Economy and Business

Trade Surplus Narrows in January

Indonesia’s trade surplus narrowed further as exports dropped and imports rose in January, according to data released by Statistics Indonesia (BPS) on Thursday. The trade surplus amounted to US$2 billion, marking the 45th consecutive month that the balance was positive. However, she pointed out that exports were down 8 percent year-on-year (yoy) at $20.52 billion, after plunging 8.34 percent month-to-month (mtm). “The deepest drop occurred in the mining sector, which declined by 23.93 percent [mtm],” said Amalia, explaining that a drop in the value of mineral fuel shipments was the main cause for the drop. Meanwhile, imports in January were up 0.36 percent yoy at $18.51 billion, despite declining 3.13 percent mtm. Amalia attributed the monthly decline mainly to a 20 percent drop in the value of incoming oil and gas shipments. Imports of machinery, on the other hand, rose in January, like rice. She revealed that Indonesia imported 443,913 tonnes of rice worth $279 million in January from Thailand, Pakistan, Myanmar and other countries, which marks a 135 percent yoy increase. Thailand accounted for more than half of Indonesia’s rice imports by value last month, which contributed to a $416 million bilateral trade surplus in its favor. Indonesia’s biggest bilateral trade deficit, however, comes from trade with China, from where Indonesia imports machinery and consumer goods. China exported $1.3 billion more than it imported in trade with Indonesia last month. (Jakarta Post)

GDP of 5.5-6% Expected for 2025

The government is banking on significant acceleration in GDP growth next year, according to the Finance Ministry’s draft macroeconomic projection and fiscal policy (KEM-PPKF), which is to be presented to the House of Representatives in August as part of the 2025 state budget bill. The draft KEM-PPKF projects economic growt

Finance Minister Sri Mulyani

h of between 5.5 and 6 percent in 2025, considerably stronger than GDP growth that has hovered around 5 percent for most of the past decade, excepting the years of the coronavirus pandemic and subsequent recovery period. The draft appears much less certain with regard to consumer prices, as it sees inflation anywhere between 1.5 and 3.5 percent. That would be in line with Bank Indonesia’s target range for this year and next year, which is set at 2.5 plus/minus 1 percent. It also assumes an exchange rate of Rp 14,900 to Rp 15,300 per US dollar, according to state-owned news agency Antara, citing figures from a meeting report on the KEM-PPKF. The draft document envisions state revenue from 12.08 to 12.77 percent of GDP, state spending from 14.21 to 15.22 percent of GDP, a primary balance from minus 0.40 percent to 0.07 percent of GDP and a deficit of 2.13 to 2.45 percent of GDP. The projected yield of the 10-year government bond ranges from 6.3 to 7.5 percent. Meanwhile, crude oil price is projected to range from US$70 to $90 per barrel, with domestic crude oil production ranging between 606,000 and 684,000 barrels per day and gas production of 1.06-1.15 million barrels of oil equivalent per day. The 2025 state budget is to be the last budget to be issued by the administration of President Joko “Jokowi” Widodo, its implementation to be carried out by the next administration. Finance Minister Sri Mulyani said on Tuesday that she had specifically asked that the design of the state budget be “sharpened” this time around, so it addressed structural and fundamental issues and met the aspirations of the Indonesian people. “The state budget will continue to be optimized as a reliable instrument in response to the various challenges of Indonesia’s development,” Sri Mulyani wrote on Tuesday in a post on her Instagram account. Sri Mulyani had previously said the country needed to increase economic growth to 6-7 percent so it could achieve reach its goal of becoming a high-income developed country by 2045.

Indonesian Coal Exports Expected to Decline in 2024 Amid Global Oversupply

Indonesia’s thermal coal export is anticipated to decrease in 2024 due to moderate global demand and oversupply, with coal prices facing pressure. Despite a 12 percent increase in volume, coal exports saw a more than 15 percent decline in value in 2023. The country’s coal production target for 2024 is set 8 percent lower than the record high in 2023, reflecting market conditions. Analysts project slower export growth amid dropping global prices and China’s economic slowdown affecting demand, with some mining firms adjusting production targets accordingly. While Indonesia’s coal exports could potentially grow by 5 to 6 percent, factors such as Australia’s reentry into the Chinese thermal coal market and fluctuating import trends in Asia may impact outcomes. (Jakarta Post)

Car Sales Drop 26% Year-on-Year in January

Domestic car sales plummeted, driven by weakened economic sentiment. Gaikindo reports significant declines in both wholesale and retail sales. Toyota’s dominance persists, but even its sales have fallen, along with Honda’s, which saw a sharp drop. Despite missing last year’s target, Gaikindo aims for 1.1 million car sales in 2024, with a focus on electric vehicles. Minister Airlangga Hartarto attributes the decline to COVID-19 disruptions but remains optimistic about reaching this year’s sales target. (Jakarta Post)

Power Wheeling Hotly Debated

Power wheeling, a mechanism that allows private power producers transmit electricity via the state grid directly to their customers, has become the most contentious topic in the deliberation of the New and Renewable Energy Bill. There are numerous unresolved questions, especially regarding the challenges, projected consequences, prospective benefits, and a feasible roadmap to implement power wheeling. Implementing the power wheeling mechanism in Indonesia is difficult because of the integrated structure of the national electricity industry. This tight integration allows state electric company PT PLN to make top to bottom calculations that reduce the cost of electricity from production to consumption. On the other hand, this structure makes the electricity industry more rigid, making it difficult for new players to penetrate the market, especially in the transmission and distribution of electricity. (Jakarta Post)

SpaceX Beats Chinese Rocket Launcher

When a Chinese rocket malfunctioned shortly after launch in April 2020, destroying Indonesia’s $220 million Nusantara-2 satellite, it was a blow to the archipelago’s efforts to strengthen its communication networks. Elon Musk’s SpaceX, the world’s most successful rocket launcher – seized on the failure to prevail over state-owned China Great Wall Industry Corp (CGWIC) as Jakarta’s company of choice for putting satellites into space. A senior government official and two industry officials in Jakarta familiar with the matter told Reuters the malfunction marked a turning point for Indonesia to move away from Chinese space contractors in favor of companies owned by Musk. (Reuters)