta Post - 30 January 2017

Indonesian government has introduced an import facility called the Export Purposed Import Facility (KITE) to annuel taxes and other tariffs for SME. By registering at the custom's office, SME's can start reaping its benefits such as a reduction of importing materials and get an annual 9% loan from Indonesian Eximbank, as long as 75% of their products are being exported.The government hopes by implemanting this new facility can reduce the production cost by 25% and therefore boost exports.

 

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Market News - 22-28 January 2017

"CPO Exit Tax Set at US$18 Per Ton” - Antara News - 28 January 2017

The Indonesian government has fixed the export tax for crude palm oil (cpo) for feb 2017 at a 3.46% hike. Meanwhile, the export reference price of cocoa beans has dropped 6.2% for Feb 2017 because of the price of the commodity in world market. However the exit tax, unlike CPO, has remained unchanged.

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"Secondary Mortgage Firm SMF Books 88% Financing Growth” - The Jakarta Post - 27 January 2017

State-owned secondary mortgage company Sarana Multigriya Finansial (SMF) had disbursed IDR 6.96 trillion than it 2015. The firm saw a jump in profit while its revenue has increased as well.  With the government aim to build around 1 million houses for low income civilians every year to reduce housing backlog; SMF aims to channel IDR 7.7 trillion this year.

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"Indonesian Government Opens Gas Import for Power Plants” - CNN Indonesia - 26 January 2017

State-owned PLN announced that the Indonesian government is preparing new regulations to allocate oil and gas for the power plant. One of those points concerning importing Liquefied Natural gas or LNG for safety issues as well as to reduce the production cost of electricity.  However PLN will not be rushing to import as they are still looking for domestic oil and gas potentials. 

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"2017 Indonensian Economic Growth at 5.3 Percent” - Kompas - 25 January 2017

The Indonesian government has targeted 5.1% for economic growth with 5.3% as maximal growth for 2017. This is due to a number of factors such as new regulations or policies of President Donald Trump, the effects of new economic policies from the US which could significantly affect China, and domestic factors in Indonesia. Domestic’s factors include inflation of food and good’s prices, electricity, gas, etc. To push the economic growth in Indonesia to 6%, the GDP must be 37% but as of right now it still stands at 32%.

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"Rupiah Strengthen after Trump Pulls U.S. Out of TPP” - Tempo English - 24 January 2017

US dollars index reportedly plunge after President Trump withdraw from the Trans-Pacific-Partnership TPP while Indonesian Rupiahs continues to increase sharply since Donald Trump’s inauguration;  closing at 13,372. With the Dollar index continuing to fall and weaken, the Indonesian Rupiah continues to rise. The rise of IDR is in line with lower state bond (SUN) yields and might relate to limited growth.

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"Commodities Prices Stabilize, Economic Growth Rises” - Media Indonesia - 23 January 2017

The development of the global situation lately gives a change of prospect in 2017, one of them being the price of commodities which could give positive economic growth in Indonesia.  With the price of commofities rising will help the export or commodities sectors and help the infrastructure as well. Even if the taxes are relatively, there is no current threat on the current government budget. However, private investors growth are still narrow. 

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"TPP Issue: Government Asks to Focus on Bilateral Partnership” - CNN Indonesia - 22 January 2017

The Institute for Development of Economics and Finance (Indef) thinks that bilaterial or regional relationships have more benefits than multilateral relationships such as the Trans Pasific Partnership. Bilateral and regional relations have more knowledge and less difficult regulations, as well as negotiable. They are far more advantageous since the bilateral partnership can have specific demands while the multilateral usually has more general policies.

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