Today, Statistics Indonesia released Indonesia's economic growth figure for the first quarter of 2013. Compared to Q1-2012, Indonesia's gross domestic product (GDP) grew 6.02 percent. This growth was supported by almost every sector except for Mining and Extracting, which fell 0.43 percent (YoY), indicating that natural resources are still not back on track. The largest contributor to Indonesia's Q1-2013 growth is Transportation and Communication, which grew 9.98 percent.

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Indonesian newspaper Investor Daily reported that stocks at the Indonesia Stock Exchange are still relatively cheap compared to regional stock indices. Currently, the price to earnings ratio (P/E ratio) of Indonesia's main index is about 18. In contrast, South Korea's Kospi index amounts to 34, Japan's Nikkei 28, Taiwan's Taiex 23, and Philippines' PSE stands at 23 times earnings. As the Indonesian economy as well as its companies' profit figures are projected to grow, the P/E is expected to fall to 16 this year.

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The International Monetary Fund (IMF) has upgraded its forecast for this year's economic growth in the ASEAN-5 countries (which comprises Indonesia, the Philippines, Malaysia, Thailand and Vietnam) from an initial 5.5 percent to 6.0 percent. Next year, however, the IMF revised down its forecast for the region from 5.7 percent to 5.5 percent. In 2012, ASEAN-5 had experienced 6.1 percent of economic growth, up from 4.5 percent the previous year.

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Indonesia's palm oil exports (palm oil and palm kernel) rose by 9.1 percent (month-on-month) to 2.04 million metric tons in February, according to data from the Indonesian Palm Oil Association (Gapki). This level - the highest in about five years - was brought on due to increased purchases from China and Pakistan. Indonesia's palm oil industry may experience a better year in 2013 as exports in the first two months of 2013 rose 29 percent from last year.

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BW Plantation (BWPT), a mid-sized crude palm oil (CPO) and palm kernels (PK) producer, felt the impact of weak global demand for commodities in 2012. The company's net profit in 2012 fell 18.17 percent to IDR 262.18 billion (US $26.89 million). Profit per share fell to IDR 64,83 from IDR 79,35 per share last year. The decline in profit was particularly caused by an increase in operating expenses from IDR 131.05 billion (US $13.44 million) to IDR 153.87 billion (US $15.78 million).

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Indonesia has been named one of the world's least attractive places regarding foreign investment in the mining sector according to a survey conducted by Canadian think-tank the Fraser Institute. Major concerns include legal uncertainty and red tape (bureacracy). Moreover, the country has been showing a worsening trend in recent years as its rank declined from 72th in 2009 to 97th in 2013.

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Yesterday, Trans Power Marine made a solid debut on the Indonesia Stock Exchange (IHSG). The Indonesian shipping company listed 15 percent of its shares in the initial public offering (IPO) for the price of IDR 230 per share. At the end of the trading day, its shares had surged by 50 percent to IDR 345 (US $0.04). In total, the company gained IDR 90.85 billion (US $9.4 million) through the IPO. These funds will be used to buy new vessels.

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Exports of Indonesian palm oil may drop to 1.51 million metric tonnes (MT) in February, a 5.6 percent decline from January. Importers prefer to buy the commodity in Malaysia where the government has put in place a duty free tariff on its palm oil exports in order to reduce large stockpiles. Indonesia, on the other hand, has a nine percent export duty as the government tries to gain more revenue out of its natural resources.

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Palm oil ranks among the most important agricultural commodities of Indonesia as this country is the world’s biggest producer of palm oil. This implies that Indonesia generates important foreign exchange earnings from palm oil exports and is a source of income for millions of workers on the plantations.

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In March 2024 global cocoa prices reached record highs (even temporarily touching above USD $10,000 per ton). Considering Indonesia ranks among the world’s top cocoa bean producers it is certainly worthwhile to take a closer look at this issue.

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If we take a look at Indonesian companies that went public in 2023 (becoming listed companies on the Indonesia Stock Exchange, or IDX), we see a couple of companies focused on nickel production, or nickel smelting and refining that made their trading debuts in Indonesia.

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“After the nickel ore ban [imposed in January 2020], we focus on bauxite this year [2022]. And after bauxite, we will go for tin and copper. We have to dare to take these steps!”

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In recent times, commodities have been ‘hot’. The rebound in economic activity after the COVID-19 pandemic (in combination with disrupted supply and logistics chains) started a high commodity price cycle. This cycle that was subsequently strengthened by the Russo-Ukrainian war.

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The non-performing loan (NPL) ratio in Indonesia's mining and excavation sector has risen drastically over the past year. Moreover, there seems few room for an improvement of the NPL ratio in this sector on the short term because mining and excavation companies are expected to remain amid tough conditions in the remainder of the year. The NPL ratio is a key indicator for measuring bad loans.

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An interesting story was released on Bloomberg Markets Asia on Wednesday (29/03) about the sliding role of commodities in the Indonesian economy and the need for Southeast Asia's largest economy to find a new growth engine (or better: several new growth engines) that will take the country to economic growth levels of +7 percent year-on-year (y/y) as once pledged by Indonesian President Joko Widodo during his presidential campaign in 2014.

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It remains unclear whether Indonesia will revise the export ban that is stipulated by the 2009 Mining Law (Law No. 4/2009 on Mineral and Coal Mining) and is supposed to come into effect on 12 January 2017. The 2009 Mining Law stipulates a ban on the export of unprocessed and semi-processed ores from Indonesia. The regulation aims to boost development of the nation's smelting capacity, hence becoming an exporter of materials that are positioned higher up in the value chain while curbing Indonesia's current dependence on exports of raw materials.

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Vale Indonesia, Indonesia's largest nickel producer, is one of those mining companies that has been plagued by low commodity prices. Various securities companies have cut their recommendation for the purchase of Vale Indonesia's shares due to persistently low nickel prices. Net profit of Vale Indonesia is expected to decline by 50 percent (y/y) to USD $26 million in 2016 as the company's average nickel sales price is expected to fall 29.5 percent (y/y) to USD $6,848 per ton this year.

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The International Monetary Fund (IMF) expects Indonesia's economy to expand 4.9 percent year-on-year (y/y) in 2016, slightly up from a 4.8 percentage point (y/y) growth of gross domestic product (GDP) in 2015. On Tuesday (15/03) Luis Breuer, IMF Mission Chief for Indonesia, said the Washington-based lender projects limited growth (+0.1 percent) of Indonesia's private consumption this year. Regarding growth of investment and government spending in 2016, the IMF holds a more positive view. On the same day, the World Bank cut its forecast for Indonesia's 2016 GDP growth by 0.2 percent to 5.1 percent.

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