The Indonesian government may raise the price of subsidized gasoline for April 2015 as the Indonesian Crude Price (ICP) rose through February and March from USD $52 per barrel to USD $57 per barrel based on data from the upstream oil & gas regulator SKK Migas. After the Indonesian government drastically reduced fuel subsidy spending at the start of 2015, subsidized gasoline prices are now set each month, in line with price fluctuations on the world market. For subsidized diesel the government provides a fixed IDR 1,000 per liter.

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Bank Sentral Indonesia (Bank Indonesia) memutuskan untuk tetap menjaga suku bunga acuannya pada 7,5% sebagai hasil keputusan pertemuan Dewan Gubernur Bank Indonesia (BI) yang dilakukan hari ini. Suku bunga overnight deposit facility dan suku bunga lending facility dipertahankan masing-masing 5,5% dan 8%. BI menganggap bahwa kondisi suku bunga saat ini sesuai dengan targetnya untuk mendorong inflasi ke dalam target antara 3,0% sampai 5,0% dalam basis year on year (y/y) di tahun 2015 dan mengurangi defisit neraca transaksi berjalan Indonesia antara 2,5% sampai 3,0% dari produk domestik bruto (PDB).

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According to the latest survey of Bank Indonesia (the central bank of Indonesia), the country’s January retail sales accelerated 10.4 percent year-on-year (y/y), up from the 3.3 percentage point growth pace (y/y) in the preceding month. Retail sales in the first month of the year in Southeast Asia’s largest economy accelerated because of higher sales of information & communication equipment (+29.9 percent y/y) as well as food, beverages & tobacco products (+15.1 percent y/y).

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Pada 8 Maret 2015, Indonesia Investments menerbitkan edisi terbaru dari newsletter-nya. Newsletter gratis ini, dikirimkan kepada para pelanggan kami satu kali setiap minggunya, berisi berita-berita paling penting dari Indonesia yang telah dilaporkan di website kami selama tujuh hari terakhir. Kebanyakan topik bekaitan dengan isu-isu ekonomi seperti analisis performa rupiah, update inflasi terakhir, kesederajatan gender di Indonesia, dampak pertumbuhan kredit yang melambat pada prospek resiko di sektor perbankan Indonesia, dan banyak lagi.

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Pada 2 Maret 2015, Badan Pusat Statistik mengumumkan bahwa tingkat inflasi tahunan Indonesia menurun pada bulan Februari. Di bulan Februari, tingkat inflasi tahunan di negara dengan ekonomi terbesar di Asia Tenggara menurun menjadi 6,29% dari 6,96% pada bulan sebelumnya. Hal ini disebabkan karena turunnya harga bahan bakar dan harga bahan makanan (terutama cabai) kendati adanya tekanan inflasi yang dipicu oleh tingginya harga beras. Pada periode antar bulan (month-to-month), Indonesia mencatat deflasi sebesar 0,36% pada bulan Februari, setelah Januari 2015 juga mencatat deflasi bulanan.

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On 1 March 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic matters such as a forecast for February inflation, an analysis of the rupiah exchange rate, news from the coal mining and palm oil sectors, Islamic finance, the IPO of Mitra Keluarga Karyasehat, and more.

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Tingkat inflasi di Indonesia diperkirakan makin menurun pada Februari 2015 karena harga bahan-bahan makanan menurun. Pengecualian ada pada harga beras. Harga beras telah meningkat 30% dibandingkan tahun sebelumnya menjadi Rp 12 ribu per kilogram di bulan Februari. Harga beras yang lebih tinggi disebabkan karena banyaknya halangan dalam operasi-operasi untuk distribusi raskin dikombinasikan dengan musim panen yang terlambat di tahun ini (antara Maret dan Juni). Fluktuasi harga beras, makanan pokok untuk 250 juta penduduk Indonesia, memiliki dampak yang signifikan terhadap tingkat inflasi di Indonesia.

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After Federal Reserve Chairwoman Janet Yellen indicated that the US central bank will be patient in raising the interest rate environment in the world’s largest economy, Indonesian assets gained on Wednesday (25/02). Both the benchmark Jakarta Composite Index and rupiah exchange rate strengthened 0.51 percent yesterday. Apart from increased speculation that the Fed will not raise interest rates before summer, expectation that Greece will avoid a disastrous default brought more positive market sentiments.

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated JCI or IHSG) posted a series of consecutive record high closes during the past week, primarily on the central bank’s (Bank Indonesia) decision to cut its key interest rate (BI rate) by 25 basis points to 7.50 percent, investors’ positive outlook on Indonesian companies’ corporate earnings in 2015 and expectation that the Eurozone’s quantitative easing program will offset the negative impact of monetary tightening in the USA.

