Economy and Business

Garuda Resumes Bali-Tokyo Flights

Flag carrier Garuda Indonesia resumed direct flights between the resort island of Bali and Tokyo on Tuesday after the Japanese government recently lifted Covid-19 border controls. Garuda has suspended the lucrative route for nearly two years due to the Covid-19 pandemic. (Jakarta Globe)

Chip Shortage Hurts Car Sales Recovery

The global semiconductor supply crunch has held back the recovery of Indonesian car sales, but local automakers say they have been spared from the worst, given the country’s relatively low demand for high-tech vehicles. Association of Indonesian Automotive Manufacturers (Gaikindo) data show that domestic car sales grew 73.2 percent year-on-year (yoy) to 84,113 units in September. In contrast, car sales are estimated to have dropped 20 percent yoy in China, 25 percent yoy in the United States (US) and 23 percent yoy in the European Union – the three biggest car markets in the world – over the same month, due to the chip shortage, according to local associations and forecasters. Gaikindo members instead see the chip shortage as a hurdle for recovering car sales to pre-pandemic levels, especially as the clock ticks on a temporary cut on luxury taxes (PPnBM) for new cars. The September sales figure remains 12 percent below that in 2019.

AKA Launches Kratom Facts Website

The American Kratom Association, in partnership with Drug Policy Alliance (DPA), Law Enforcement Action Partnership (LEAP) and International Plant & Herbal Alliance (IPHA) is very excited about their latest resource: KratomAnswers.org. This website will be instrumental in sharing the science of kratom and dispelling misinformation. This site is designed to help easily educate elected officials, policy makers, and everyone new to kratom with the facts and history of kratom science, legislation, and emerging information. (www.kratomanswers.org)

Foreigners Exit Indonesia’s Bond Market

Investors are holding back from the government bond market amid rising interest rates to fend off high inflation in many major economies, leaving emerging countries like Indonesia struggling to keep up with investors’ appetite to secure capital at home. Bids have been slowing down in Indonesian bonds auctions in the past weeks, analysts from securities and banks noted. On Oct. 11, it reached a multi-year low of Rp 15 trillion (US$961.8 million), Reuters wrote. Meanwhile, foreign ownerships on government securities have massively tanked to around 14 percent as of Oct. 20, almost a third of pre-pandemic level at around 39 percent, according to a Finance Ministry report. The trend was in line with the soaring yield of the United States Treasury that achieved a decades-high of 4 percent mark from around 1.4 percent earlier this year, following multiple rates hike by the Federal Reserve (Fed) to 3.25 percent from the past months, with more possible hikes in the future. (Jakarta Post)

No More Low Octane Gas

Indonesia announced it will ban the sale of all fuels with RON ratings below 90 beginning January 1. A previous effort failed after the Environmental Ministry banned the dirtier gas in 2017. But this year Indonesia has the added burden of hosting the G20. Since it looks like the government’s renewable energy bill will not be passed in time for the G20, Indonesia’s can still show progress on fuels and decreased deforestation rates.

IMF Identifies 3 Economic Risks

The International Monetary Fund (IMF) has warned of three major risk factors for Indonesia’s economy: the slowdown in China’s economy, global monetary tightening and the war in Ukraine. In a hybrid press briefing on Oct. 27, the United States-headquartered institution explained that continued slowdown in China’s real estate market, a key economic sector, would affect the prices of Indonesian export commodities. Should consumer spending in China slump as a result, then growth in manufacturing and agriculture in the economies of Indonesia and other Asia-Pacific countries would also take a hit. “Indonesia, being a commodity exporter, has benefited from the current terms of trade,” IMF economist Shanaka Jayanath “Jay” Peiris told reporters. The country would “be more affected from […] the investment-side slowdown in China”, he said, and was vulnerable to intensification of the three headwinds. (Jakarta Post)

Singapore Still Tops for Start-Ups

Despite a slowdown in investment, Singapore is still Asia Pacific’s best sandbox for early-stage start-ups, but other countries in the Southeast Asian region are becoming more competitive, tech industry insiders say. Indonesian founders admit that a presence in the city-state remains important for attracting pre-seed and seed funding from foreign investors. “To get early-stage funding, we need an international presence, and Singapore is important in that sense. Not every start-up needs a Singapore presence, but if we have a Singapore company involved, we have better access to international funding,” said Imam Karnohartomo, CEO of FitHappy, a wellness start-up in the pre-seed round. (Jakarta Post)

Financing for Art

In a bid to support the creative economy, Indonesia’s government introduced Government Regulation 24 of 2022 (GR 24/2022) in July 2022, which allows creative economy actors to use their intellectual property (IP) assets as security to obtain financing from banks and non-bank financial institutions. GR 24/2022 is scheduled to come into force in July 2023. Through GR 24/2022, the government hopes this will encourage more added-value products in the sector and become an important driver of Indonesia’s economy going forward. Since the concept of intellectual property is alien to Indonesia’s traditional arts and is not widely accepted in the marketplace –where counterfeiting is rampant—its not clear how the regulation will be applied and who will benefit. But, given that many Indonesians enthusiastically invested in blockchain digital art assets (tokens), the regulation may be a harbinger of a positive economic trend.

Indonesia Launches “Second Home” Visa

A press release from the Indonesian Directorate General of Immigration under the Ministry of Law and Human Rights has officially announced the rules and requirements for a “second home visa.” The goal is to attract international tourists to Bali and several other destinations who desire to live in Indonesia and contribute positively to the national economy. The new visa class will allow foreigners to stay in Indonesia for five or ten years while undertaking investment and employment activities. The new “second home” visa would become effective 60 days after the announcement of the new immigration facility (i.e., 25 December 2022).

The application process for the second home visa has been simplified by allowing the application process to be done online (visa-online.imigrasi.go.id).