Indonesia Economy and Industry

[Indos]

Indonesia's Foreign Exchange Reserves at $144 Billion in February: BI​

Faisal Maliki Baskoro
March 7, 2024 | 11:01 am

Jakarta. Indonesia's foreign exchange reserves stood at $144.0 billion (Rp 2.255 trillion) at the end of February 2024, maintaining robust levels despite a slight 0.76 percent decline from the January 2024 position of $145.1 billion.

According to Bank Indonesia's spokesman, Erwin Haryono, the decrease is attributed, in part, to the government's repayment of foreign debts.

"The current reserve position is equivalent to financing 6.5 months of imports or 6.3 months of imports and government foreign debt payments, surpassing the international adequacy standard of around 3 months of imports," he said.

The central bank assesses that the foreign exchange reserves are capable of ensuring macroeconomic stability and financial system stability.

Looking ahead, Bank Indonesia anticipates that the foreign exchange reserves will remain sufficient, supported by sustained economic stability and prospects.

Indonesia's Foreign Exchange Reserves at $144 Billion in February: BI

Indonesia's foreign exchange reserves stood at $144.0 billion (Rp 2.255 trillion) at the end of February 2024.

jakartaglobe.id

 

[Indos]

Indonesia palm oil firms warn of food security risks as biodiesel use rises​

Government mulls doubling the subsidy for replanting amid concerns over exports

ERWIDA MAULIA, Nikkei staff writer
February 28, 2024 14:01 JST


JAKARTA -- Indonesian palm oil producers are voicing concerns that the continuing rise in domestic demand for biofuels could harm the country's food security and take a toll on exports amid stagnant production of the commodity.

Consumption of palm oil for biodiesel in Indonesia surpassed that for food for the first time last year, according to the Indonesian Palm Oil Association, commonly known as GAPKI from its Indonesian initials. About 46% of the total 23.2 million metric tonnes was for biodiesel, versus 44% for food and 10% for oleochemicals, used in the production of items like hand sanitizers and soaps.

Indonesia palm oil firms warn of food security risks as biodiesel use rises

Government mulls doubling the subsidy for replanting amid concerns over exports

asia.nikkei.com

 

[Indos]

Palm Oil | USDA Foreign Agricultural Service

fas.usda.gov

 

[Indos]

https://www.imf.org/external/datamapper/profile/IDN

G20 GDP, GDP per Capita 1980-2028 / IMF, October 2023 Data​

 

[Indos]

High - Speed Train "Whoosh" Has Served 2 Million Passengers​

 

[Indos]

Indonesia ready to mass produce EV batteries in April 2024​

March 9, 2024 14:33 GMT+700

Jakarta (ANTARA) - The Ministry of Investment stated that Indonesia is ready to mass produce electric vehicle (EV) batteries in April 2024.

The mass production will mark a new page in the history of the country’s automotive industry and signify the benefits of the downstreaming policy.

“Downstreaming is a way to create added value from abundant natural resources in Indonesia, one of which is nickel,” the ministry’s Special Staff, Tina Talisa, stated here on Saturday.

According to Talisa, mass production will be carried out through PT Hyundai LG Industry (HLI) Green Power, a joint venture company between South Korea’s Hyundai Motor Group and LG Energy Solution, which is based in Karawang, West Java.

She assessed that it will not only make Indonesia the first EV battery cell producer in Southeast Asia but also highlight the government’s commitment to supporting the national EV battery ecosystem development project.

Talisa also highlighted that the massive production of EV battery cells would make Indonesia the first country to produce EV battery cells in Southeast Asia to use the latest technology from LG.

Related news: Indonesia ready to supply EV batteries to the US: Minister

This will also directly trigger an absorption of Indonesian young workers to become professional workers, thereby ultimately boosting the community’s economy.

President Director of PT HLI Green Power Hong Woo Pyoung highlighted HLI’s readiness to carry out mass production.

Pyoung stated that Indonesia’s EV battery industry would later be able to create young pioneer engineers who are capable of professionally creating electric car battery cells.

He affirmed that his side had trained Indonesian engineers for a year and said that the training would continue to be provided.

In the first phase, PT HLI received an investment of US$1.1 billion and has a production capacity of 10 gigawatts per hour (GWh) with 32.6 million battery cells that could be used to produce approximately 150 thousand electric vehicles.

