Happy Idul Fitri 1435 Hijriah

TO KEEP WATCH ON WORLD BANK’S WARNING

Several times before the World Bank had given their views, input and recommendation to the Indonesian Government various aspects of economy but so far the respond to it was unknown

The World Bank believed that the Indonesia Government must pursue growth at close to 9% and join the high-income club in 2030 to avoid the middle income trap in 2030. Such was written in the World Bank’s report entitled “Avoiding the trap.”

The world was waiting for Indonesia to emerge as the world’s economic leader. To meet the objective, Indonesia must step up competitiveness by playing catch up with regress and cover up the infra-structure gap and enhance market function.

The positive step would bring significant impact on the promotion of productivity ad income. Besides, the steps needed better management of Government expenditure and minimize efficiency, like oil subsidy. Such was statement of World Bank’s Country Director for Indonesia Rodrigo Chaves as quoted from World Bank’s internet site.

Furthermore with rising electronic-literate generation and rising labor cost in China, Indonesia gained stronger competitiveness in term of investment and stood a better chance to escape the middle income trap.

The world Bank’s rated although access to education in Indonesia had increased significantly, the great challenge was step up quality of education to make skillful and competent workforce.

Not less important was infra structure building. The World Bank’s rated that all the infra-structure development exercised by the Government and private sector in Indonesia constituted only% pg GDP or about half the need, which caused the nation to lose at least 1% of economic growth each year.

Reduction of oil subsidy would enable the government to allocate the available fund for infra structure building and other pressing need. Re allocation of  budget at provincial level would increase support to infra structure building.

With support of better provincial Governments, public service could be improved, such as health, sanitation, and wastage treatment. In line with development of infra structure and human resources and consistent regulations would enhance growth.

It would be necessary to ease permit facilitation in some sectors. However, at the same time the new regulation allowed more discretion  to ministries and institution. Internal experience showed that the policy most advantageous to the public was transparent policy with zero discretion.

With the above reformation, the World Bank was sure Indonesia could rise and avoid the Middle Income Trap [MIT]. The risk was loud an clear so the Government of RI must be ready to anticipate it.

Unless ready, Indonesia stood a chance to be trapped in MT the way it happened to Ghana who was buoyed by high economic growth and forgot to fill it with development especially infra-structure.

From the World Bank’s recommendation, the Government was called for to give serious attention to that matter. Surely not all of World Bank’s recommendation was  worth accepting, but at least they were considerable because their view was substantially valid. (SS)

Business News - July 2, 2014

JUNE 2014 INFLATION AT 0.43 PERCENT

The development of commodity prices, in general, in June 2014 showed an increase. Based on the monitoring result of the Central Bureau of Statistics (BPS) in 82 cities in June 2014 there was an inflation of 0.43 per cent, or an increase in the Consumers Price Index (CPI) from 111.53 in May 2014 to 112.01 in June 2014. Inflation by calendar year (January to June) 2014 is 1.99 percent from inflation rate year-on-year (June 2014 to June 2013) at 6.70 percent.

Inflation occurred due to price increases as shown by the increase of indexes of all expenditure groups, namely: foodstuffs 0.99 percent: processed foods, beverages, cigarettes, and tobacco 0.32 percent: housing, water, electricity, gas and fuel 0.38 percent: clothing group 0.36 percent: education, recreation, and sports 0.08 percent: and transportation, communications, and financial services 0.19 percent.

Commodities which experienced price increases in June 2014 include: purebred chicken meat, shallots, purebred chicken eggs, electricity rates, air transport rates, tomatoes, garlic, house contract rates, rice, clove cigarettes, filter clove cigarettes, cement, wages of non-foreman construction workers, household fuel, gold jewelry, and motorcycles. While, commodities whose prices decline are: cayenne pepper, red pepper, and fresh fish.

In June 2014, all expenditure groups that contributed to inflation are: foodstuffs 0.19 percent: processed foods, beverages, cigarettes, and tobacco 0.06 percent; housing, water, electricity, gas and fuel 0.09 percent; clothing groups 0.02 percent; health group 0.02; education, recreation, and sports 0.01 percent; and transportation, communications, and financial services 0.04 percent.

Foodstuffs in June 2014 experienced inflation at 0.99 percent or increase of index from 116.26 in May 2014 to 117.41 in June 2014.

Of 11 subgroups in the foodstuff group experienced deflation. Subgroup that experienced the highest inflation are subgroup of meat and products thereof, and lowest was experiences by subgroup of preserved fish at 0.05 percent. While, dominant contributors to deflation are fresh fish subgroup at 0.30 percent.

This group, in June 2014 contributed 0.19 percent to inflation. Dominant contributors to inflation include: purebred chicken meat at 0.06 percent; shallots 0.05 percent: purebred chicken eggs 0.04 percent; tomatoes vegetable and garlic 0.02 percent, respectively; and rice 0.01 percent;. While, dominant contributors to deflation are: cayenne pepper 0.03 percent; red chili 0.02 percent; and fresh fish 0.01 percent.

