Indonesian President Joko Widodo announced yesterday evening (17/11) that prices of subsidized fuels will be raised by over 30 percent starting from midnight in an effort to reduce state expenses on non-productive matters. Low-octane gasoline (premium) will now cost IDR 8,500 (USD $0.70) per liter, while diesel now costs IDR 7,500 (USD $0.62) per liter. This sudden announcement immediately led to long queues at local gas stations as people still had three hours to enjoy cheaper fuel rates.

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Tensions within Indonesian parliament may have eased after the two opposing coalitions signed a limited power-sharing pact on Monday (17/11) after weeks of negotiations. This pact is expected to reinforce investor confidence in Indonesian politics amid improved political certainty. Previously, parliament was divided into two rival coalitions: the Awesome Indonesia Coalition (Koalisi Indonesia Hebat), which backs Indonesian President Joko Widodo, and the Red-White Coalition (Koalisi Merah-Putih), which is led by Prabowo Subianto.

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After weeks of uncertainty, Indonesian President Joko Widodo announced on Monday (17/11) that prices of subsidized fuels (gasoline and diesel) are to be raised by IDR 2,000 (USD $0.16) per liter starting from midnight. Gasoline (premium) is to be raised from IDR 6,500 to IDR 8,500 per liter, while diesel will be raised from IDR 5,500 to IDR 7,500 per liter. Earlier it was speculated that an IDR 3,000 per liter price hike would be announced. However, as global oil prices have declined sharply, this was considered an unnecessary burden for the people.

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After speculation started to rise that Indonesia would perhaps not raise prices of subsidized fuels (gasoline and diesel) in November as recent declining global oil prices have managed to somewhat relieve the government’s budget deficit, Indonesian Finance Minister Bambang Brodjonegoro said over the weekend that the Indonesian government is still eager to raise these prices within a couple of weeks. However, he added that the price hike will be less than IDR 3,000 (USD $0.25) per liter.

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The ceramic industry in Indonesia is expected to grow about ten percent in 2015 amid the country’s +5 percentage point GDP growth. Economic expansion translates to increased purchasing power of Indonesian consumers and the ceramic industry is one of the industries that will benefit from this. Moreover, as Indonesian President Joko Widodo targets +7 percent GDP by the end of his term, new infrastructure and property projects are to rise as well. As such, domestic ceramic demand will increase accordingly.

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Today is Hari Pahlawan (Heroes’ Day) in Indonesia. On this day, which is always celebrated on 10 November, Indonesia commemorates those people (posthumously) that have made a significant contribution to the country. Currently, the list of Indonesian heroes numbers 163 people (only 12 of which are women), and most of whom were involved in the battle against colonialism. Each year, the Indonesian president can add names to this list. This year, Indonesian President Joko Widodo added four names.

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Statistics Indonesia announced on Wednesday (05/11) that economic growth in Indonesia reached 5.01 percent year-on-year (y/y) in the third quarter of 2014. This result was slightly below analysts’ forecasts and implies that the slowing trend of economic expansion in Southeast Asia’s largest economy continues. Since 2011, gross domestic product (GDP) growth has been declining amid global and domestic developments. The 5.01 percentage point GDP growth in Q3-2014 was the slowest quarterly growth pace in five years.

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Jusuf Kalla, Vice President of Indonesia, confirmed that subsidized fuel prices will be raised this month. Although Kalla declined to announce the specific amount, analysts expect a sharp increase of between IDR 2,000 and 3,000 (roughly USD $0.21) per liter - a price hike of almost 50 percent - to prices of both gasoline and diesel. Currently, the price of premium gasoline is IDR 6,500 (USD $0.54) per liter and diesel IDR 5,500 (USD $0.46). Economists have long requested for higher subsidized fuel prices in Indonesia as these distort the economy.

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The administration of Indonesian President Joko Widodo (popularly known as Jokowi) will not give priority status to the Sunda Strait Bridge project. As such, the new government’s stance is in direct contrast to the previous administration’s stance toward the ambitious infrastructure project. The Sunda Strait Bridge, a planned road and railway connection between the two (westernmost) Indonesian islands of Sumatra and Java, was placed high on the agenda of the government led by Susilo Bambang Yudhoyono.

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On 2 November 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 matters such as GDP growth in the third quarter of 2014, an October inflation update, developments in coal mining, Internet connectivity, Soechi Lines’ IPO, Joko Widodo’s new cabinet, and more.