In the second phase, PT HLI plans to increase its production capacity to 20 GWh in 2025.

Indonesia ready to mass produce EV batteries in April 2024

The Ministry of Investment stated that Indonesia is ready to mass produce electric vehicle (EV) batteries in April 2024. The mass production will mark a ...

en.antaranews.com

 

[Indos]

Indonesian Aerospace foresees local market for 120 N219s​

By Greg Waldron
26 May 2023

Indonesian Aerospace is upbeat about the commercial and military prospects for its 19-seater N219 turboprop.

The company sees a domestic market of 120 examples over the next ten years, according to Indar Atmoko, Indonesian Aerospace’s senior executive vice president commercial.

An N219 test aircraft in 2017

Powered by two Pratt & Whitney Canada PT6A engines, the N219 attained a local type certificate in 2020.

In June, Indonesian Aerospace – also known as PTDI - expects to sign a contract with the Indonesian Army for eight examples. It will take 20 months to produce the first aircraft, with one or two examples subsequently produced every three months.

An army commitment for the N219 was first announced in November 2022, although initially this was for 10 examples. November 2022 also saw private company Karya Logistik Indonesia commit to 11 examples.


Atmoko says that should additional orders follow the army deal, production at PTDI’s Bandung factory could ramp up to 10 aircraft annually, or possibly even 12.

Atmoko spoke with FlightGlobal and the Langkawi International Maritime and Aerospace (LIMA) exhibition. At the show, Indonesian Aerospace signed up Malaysian aerospace firm Airod as its marketing and sales agent for the N219 in Malaysia.

Indonesian Aerospace also sees the N219 potentially performing surveillance missions for Indonesia’s coast guard. In the maritime surveillance role the aircraft has endurance of 4h.

A model of the proposed N219 Amphibian at LIMA in 2023

Another potential market is resources. Indonesia’s government has mandated that more or processing take place domestically, creating a requirement for large, manpower intensive facilities in remote areas.

The N219, which can operate from rough air strips, is well suited to such missions, particularly since it boasts a large cargo door.

Indonesian Aerospace also intends to develop an amphibious version of the N219, a useful capability given that Indonesia comprises thousands of islands.

The amphibious version would be aimed at the country’s tourism market. The company also sees various local governments obtaining the aircraft.

Indonesian Aerospace foresees local market for 120 N219s

Indonesian Aerospace is upbeat about the commercial and military prospects for its 19-seater N219 turboprop.

www.flightglobal.com

 

[Indos]

Jokowi Wants PT PP, Adhi Karya’s Railway Project in Philippines to Start​

Jayanty Nada Shofa

January 10, 2024 | 1:46 pm

Jakarta. President Joko “Jokowi” Widodo wants to see the construction of the railway project that Indonesian state-owned enterprises are partaking in the Philippines to kick off soon.

Jokowi met with his Filipino counterpart Ferdinand “Bongbong” Marcos Junior at the Malacañan Palace in Manila on Wednesday. Speaking in a leaders’ joint statement with Bongbong Marcos, Jokowi brought up the North-South Commuter Railway project that the joint venture of state-owned construction enterprises Adhi Karya and PT PP is taking part in.

“I appreciate the Philippines’ trust in Indonesian state-owned enterprises, in the construction of important infrastructures,” Jokowi said as seen in the RTVMalacanang presidential broadcast.

“I believe that we need to expedite the groundbreaking of the North-South Commuter railway project,” Jokowi added.

Marcos did not talk about the commuter railway project at the presser. However, he said that they had productive discussions on bilateral cooperation, as well as on the South China Sea.

“I would like to once again thank President Widodo for finding time to visit with us in the Philippines. [He is] the first head of state I have had the pleasure of receiving in the new year. Welcome once again to the Philippines, your second home,” Bongbong Marcos told Jokowi.

In July 2023, the PT PP and Adhi Karya joint venture inked two contracts on a railway project. The first is the construction of a 1.2-kilometer viaduct -- an elevated rail over a public road -- in the Blumentrit Extension. The second contract is a 5.8-kilometer viaduct with the scope of work encompassing the Bicutan and Sucat areas. Both contracts -- worth totaling 32.59 billion pesos (approximately $578 million) -- are part of the 147-kilometer North-South Commuter Railway. This railway aims to reduce traffic congestion on the major roads in Metro Manila.