In June 2014 there was inflation at 0.43 percent with Consumer Price Index (CPI) at 112.01. From 82 cities of IHK, 76 cities experienced inflation and 6 cities experienced deflation. The highest inflation occurred in Ternate  at 1.29 percent with CPI at 114.28, and the lowest occurred in Tual at 0.06 percent with CPI at 113.36. while, the highest deflation occurred in Maumere at 0.72 percent with CPI at 110.93, and the lowest occurred in Pematang Siantar at 0.09 percent with CPI at 115.04. (E) 

Business News - July 2, 2014

IMPORTS IN MAY 2014 AT USD 14.76 BILLION

1.  Oil & Gas and Non Oil & Gas Imports

Indonesia imports in May 2014 amounted to USD 14,755.4 million, down USD 1,499.6 million (9.23 percent) from April 2014. This was due to the decline in the value of non-oil & gas imports by USD 1,513,5 million (12.05 per cent) although oil and gas imports increased slightly to USD 13.9 million (0,38 percent). Increase in oil & gas imports was triggered by the rise in the value of crude oil imports by USD 228.8 million (21.43 percent). While, oil and gas imports decreased by USD 176.0 million (7,48 percent) and USD 38.9 million (14.32 percent).

Indonesian imports from January to May 2014 reached USD 74,241.0 million, down USD 4,533.6 million (0.76 percent) over the same period of the previous year. The decline in oil and gas imports by USD 174,3 million (0.94 percent) and non oil & gas imports by USD 4,359.3 million (7.24 percent) triggered a decrease in Indonesia import value. In more detail, decline in oil & gas imports was caused by the decline in the value of imports of crude oil and oil product by USD 28.7 million (0.50 percent) and USD 172.9 million (1.51 percent). Meanwhile, gas imports increased by USD 27.3 million (2.06)

2. Non Oil & Gas Imports by 2-Digit HS Group of Goods

In May 2014, Indonesian non-oil & gas imports reached USD 11,048.7 million. Of the ten major categories of goods, only waste from the food industries and cereals that experience increase in imports value compared to April 2014, i.e. USD 59.0 million (21.16 percent) and USD 21.6 million (6.70 percent), respectively. Meanwhile, eight other classes of goods experienced a decrease in import value.

Of the eight categories of goods which experienced decline, three classes of goods declined over USD 100.00 million, i.e. machinery and mechanical appliances by USD 297.2 million (12.69 percent), electrical machinery and equipment by USD 242.8 million (14.77 percent), and organic chemicals by USD 106.4 (16.60 percent). The next four categories of goods decreased between USD 50.0 million to USD 100.0 million, i.e. plastics and articles thereof by USD 99.8 million (13.63 percent), iron and steel by USD 98.5 million (12.63 percent), vehicles and parts thereof by USD 71.9 million (12.78 percent), and cotton by USD 51.4 million (18.44 percent). Meanwhile, only iron and steel that decreased below USD 50.0, namely USD 42.6 million or 11.61 percent.

3. Non Oil & Gas Import by Main Countries of Origin

Total value of Indonesia non-oil & gas imports in May 2014 amounted to USD 11,048.7 million, down USD 1,513.5 million (12.05 percent) from April 2014. Similarly, non-oil & gas imports from thirteen major countries fell by 13.93 percent (USD 1,419.0 million). The decrease was primarily due to the decline in the import value in some major countries, such as Japan by USD 397.8 million (24.06 percent), China USD 346.6 million (12.15 percent), the United States USD 156.million (18.62 percent), South Korea USD 152.2 million (20.45 percent), and Singapore USD 135.2 million (14.01).

In term of the role to total non-oil & gas imports in May 2014, ASEAN accounted for the largest part, which is 22.09 percent (USD 2,441.2 million), followed by the European Union at 9.49 percent(USD 1,048.2 million). While, the thirteen major countries provided a role of 79.36 percent, where China and Japan are the largest importers with a contribution of 22.68 percent (USD 2,506.3 million) and 11.36 percent (USD 1,255.3 million), respectively. (E)

Business News - July 2, 2014

EXPORTS IN MAY 2014 REACHED USD 14.83 BILLION

1.

1.                  1. Oil & Gas and Non Oil & Gas Exports

Indonesian export in May 2014 increased by 3.73 percent compared to April 2014, from USD 14,292.5 million to USD 14,825.3 million. When compared to May 2013, exports decreased by 8.11 percent.

Increase of exports in May 2014 was due to increase in non-oil & gas exports by 6.95 per cent from USD 11,641.1 million to USD 12,449.6 million, while oil and gas exports fell by 10.40 percent, from USD 2,651.4 million to USD 2,375.7 million. Furthermore, decline in oil & gas exports was due to the decline in exports of oil products by 24.95 per cent to 302.3 million and exports of gas by 18.00 percent to USD 1,303.5 million, while crude oil exports increased by 16.84 per cent to USD 769, 9 million. Volume of oil & gas export in May 2014 to April 2014 for oil and gas fell by 16.66 percent and 13.75 percent, respectively, while crude oil exports rose 17.65 percent. Meanwhile, Indonesian crude oil price in the world market dropped from USD 106.44 per barrel in April 2014 to USD 106.20 per barrel in May 2014.

     

2. Non Oil & Gas Export by 2-Digit HS Groups of Goods

The largest increase in non-oil exports in May 2014 to April 2014 occurred in animal/vegetable fats and oils by USD 817.1 million (72.97 percent), while the largest decrease occurred in vehicles and parts thereof by USD 64.9 million (15.78 percent).

3. Non Oil & gas Export by Main Destination Countries

Indonesia non-oil & gas exports in May 2014 to China, the United State, and Japan reached USD 1,444.6 million, USD 1,288.6 million and USD 1,161.1 million, respectively with the role of three reached 31.28 percent. (E)

Business News - July 2, 2014