Economy and Business

200% Duties on Chinese Goods

Following the lead of President Biden, Indonesia plans its own high tariffs on Chinese goods. Local importers have expressed concern about the plan to impose a 200 percent duty on products imported from China, warning the move could lead to an increase in smuggling activities. Indonesian Importers Association (GINSI) chairman Subandi said that the policy would boomerang trade ties between Indonesia and China. “If the [Chinese products] are subjected to a 200 percent tax, that will be the same thing as closing down trade, Subandi said on Monday, as quoted by news portal “If [the government] is serious about this, we’re dead,” he added. The government is planning to impose import duty of between 100 and 200 percent on Chinese goods in response to impacts from the trade war between Beijing and Washington, Antara reported, particularly clothing, steel, textile products and ceramics. Trade Minister Zulkifli Hasan said on Friday that the measure aimed to protect local businesses against the influx of goods from China due to “overcapacity” and “oversupply” in that country as a result of increased tariffs from Western markets. (Jakarta Post)

PMI Drops and Industry Ministry Blames its Sister, Trade

The Industry Ministry has blamed regulatory issues as a major factor of the country’s weakening industries, as indicated by the manufacturing purchasing managers’ index (PMI) dropping to a 13-month low of 50.7 in June. Specifically, it pointed to the eased import requirements in Trade Ministry Regulation No. 8/2024 for causing a drop in optimism among local business players. According to the Industry Ministry, that regulation could lead to imported products flooding the domestic market while local players were struggling to maintain their businesses due to lower export demand, resulting in waves of layoffs. “The industrial sector is in an alarming condition right now. That was caused by weakening growth in new orders due to global market conditions, trade restrictions from other countries and unsupportive domestic regulations,” Industry Ministry spokesperson Febri Hendri Antoni Arif said on Monday. Febri said the government needed to revert to the stricter import rules in Trade Ministry Regulation No. 36/2023 to prevent more damage, as well as impose “safeguard measures” and anti-dumping duties on certain commodities. (Jakarta Post)

Geothermal Projects Offered by PLN Deemed Unattractive

Indonesia’s plans for renewable energy continue to falter with investors in the nation’s many geothermal spots currently on the sidelines according to reporting in the Jakarta Post. Businesses have been reluctant to participate in geothermal projects auctioned by state electricity company PT PLN, with analysts pointing to the projects’ unattractive returns that may not sufficiently compensate for the risks faced during development. PLN began offering nine geothermal projects with a total capacity of around 260 megawatts (MW) in March last year, including the Tulehu project in Central Maluku, Atadei in East Nusa Tenggara, Songa Wayaua in North Maluku, Tangkuban Perahu in West Java, Ungaran in Central Java and Kepahiang in South Sumatra. Those looking to participate are required to collaborate with PLN by forming a joint company and signing a contract with PLN through the Geothermal Exploration and Energy Conversion Agreement (GEECA) cooperation scheme. Among those interested was publicly listed Barito Renewables through its subsidiary Star Energy. The company had expressed interest in the Kepahiang geothermal project, which boasts 180 MW electricity potential, but later it decided to pull out of the bid. PLN geothermal executive vice president Christyono said on June 27 that the company could not go through with the partnership because “Star Energy’s proposal did not meet what PLN was asking for.” “[PLN] is re-auctioning the geothermal working area,” he said, as reported by Bisnis, stressing that Star Energy had yet to be announced as the official winner of the geothermal project’s auction. (Jakarta Post)

Calls for Comms Minister to Resign

The public has called for the resignation of Communications and Information Minister Budi Arie Setiadi following a week-long nationwide disruption of various public services caused by a ransom-ware attack on a temporary National Data Center (PDN) facility. The cyberattack hit the temporary facility in Surabaya, East Java on June 20, disrupting hundreds of services whose online databases were linked to the server. The attack occurred using Brain Cipher, a new variant of the LockBit 3.0 ransomware, which was used to hit sharia lender Bank Syariah Indonesia (BSI) last year as claimed by hacker group LockBit. Since the attack, the government has stumbled to restore services and databases for a total of 282 institutions of the central government and regional administrations. The Communications and Information Ministry missed their target of restoring at least 18 institutions’ databases by the end of the month, as only five institutions had theirs restored and had resumed activities by Sunday. His ministry’s failure to protect citizens’ personal information on the server intensified the call for Budi’s resignation. As of Sunday evening, over 15,500 people have signed an online petition started on Wednesday by internet watchdog Southeast Asia Freedom of Expression Network (SAFEnet) demanding that the minister resign as a gesture of responsibility. (Jakarta Post)

Inflation Slowing But Interest Rates Likely to Hold Steady

Consumer price growth has slowed again, but experts see no room for Bank Indonesia (BI) to reduce its benchmark interest rate because doing so would put more pressure on the rupiah and a further depreciation of the currency could lead to imported inflation. The headline inflation rate, or annual consumer price index (CPI) growth, dropped to 2.51 percent in June, according to Statistics Indonesia (BPS) data published Monday, which marks a further drop from 2.84 percent logged in the preceding month. BPS chief secretary Imam Machdi revealed in a press briefing on the same day that “food, beverages and tobacco” was the group that contributed the most to CPI growth last month, accounting for 1.4 percentage points of the 2.51 percent rise. Prices of volatile food items were up 5.96 percent year-on-year (yoy) in June, but that marks an improvement from a reading of 8.14 percent yoy logged in May. Headline inflation has been declining since March and has remained within BI’s target range since May last year.

Indonesia Vows to Crack Down On ‘Blood Sucking’ Online Gambling

On Friday, June 14th, Indonesia’s communication minister, Budi Aire Setiadi, announced the nation banned over two million illegal gambling websites. Although online gambling is banned in the country, over three million Indonesians gambled online last year, and the gambling industry remains around 1.5% of Indonesian gross domestic product. The Government was forced to action due to recent events such as three weeks ago when an Indonesian woman set her husband on fire due to a gambling addiction which left them financially struggling. Budi also noted that the government also froze thousands of bank accounts and will soon formally set up an anti-gambling task force. Budi claimed that the gambling sites originate from Cambodia without providing any hard evidence for the assertion. Indonesian officials believe that the crackdown will lower crime, high-interest loans and divorces. (Reuters)