STRATEGIC ASSESSMENT. The central bank of Indonesia (BI) on January 18 announced that it has allocated funds amounting to 260 trillion IDR (16.63 billion USD) ahead of major celebrations, including the 2024 elections, Ramadan, and Eid al-Fitr 2024.
Deputy Governor of Bank Indonesia Doni Primato Joewono said that the amount is 35% larger than the funds allocated for Ramadan and Eid al-Fitr 2023.
In the first four months of this year, there are three significant events in Indonesia, namely the elections, Ramadan and Eid. Funding for them can be 35% higher than that of last year due to inflation and hiking prices.
Indonesia’s central bank kept policy rate unchanged for the third straight meeting on January 17, as inflation remains within its target range.
Bank Indonesia’s six-member board of governors kept the benchmark seven-day reverse repurchase rate at 6%. It also left the deposit and lending rate unchanged at 5.25% and 6.75% respectively.
Mining activity at a nickel industrial park linked to mainly Chinese companies has contributed to mass deforestation in Indonesia, a non-governmental group said in a report.
The report, opens new tab of ecological damage in the nickel industry comes as Indonesia, home to the world’s largest nickel ore reserves, seeks to extract more value from the mineral by attracting investment into its processing and in the manufacturing of electric vehicle batteries.
The country has also set a production target of some 600,000 electric vehicles (EV) by 2030 – more than 100 times the number of EVs sold in Indonesia in the first half of 2023.
A recent report by a non-governmental group has drawn attention to the extensive deforestation in Indonesia, attributing it to mining activities at a nickel industrial park, primarily backed by Chinese companies.
The Indonesia Weda Bay Industrial Park, with its vast nickel processing hub, has been a particular area of concern. Since 2018, over 5,300 hectares of tropical forest within the park’s concession have been cleared, causing significant air and water pollution, and releasing massive amounts of greenhouse gases from captive coal plants.
Nickel was the worst performer among the London Metal Exchange’s (LME) base metals last year by some margin as the market priced in a wave of new Indonesian supply.
Indonesia’s mined production rose by 29.2% year on year in the first 10 months of 2023, according to the International Nickel Study Group. Nickel demand is rising fast thanks to its use in electric vehicle batteries but nowhere near the pace of supply growth.
Bank Indonesia (BI) kept policy rates at 6% today despite pointing to a less upbeat outlook for the global economy. It retained its outlook for domestic growth, with GDP expected to expand between 4.7-5.5% year-on-year.
The central bank also revised its forecast for Indonesia’s current account surplus to range between 0.1% to 0.5%, narrower than the previous estimate of 0.9% of GDP. Despite some lingering concerns about price pressures, Governor Perry Warjiyo still believes inflation will settle within BI’s 2024 target of 1.5-3.5%.
Bank Indonesia (BI) Governor Perry Warjiyo said here today that Indonesia’s economic recovery has continued in 2024, supported by domestic demand, reported Antara news agency.
He made the statement in Jakarta while announcing the results of the meeting of BI’s board of governors for January 2024.
Warjiyo noted that Indonesia’s economic growth in 2023 was projected to be around 4.5 to 5.3 per cent, driven by consumption and investment, in line with the acceleration of government spending at the end of the year and the completion of several national strategic projects.
Indonesia finally outperformed China in trade throughout 2023. According to senior economist Raden Pardede in an interview with CNBC Indonesia, Indonesia’s exports to China totaled $64.94 billion, with imports totaling $62.18 billion.
He saw this achievement as the result of downstream policy, which had begun to show in an increase in exports to China. In line with this, CNBC Indonesia research economist Maesaroh stated that the downstream policy can indeed encourage exports.
Indonesia’s application to join the Organization for Economic Co-operation and Development (OECD) is an “exciting development” for the group as the Southeast Asian country could bring the voice of emerging economies, its secretary-general said.
In an interview with Nikkei Asia in Tokyo, OECD Secretary-General Mathias Cormann confirmed that the group had received a formal request from Indonesia.
He said Indonesia can contribute to the group, which has only two Asian members — Japan and South Korea — noting that the country already has a “very significant” presence in the global economy.
A data center company from the United States, EdgeConneX, is studying the use of artificial intelligence (AI) in its data center located in Indonesia, in order to strengthen its position in Indonesia.
Asia Pacific EdgeConneX Managing Director Kelvin Fong said this was done to attract the huge potential of Chinese and U.S. cloud data center companies that want to locate their data in Indonesia.
Kelvin said this potential is also increasingly promising considering that Indonesia’s data center development is still at an early stage.
Transportation Minister Budi Karya Sumadi visited the factory of aircraft manufacturer Commercial Aircraft Corporation of China (COMAC), in Shanghai, inviting COMAC to invest in Indonesia’s aviation industry. Minister Budi witnessed the signing of cooperation between COMAC and Indonesia’s TransNusa, the first Indonesian airline to use COMAC aircrafts.
The minister also met with Chinese Minister of Transport Li Xiaopeng and the company’s leaders from the China Railway Rolling Stock Corporation (CRRC) to discuss continuing cooperation in developing autonomous rail transit (ART) mass transportation for the Indonesian Capital City (IKN). Budi is scheduled to meet with Huawei about opportunities for cooperation on high-tech railway systems.