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One day after the surprise interest rate cut by Indonesia’s central bank, Indonesian stocks surge to a new record level led by interest rate sensitive stocks (such as financial institutions, construction firms and property firms) while the rupiah and government bonds are weakening. Yesterday (17/02), Bank Indonesia shocked markets by lowering its key interest rate (BI rate) and deposit facility rate (Fasbi) by 25 basis points, each, to 7.50 percent and 5.50 percent, respectively. Easing monetary policy is back in fashion among the region’s central banks.

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Asian stock markets were mixed on Thursday (30/05). Particularly Hong Kong's Hang Seng Index (HSI) was negatively influenced by Wednesday's falling stock indices in Europe and the USA. In this context, Indonesia's main index (IHSG) was hit as well and fell 1.37 percent to 5,129.65 points. Moreover, the continuing decline of the IDR rupiah makes market participants less enthusiastic to purchase Indonesian stocks. Foreigners were also anxious to sell part of their stock portfolios.

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Throughout the month of May, the level of volatility of Indonesia's main stock index (IHSG) has been remarkable and interesting. At the start of the month we were shocked by Standard & Poor's downgrade of Indonesia's credit rating outlook as well as Moody's warning to take similar measures as Indonesia had been slow to deal with its subsidized fuel policy. These issues were able to drag the index down. Moreover, the threat of higher inflation triggers concerns that the index would show its traditional fall in the month of May.

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Although Indonesia’s government stresses the need to relieve pressure on the state budget (by raising the price of subsidized fuel next month), it plans to allocate an additional IDR 16.1 trillion (USD $1.65 billion) to this year’s fuel subsidy budget. The additional allocation, which covers fuel, LPG and vegetable fuels, will raise government expenditure on fuel subsidies to IDR 209.9 trillion (USD $21.50 billion) from the IDR 193.8 trillion drafted in the original 2013 state budget (APBN 2013). Total energy subsidies will grow to IDR 309.9 trillion this year.

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Last week, Indonesia's main stock index (IHSG) moved remarkably well. The index managed to set a new record high at 5145.68 points on Friday (17/05/13) as it was pushed up by its strongest pillar of support, the consumer sector. Indonesia's consumer sector rose as much as 8.23 percent last week, while the largest obstacle to growth was the country's mining sector, which experienced a correction of 3.31 percent. What are the underlying reasons of last week's gain towards yet another record high? And is it sustainable?

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Positive American and European stock indices on Tuesday (14/05/13) made a good impact on Asian stock indices on Wednesday (15/05/13), including Indonesia's main index (IHSG) which is heading towards the 5,100 points line. Although many foreign investors were eager to sell their Indonesian assets, support from other Asian stock indices kept the IHSG within the green zone. At the end of the trading day, it stood at 5,089.88 points, a 0.16 percent rise.

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One of the sectors that showed exceptional growth in 2012 was Indonesia's property market. On average, net profit of companies engaged in Indonesia's property sector grew 68 percent during the full year. Of the 45 property companies that are listed on the Indonesia Stock Exchange (IDX), 26 posted net profit growth that exceeded 50 percent. But the success story did not end there. In the first quarter of 2013, the property sectoral index of the IDX continued its fast pace by rising over 41 percent.

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The release of Indonesia's April deflation figure (0.10%) and orderly May Day demonstrations provided a good environment for investors to continue purchasing Indonesian stocks (despite uncertainty about Indonesia's subsidized fuel policy. Moreover, positive Asian stock indices - in combination with positive European openings on Wednesday - made the Indonesia Stock Index (IHSG) rise to a new record level of 5,060.92 points on Wednesday (01/05/13), a 0.53 percent gain.

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Even though American and European stock indices were positive on Monday (in fact S&P 500 set a new record) it did not impact directly on the performance of Indonesia's main stock index (IHSG) on Tuesday (30/04/13). In the first session, the IHSG's peak at 5,014 points was only short-lived and quickly lowered again. In the second session, however, the index started to show more solid growth (despite the ongoing uncertainty about Indonesia's subsidized fuel price) as Asian stock markets were mostly up.

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After two consecutive days of decline, the Jakarta Composite index (IHSG) had no intention to continue its fall. Indonesia's main index was able to rise 0.43 percent to 4,999.75 points on Monday 29 April 2013. Stocks that had been weakening in recent days were popular among investors. Moreover, both Asian stock indices and foreign net purchases of Indonesian stocks supported Indonesia's index, although it fell short of reaching the psychological boundary of 5,000 points.

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One piece of evidence of international confidence in the Indonesian economy is the steady upgrades in the country's credit ratings by international financial services companies such as Standard & Poor's, Fitch Ratings and Moody's. In late 2011, Fitch Ratings was the first to reinstate Indonesia's investment grade status after a 14-year hiatus. In January 2012, Moody’s followed suit citing the country’s resilient economy. S&P may follow soon, depending on the fuel price hike issue.

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