Thursday, 12 March 2015

A SECOND LOOK AT INDONESIA’S ECONOMIC CHALLENGES 2015



Toward second month of 2015 it was about time to review all the prospect and challenges of national economy especially in overall appraisal of the Joko Widodo – Jusuf Kalla performance over his 100-day administration.

To begin with, let us highlight on the latest data released by the Central Board of Statistics (BPS) last week. In January there was deflation of 0,24% with Consumer’s Price Index (IHK) of 118.71. Of 82 IHK cities, 51 cities posted deflation and 31 cities posted inflation.

Deflation was posted highest in Padang 1.98% with IHK 123,54 and lowest in Bandung and Madiun 0.05% respectively with IHK 117.05 and 116.77 respectively. Meanwhile highest inflation was posted in Ambon 2.37% with IHK 117.77 and the lowest in Malang 0.04% with IHK 119.21%. deflation was due to price ion, communication and financial service 4.04%.

Meanwhilee other expenditure group which showed increase of index was food 0.60%; ready food, beverages, cigarettes and tobacco 0.65%; housing, water, electricity, gas and fuel 80%, clothing 0.085%; health 0.66% and education, recreation and sports 0.26%.

Deflation of calendar year (January) 2015 was 0.24% and year on year inflation (January 2015 against January 2014) was 6.96%

Inflation pressures tend to ease which means assumed inflation was 5% according to Government’s expectation recorded in APBN-P To use BI’s benchmark of 3% + 1% it was still attainable.

Compared to December 2013 there was downturn of 13.83%. Non oil-gas export in December 2014 was posted at USD 12.27 billion, up by 6.59% against November 2014; while compared to December 2013 export was down bt 9.55%.

Accumulatively Indonesia’s total export per January-December 2014 came to USD 176.29 million, a downturn of 3.43% against same period 2013, the same was with non oil-gas export which came to USD 145.96 billion, a slump of 2.64%.

The biggest increase in non oil gas export was in December 2014 against November 2014postd in jewellery USD 168.6 million (55,00%) while the biggest downturn was in fat an animal/vegetable oil USD 51.6 million (2.94%).

The biggest increase of non oil-gas export in December 2014 against November 2014 happened on jewelry amounting to US168.6 million (55,00%) while the biggest downturn was in fat an animal/vegetable oil USD 51.6 million (2.94%).

Export of non oil-gas in the USA per December 2014 posted highest figure i.e. USD 1.47 billion, followed by China USD 1.33 billion and Japan USD 1.26 billion, contribution of the three came to 33,12% while export to Uni Europe (27 countries) was posted at USD 1.45 billion.

By sector, export of non oil gas products from processing industry through January-December 2014 increased by 3.80% against same period of 2013 and export of agro products increased by 1.01% while export of mining etc only dropped by 26.67%.

Indonesia’s totall export through December 2014 came to USD 14.43 billion, an increase of 2.80% against November 2014. On the contrary against December 2013 it dropped by 6.61%. Import of non oil gas per December 2014 came to USD 11.05 billion, and increase of 4.51% against November 2013 down by 1.69%.

Oil gas import per December 2014 came to 2014 to USD 3.39% or down by 2.40% against December 2014; compared to December 2013 it dropped 19.71% the biggest non oil gas export in 2014 was machineries and mechanical instruments worth USD 2,02 billion. The value inched down by 0.47% against same type of goods in November 2014.

Non oil-gas supplier countries through December 2014 was china with USD 2,93 billlion (26.55%), Japan USD 1,22 billion (11.6%) and Singapore USD 0.75 billion (6.75). Non oil-gas import from Asean countries formed a market share of 20.59% while from Uni Europe 8.75%.

Total import of consumer goods, raw materials, complementary goods and capital goods through January-December 2014 posted downturn against previous year at 3.59%, 4,05% and 7,7% respectively.

The next indicator was the position of forex reserves which in December 2014 was in the position of USD 111,862 billion and increase of 0,65% against November 2014 while against same period the previous year it posted increase of 12.55%.

The next dominant indicator National Economic Growth, BPS reported Indonesia’s economic growth in 2014 last was 5.02% which was in parallel with Government’s target of 5.5% for 2014.

Meanwhile compared to same period last year, Indonesia’s GDP grew 5.1% based on 2010 calculation of 6.48% while economic growth 2011 was 6.17%.

Economic growth in 2012 was posted at 5.58% while in 2014 Indonesia’s economic growth was only 5.02%. the highest role was processing industry with share of 21.2% and growth 4.63%. the was increase in F&B industry due to electoral campaign.

The printing industry and machinery also posted significant growth. In 2013 processing industry only grew by 4.49%.

In 2014 last, trading which constituted 13.38% posted 4.48% growth while the agro sector with same share by 4.18%. Growth in agriculture lessened against 2013 but still stable, triggered by the subsectors of plantation where demand was still high in spit of falling CPO price. Fishery and horticulture was still well and stable.

The construction sector with share of 9.88% posted growth of 6.97% in 2014 which was due to development of hotels, harbors and bridges. Construction posted 6.11% growth against 2013.

Meanwhile the mining sector with share of 9.82% only grew by 0.55% slow growth of the mining industry was due to the Minerba law No 4 2009. By 2013 the Mining sector still grew by 1.74%.

BPS also reported Indonesia’s GDP per capita based on 2010 calculation Rp.41,81 per capita per annum. There was notable increase of GDP in 2012. Meanwhile GDP per capita in 2012 was posted at Rp.35.11 million per annum. GDP of 2013 was posted at Rp.38,28 million per annum.

To consider Rupiah depreciation factor, there was reduce per capita amount. GDP per capita USD was 3,751.3 per capita per annum. In 2013 there was downturn by Rp.38,28 per capita per annum.

By the main indicators above it might be concluded that the prospect of economic growth 2015 would be slightly better at 5.2% - 5.5% against previous year at 5.02%.

Internationally, economic slowdown in China, Japan and Uni Europe still generated pressures on Indonesia’s economy. What could be done was to put brakes on import of non primary commodities while promotional export.

Meanwhile inflation declined by around 5% although being overshadowed by increase of electricity tariff (TDL) and 12 kg LPG gas and adjustment of Minimum Laborers Wages (UMP). Lastly, assumed Rupiah value at Rp.12,500 per USD seemed reasonable in case the Fed increased Fed Fund Rate. (SS)

Business News - February 11, 2015

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