On 18 May 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 political and economic topics such as updates on the presidential election, the revision of Indonesia's macroeconomic assumptions, youth unemployment, palm oil, coal, company profiles of HM Sampoerna and Telekomunikasi Indonesia, and more.

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Indonesian crude palm oil (CPO) exports may have increased 3.4 percent (month-to-month) to 1.85 million metric tons in April 2014 according to the median forecast of five analysts and traders compiled by Bloomberg. Exports are forecast to increase as buyers boost purchases ahead of the holy Muslim fasting month Ramadan in June and Idul Fitri celebrations. These festivities always trigger increased demand for palm oil. If this projection is accurate, it would imply that Indonesian CPO exports in April are the highest since December 2013.

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Demand for Indonesian crude palm oil (CPO) - both global and domestic demand - surged, giving rise to impressive corporate earnings reports of Indonesian palm oil producers in the first quarter of 2014. Combined, net profit of plantation companies that are listed on the Indonesia Stock Exchange, rose 116 percent. Indonesia's plantation sector is dominated by production of crude palm oil products and derivatives. Because of increased global demand, the value of Indonesian CPO exports is expected to rise to USD $22-24 billion.

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Indonesian companies engaged in the production of crude palm oil (CPO) recorded impressive financial figures in the first quarter of 2014. Combined, 13 CPO companies that are listed on the Indonesia Stock Exchange posted IDR 3 trillion (USD $260.9 million) in net profits over the first quarter of 2014, a 116.1 percentage growth from the same period last year. Main reasons for this growth are the sharply depreciated Indonesian rupiah exchange rate in combination with the rising global CPO price and looming new El Niño cycle.

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Indonesia's March 2014 trade balance recorded a surplus of USD $673 million as the value of exports reached USD $15.21 billion, while imports stood at USD $14.54 billion. It was the second consecutive monthly trade surplus for Indonesia. In February 2014, the country posted an USD $843.4 million trade surplus. In the first three months of this year, Indonesia's trade balance now accumulated to an USD $1.07 billion surplus. Market participants will be pleased to see this balance as it eases pressures on the current account deficit.

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Indonesia Investments updated the company profile of Astra Agro Lestari in our Indonesian Companies section. Astra Agro Lestari is Indonesia's largest agribusiness company by value. The company, majority-owned by diversified conglomerate Astra International, is engaged in palm oil and rubber plantations as well as industrial activities. It currently manages a total plantation area of 281,378 hectares - including nucleus and plasma - in Sumatra, Kalimantan and Sulawesi.

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The Indonesian Palm Oil Association (Gapki) stated that exports of Indonesian crude palm oil (CPO) and its derivatives have increased 13 percent to 1.79 million tons in March 2014 from 1.58 million tons in the previous month. The increase was particularly due to a surge in the price of soybeans since February which makes importers shift their focus to CPO and its derivatives as a substitute for soybeans. Moreover, CPO prices have risen due to speculation about the looming El Niño cycle and declining stockpiles in Indonesia and Malaysia.

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Concerns about the arrival of a new El Niño weather phenomenon have increased in recent weeks. A possible new El Niño cycle has a major impact on the global commodities market. El Niño - a weather phenomenon that occurs once every five years on average - involves periodical warm ocean water temperatures off the western coast of South America which can cause climatic changes across the Pacific Ocean. Its impact on harvests and the world varies; sometimes passing almost unnoticeable (such as in 2010) but it can also be felt worldwide.

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After announcing the low March inflation rate (0.08 percent), Statistics Indonesia (BPS) also released positive news about Indonesia's trade balance. In February 2014, Indonesia recorded a USD $785.3 million trade surplus, supported by a USD $1.58 billion surplus in the non-oil and gas sector (the oil and gas sector recorded a deficit of USD $797.4 million). According to BPS Head Suryamin, exports in February rose 0.68 percent (month-to-month) to USD $14.57 billion, while imports declined 7.58 percent (mtm) to USD $13.78 billion.

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So far, the year 2014 is marked by adjustments in forecasts for commodities demand and prices on the global market. The primary example is coffee. Due to severe drought in Brazil, weak coffee production is expected to result in a shortage of coffee on the international market. Uncertainty about the extent of the shortage has pushed coffee prices up by about 65 percent since the end of 2013. Meanwhile, Brazil's reduced arabica output cannot be replaced by Indonesia's robusta coffee due to high rainfall in the archipelago.

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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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Over the past couple of months we have informed on the shortage of cooking oil on the Indonesian market, the subsequent inflationary pressures this shortage caused, and the policies that were imposed by the government to tackle this shortage. But, we did not devote an entire article to this topic.

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Both Indonesia’s export and import performance was quite amazing in March 2022. While we expected imports to rebound ahead of the start of the Ramadan month (on 1 April 2022), a month that typically gives rise to a big increase in consumption, we did underestimate Indonesia’s export performance in last month’s forecast.

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Although there is plenty of opposition to – and criticism on – Indonesia for allowing crude palm oil (or CPO) to play a big role in the domestic economy (Indonesia being the world’s largest producer and exporter of CPO), the country is currently feeling the windfall from soaring CPO prices. And, it is contributing to Indonesia’s recovery from the severe – and still ongoing – novel coronavirus (COVID-19) crisis.

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Indonesia is the world’s biggest palm oil grower as well as the world’s biggest exporter of crude palm oil (CPO). Traditionally, palm oil exports are ranked among the top three export products of Indonesia (along with coal and natural gas). As such, palm oil is of crucial importance for the Indonesian economy.

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It have not been great times for palm oil farmers and traders. Malaysia’s benchmark palm oil price is currently hovering near a three-year low of 1,949 ringgit (approx. USD $464.8) per ton amid high inventories, rising production and sluggish global demand.

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Several negative sentiments are putting pressure on the crude palm oil (CPO) price in the first week of March 2018. These sentiments are expected to continue pushing downward pressure on the CPO price in the remainder of this week. On Monday (05/03) the CPO price on the Malaysia Derivatives Exchange (May 2018 shipments) fell 0.28 percent to 2,467 ringgit per metric ton. Compared to one week earlier, the price has now declined 2.91 percent.

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In the battle between Indonesia and the European Union (EU) regarding the latter's anti-dumping duties on Indonesian biodiesel exports, Indonesia won six out of seven legal challenges. Indonesia had challenged the EU's duties, set in 2013, on biodiesel imports from Indonesia and Argentina. The World Trade Organization (WTO) ruled, largely, in favor of Indonesia.

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The crude palm oil (CPO) price is expected to strengthen in the first quarter of 2018 due to the impact of the La Nina weather phenomenon and rising CPO demand in the traditional big CPO importing countries. This is good news for stakeholders in the palm oil industry as the price has been sliding around 16 percent so far this year (toward the 2,700 Malaysian ringgit per ton level).

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Foreign exchange earnings are important assets for a national economy. Therefore, many nations have recently been taking a much more protectionist approach vis-à-vis trade in an effort to strengthen their trade positions, generate trade surpluses, hence see the inflow of more foreign exchange earnings. Foreign exchange assets support a stable local currency as well as economy.

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