Economy and Business

# 2 AIIB Funds Recipient: Indonesia

The Asian Infrastructure Investment Bank said in a statement on Tuesday (28/08) that its board of directors had approved a $691.5 million loan to the Indonesian government to fund four infrastructure projects. Indonesia has so far received 13 percent of the total lending of $5.34 billion the AIIB has agreed to provide to its 87 member countries, making it the second-largest recipient of funding from the Beijing-headquartered multilateral development bank after China.

Another Rate Hike

Indonesia’s central bank on Wednesday (8/15) raised its benchmark interest rate for the fourth time since mid-May, unleashing new firepower to defend a rupiah currency under renewed pressure as Turkey’s financial crisis ripples across emerging markets. Bank Indonesia (BI) raised its seven-day reverse repurchase rate by 25 basis points to 5.50 percent, as expected by 7 of 19 economists in a Reuters poll, giving the rupiah an immediate leg-up. “The reason for the rate hike is to maintain the attractiveness of our domestic financial market, in that we want yields … to remain attractive despite rising risk premiums and that could trigger inflows,” BI governor Perry Warjiyo told a news conference. (Reuters)

Bintang Beer Heads to America

From left, Achmad Sigit Dwiwahjono, acting director general of agro-industry at the Ministry of Industry, Multi Bintang Indonesia president commissioner Cosmas Batubara and Rosemary Gallant, senior commercial officer at the US Embassy. (Photo courtesy of Multi Bintang Indonesia).

Multi Bintang Indonesia, the country’s largest brewer, has started exports of its flagship product – Bintang Beer – to the United States as part of ongoing efforts to increase demand and expand its market. The shipment, which departed from Tanjung Priok Port in North Jakarta on Monday (13/08), marks a new milestone in the company’s efforts to expand its global reach, after sending its first shipment of beer to South Korea in May. Bintang is a local version of Heineken.



No Rice Self-Sufficiency

Indonesia may import 2 million tons of rice this year, falling short of fulfilling President Jokowi’s 2014 presidential campaign promise of rice self-sufficiency. Since 2015, Indonesia has imported 3.35 million tons of rice. This year the imports are going to be increased, as severe droughts are expected to disrupt harvests. Last week, the Ministry of Trade issued a permit for the national procurement agency, Bulog, to import 1 million tons of medium quality rice for the second half of the year. The year’s total rice imports would then become 2 million tons, the highest since 2011.

New Pertamina CEO

Nicke Widyawati was appointed the new chief executive of Pertamina and a former BP executive, Dharmawan Samsu was picked to be a new upstream director amid pressure on the state-owned oil company to curb imports, boost refining capacity and biodiesel use. Nicke became the company’s acting chief executive in April after Elia Massa Manik was fired, following repeated clashes with the government over fuel price controls, his handling of an oil spill and failing to meet mandates on fuel sales. Nicke, a former human resources director at the company, is the third chief executive at Pertamina in just three years. “There are three mandates from the government — reduce imports, start development of refineries and implement the B20 biodiesel project,” Nicke told reporters at a press conference at the State-Owned Enterprises Ministry after her appointment by Indonesian President Joko “Jokowi” Widodo.

Islamic Convenience Stores Expand

Islamic convenience store chain 212 Mart has opened 192 branches since its May 2017 establishment, according to the 212 Islamic Cooperative that founded the chain store. “Of 192 stores, 108 are in Greater Jakarta. The rest are in other regions,” its Executive Director Ahmad Juwaini said as quoted by He added that, due to the cooperative’s adherence to the sharia principles of Islamic finance, 212 Mart did not have individual partners. “We do not work with individual partners. One cooperative has to have at least 100 members,” Ahmad said, and that partner cooperatives of 212 Mart must be actively involved in the daily management of its stores, including purchasing goods from cooperatives. “Every store also must reserve 20 percent of its shelf space for products made by small and medium enterprises [SMEs],” he said. The country has been seeing growth in Islamic convenience stores that tap into Muslim consumers’ demand for halal products and aspirations for a “Muslim economy”. The “212” brand name refers to the 12/2/2016 protests when close to a million people hundreds held a rally in Jakarta to demand the removal of then-Jakarta governor Basuki “Ahok” Tjahaja Purnama, a Chinese-Indonesian of the Christian faith, on allegations of a blasphemous reference he made to a Quranic passage. Ahok was convicted the following year for blasphemy against Islam.

Rating Maintained

International credit rating agency Fitch Ratings has maintained Indonesia’s long-term sovereign debt rating at “BBB,” or a notch above investment grade, with a stable outlook, on the back of the country’s economic resilience to global challenges. The decision is supported by a low government debt burden and good economic growth prospects that counterbalance external challenges stemming from high dependence on external financing and structural indicators that are still weaker than the country’s peers. “Indonesia’s external finances are stronger than during the 2013 ‘taper tantrum,’ resulting from a disciplined monetary policy stance in the past few years and macro-prudential measures that have helped curb a sharp rise in corporate external debt,” Fitch said in a statement. (Jakarta Globe)