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International credit rating agency Fitch Ratings maintained Indonesia’s sovereign rating at BBB-/stable outlook (investment grade). Baradita Katoppo, President Director of Indonesia’s Fitch Ratings branch, said that the firm is positive about the country’s financial fundamentals and prudent fiscal policy as the central bank has showed to prefer stability over growth, resulting in slowing credit growth and rising foreign exchange reserves in Southeast Asia’s largest economy. Economic growth is expected to fall to 5.1 percent (y/y) in 2014.

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Last week, Indonesian President Joko Widodo introduced higher subsidized fuel prices in Southeast Asia’s largest economy in a bid to shift generous public spending from fuel consumption to productive and structural economic and social development. Prices of subsidized low-octane gasoline (premium) and diesel (solar) were raised by over 30 percent, or IDR 2,000 (USD $0.17) per liter, starting from 00:00 on Tuesday (18/11). Widodo aims to reallocate these funds to infrastructure, social welfare and the maritime sector.

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Basuki Tjahaja Purnama (better known as Ahok) has been inaugurated as the 17th Governor of Jakarta by Indonesian President Joko Widodo on Wednesday (19/11) The position of Jakarta Governor was previously empty as former Governor Widodo stepped down from this position to focus on a (successful) presidential campaign. Although by law the Deputy Governor (Ahok) automatically becomes the new Governor, this has met fierce resistance from certain sides as Ahok is an ethnic Chinese Christian. This news article is the updated version of an article that was first published on 18 November 2014

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A total of 35 American companies are interested to invest a combined USD $61 billion in Indonesia over the next five years according to a survey conducted by the Paramadina Public Policy Institute, the American Chamber of Commerce in Indonesia (AmCham Indonesia), the Indonesian Employers Association (Apindo), and the Indonesian Chamber of Commerce and Industry (Kadin Indonesia). These 35 US companies have already invested a total of USD $65 billion in Indonesia over the period 2004 to 2012.

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Amid mostly gaining stock markets in Southeast Asia on Tuesday (11/11), the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) rebounded sharply after several days of declines. Most Indonesian blue chip stocks rose considerably after having tumbled in recent days. Positive market sentiments were caused by Joko 'Jokowi' Widodo’s participation in the Asia Pacific Economic Cooperation (APEC) summit in Beijing as well as news that both camps in Indonesian parliament have agreed to work together.

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After Indonesian President Joko Widodo and Vice President Jusuf Kalla have confirmed that prices of subsidized fuels (gasoline and diesel) will be raised in November 2014 in an attempt to ease the country’s wide current account deficit and government budget deficit (which are primarily caused by costly oil imports), domestic car manufacturers and dealers are expected to post declining earnings in 2015. Besides the subsidized fuel price issue, Indonesia’s car industry is also negatively impacted by the country’s slowing economic growth.

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President Joko Widodo’s unexpected visit to the Indonesia Investment Coordinating Board (BKPM) on Tuesday (28/10) signals that the new president of Indonesia is serious about wiping out severe bureaucracy that causes time-consuming and difficult procedures to obtain permits, licenses and certificates in a bid to ease doing business in Indonesia for both foreign and domestic investors. Joko Widodo, popularly known as Jokowi, is eager to tackle the country’s ‘red-tape’ problem as it curtails the pace of economic growth in Indonesia.

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The market showed today (27/10) that the composition of Indonesian President Joko Widodo’s cabinet did not live up to expectations. On Sunday afternoon, Widodo had announced the names of the ministers inside his Working Cabinet (Kabinet Kerja) after having delayed the announcement for almost a week as several of his ministerial candidates needed to be replaced having been red flagged by the country’s Corruption Eradication Commission (KPK). This then heightened expectations that Widodo’s cabinet would constitute a ‘dream team’.

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It was a good start of the week for the benchmark stock index of Indonesia (known as the Jakarta Composite Index, abbreviated IHSG). Various factors, both internal and external, managed to push the index higher on Monday (20/10). Externally, the IHSG was supported by positive Asian indices which responded to last week’s good US economic data (building permits, housing starts, and consumer sentiment). Moreover, the sharply appreciating Indonesian rupiah exchange rate made Indonesian assets more attractive.

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Today (20/10), Central Jakarta seems to have changed into one big party as Joko Widodo was inaugurated as Indonesia’s seventh president earlier this morning. For the remainder of the day celebrations will be held at Monas (National Monument) and surrounding areas. However, it is of vital importance that Widodo (popularly known as Jokowi) will start to focus on this presidential duties tomorrow as the country is facing a number of economic challenges. What are these challenges?

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