On Monday (20/10), Indonesia raised IDR 21.2 trillion (about USD $1.8 billion) from the sale of rupiah-denominated retail bonds (Obligasi Negara Ritel Indonesia, abbreviated ORI). This is not only the country’s largest ORI-bond sale ever, but also the largest bond sale in 2014 so far. ORI, which is usually issued once per year, is a bond that is issued specifically to Indonesian retail investors/individuals. The ORI series ORI011 was offered in the period 1-16 October 2014 with a coupon rate of 8.5 percent and a tenor of three years.

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Indonesian stocks, bonds and the rupiah exchange rate performed well ahead of - and during - the inauguration of Joko Widodo (Jokowi) as Indonesia’s seventh President on Monday morning (20 October 2014). At 10:45 am local Jakarta time, when Jokowi was making his speech in front of the People's Consultative Assembly (MPR), the Jakarta Composite Index had surged 1.36 percent to 5,097.25 points, while the rupiah had appreciated 0.78 percent to IDR 12,015 per US dollar according to the Bloomberg Dollar Index.

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On 19 October 2014, 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 topics such as the performance of Indonesian stocks and the rupiah, foreign direct investments, an update on the coal mining sector, tax, the cement industry, palm oil, steel industry, and more.

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Indonesian stocks and the rupiah exchange rate strengthened considerably on Friday (17/10) due to speculation that president-elect Joko Widodo will raise prices of subsidized fuels soon after his inauguration as Indonesia’s seventh President on Monday 20 October 2014. Furthermore, a meeting between Widodo and powerful opposition leader Prabowo Subianto on Friday morning also managed to ease concerns about political stability in Southeast Asia’s largest economy. Lastly, rising indices on Wall Street added positive market sentiments.

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On 12 October 2014, 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 topics such an outlook for GDP growth, the benchmark interest rate, the equity market, car sales, the coffee industry, the Giant Sea Wall Jakarta, and more.

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Executive director of equity research at JP Morgan Securities Indonesia Aditya Srinath painted a positive picture about the equity market in Indonesia despite the lingering risks emerging from domestic political instability and looming capital outflows due to higher US interest rates in the second quarter of 2015. Srinath stated that Indonesia’s economic resilience so far as well as falling domestic interest rates among Indonesian financial institutions are positive signs for the equity market.

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Both the Indonesian rupiah exchange rate and Indonesian stocks weakened sharply on Wednesday (08/10) due to internal and external factors. Externally, weakening stock indices on Wall Street on Tuesday (07/10) have a severe negative impact on the performance of Asian stocks today. Wall Street was down on the IMF’s downward revised outlook for global GDP growth in 2014 and 2015, as well as on Germany’s industrial production, which fell the most in five years in August 2014.

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Although domestic car sales in Indonesia have again exceeded the psychological level of 100,000 vehicles per month, sales have fallen 12 percent year-on-year (y/y) to 101,801 units in September 2014. In September last year, car sales were heavily supported by the newly-introduced low cost green car (LCGC). Domestic car sales constitute an important indicator to measure consumer confidence and domestic consumption. Domestic consumption accounts for 55 percent of total economic growth in Indonesia.

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On 5 October 2014, 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 topics such September inflation, August trade balance, the IPO of Blue Bird, a rupiah and stock update, a new plantations bill, political developments, and more.

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The Indonesian rupiah exchange rate depreciated sharply on Monday (29/09) due to the market’s reaction against parliament’s passing of a bill that ends direct elections in the regions. On Friday (26/09), parliament agreed that mayors, district heads and governors will be elected by local legislatures instead of the people. Critics say this bill is a major setback for democracy and makes the system more vulnerable to corruption. Last Friday, investors had already pulled USD $119 million from Indonesian shares.

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In line with expectations, the central bank of Indonesia (Bank Indonesia) left its interest rates unchanged at the last monetary policy meeting of 2018 (held on 19-20 December 2018). The benchmark BI 7-Day Reverse Repo Rate was held at 6.00 percent, while the deposit facility and lending facility rates were kept at 5.25 percent and 6.75 percent, respectively.

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Robust rupiah appreciation in the month of November 2018 has taken many people – such as policymakers, businessmen, and analysts, including us – by surprise.

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It are challenging times for businessmen and investors in Indonesia. An escalating trade war between the United States and China is felt by emerging markets including Indonesia. For example, the rupiah has weakened to a 20-year low against the US dollar. Meanwhile, Indonesia's legislative and presidential elections are scheduled for April 2019 and the results can have big consequences for the country's investment climate.

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Based on the latest reports - and contrary to earlier plans - the Indonesian government will not postpone the development of 15,200 MW of power projects. Earlier the government said it wanted to delay various power projects in an effort to curtail imports, thus improve the country's current account balance and ease heavy pressures on the rupiah exchange rate.

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Concerns about Indonesia's current account balance increased after Bank Indonesia announced last week that the country's current account deficit widened to USD $8.02 billion, or 3.0 percent of gross domestic product (GDP), in the second quarter of 2018. It is Indonesia's highest quarterly deficit since Q3-2014, thus putting additional pressures on the rupiah exchange rate.

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There are doubts whether Indonesia's gross domestic product (GDP) growth can reach 5.2 percent year-on-year (y/y) in full-year 2018 as Indonesia is experiencing a couple of major challenges. Challenges include the global trade war, the fragile rupiah, Bank Indonesia's higher benchmark interest rate, the current account deficit, and political tensions ahead of the 2019 legislative and presidential elections. Currently, Indonesia Investments' forecast for Indonesia's economic growth is set at 5.2 percent (y/y) in 2018.

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Chief executive officers (CEOs) in Indonesia have become slightly less optimistic about the Indonesian economy and politics. This makes sense considering the presence of simmering global trade tensions, sharp rupiah depreciation against the US dollar, and Bank Indonesia's recent series of interest rate hikes.

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One of the national industries that is heavily affected by the weak rupiah exchange rate is Indonesia's pharmaceutical industry. Considering around 90 percent of raw materials in the pharmaceutical industry need to be imported from abroad (in US dollars), production costs rise sharply in times of significant rupiah depreciation. It is estimated that materials imported from abroad account for about 75 percent of pharmaceutical companies' total production costs.

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In an ad hoc press conference on Thursday (26/04) Bank Indonesia Governor Agus Martowardojo provided an update on the performance of the Indonesian rupiah as well as an update on the strategies that are - or can be - used by the central bank to safeguard a stable rupiah. When the ad hoc press conference was announced we initially expected to see an interest rate hike. However, based on a statement from Bank Indonesia, this seems to be the last option the central bank wants to use.

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Indonesia's benchmark Jakarta Composite Index fell 1.24 percent to 6,229.63 points on Tuesday (24/04). The performance of Indonesian stocks were in line with the general trend in Southeast Asia. Due to rising US treasury yields (touching nearly 3 percent, its highest level since January 2014) investors withdraw their funds from riskier assets in emerging markets. Concerns over US inflation and the fiscal deficit are behind the rising US treasury yield.

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