Earlier this week, Foreign Minister Retno Marsudi said that Indonesia’s economic diplomacy had led to many SOEs expanding overseas, including the Philippines. Aside from the Adhi Karya-PT PP joint venture’s tender victory, state-run concrete maker Wijaya Karya Beton announced it had won a railroad project belonging to the Philippines National Railways in 2022.

Jokowi Wants PT PP, Adhi Karya’s Railway Project in Philippines to Start

Last year, PT PP and Adhi Karya joint venture won contracts on the North-South Commuter Railway Project in the Philippines.

jakartaglobe.id

 

[Indos]

Indonesia: employment numbers by sector 2023 | Statista

Agriculture became Indonesia's most common job sector, with over 39 million workers employed in 2023, closely followed by wholesale and retail.

www.statista.com

 

[Indos]

Indonesian MSMEs Become Kings in the World, Absorb 97 % Total Labor​

RESEARCH - Revo M, CNBC Indonesia
March 07, 2024 5:10 PM

Jakarta, CNBC Indonesia - Employment in the Micro, Small and Medium Enterprises (MSMEs) sector in Indonesia exceeded 97%. This figure is one of the highest in the world.

Indonesian President Joko Widodo (Jokowi) at the opening of the BRI Microfinance Outlook 2024 in Jakarta (07/03), revealed that MSME players deserve great attention considering their large role in the economic sector ranging from employment to contribution to Gross Domestic Product (GDP).

"We know that the number of our MSMEs is approximately 65 million, more or less and the contribution to our economic GDP of 61% is very large and the absorption of labor in the MSME sector is 97%, a very large number," explained Jokowi at the BRI Microfinance Outlook 2024 event at BRILiaN Tower, South Jakarta, Thursday (7/3/2024).

This 97% figure was also emphasized by Finance Minister Sri Mulyani that the figure is relatively very high compared to many other countries. The absorption of MSME workers is around 117 million workers.

Indonesia's position which is ranked first is basically quite far away from the country ranked second, namely Thailand with the absorption of MSME workers of 85.5%.

This shows that the possibility of dominance of job creation by MSMEs is not necessarily in the formal sector.

The majority of people who work in MSMEs with the informal sector will affect taxation and income. This is what is a homework for Indonesia, which is to make MSMEs that were previously informal become formal and their income becomes more stable.

Furthermore, President Jokowi also supports giving special attention to MSMEs, especially digital banking which is implemented to the bottom can be carried out properly.

CNBC INDONESIA RESEARCH

research@cnbcindonesia.com

UMKM Indonesia Jadi Raja di Dunia, 97% Serap Tenaga Kerja

Indonesia tercatat berada diperingkat pertama dibandingkan negara-negara lain di dunia.

www.cnbcindonesia.com

 

[uucc001]

In fact, Indonesia's geographical location, resources, and population have the conditions to become a global power.

 

[Indos]

Erick Thohir: 92% of Indonesian MSMEs are financed by state-owned banks​

Market - Romys Binekasri, CNBC Indonesia
08 March 2024 11:40

Jakarta, CNBC Indonesia - Minister of State-Owned Enterprises (BUMN) Erick Thohir revealed that Micro, Small and Medium Enterprises (MSMEs) are still the backbone of national economic growth. Thus, state-owned companies are asked to continue to encourage the MSME sector.

Erick said that the role of BUMN in boosting the MSME sector was very good. The reason is, 92% of MSMEs have been given access to funding by state-owned banks, which has had an impact on opening up 97% of absorption from the sector. "What is no less important is economic people.

92% of MSMEs are financed by BUMN. 97% of absorption is in MSMEs. The contribution to MSMEs is 60 percent of national economic growth," he said at the Senayan Jakarta Indoor Tennis, Thursday evening (7/3).

To date, as many as 40,000 MSMEs have joined the MSME Digital Market program together with 92 state-owned companies and their subsidiaries. This collaboration has reached a very large value of IDR 24.4 trillion throughout 2022.

This year's achievement target from this collaboration is IDR 50 trillion. He said that information on collaboration programs between BUMN and MSMEs, such as rice UMKM, not only helps absorb products and services directly from MSMEs, but also destroys the notion that MSMEs are completely untouchable by the people.

"As well as making progress in the journey to realizing an independent, sovereign Indonesia," he added. He added, PT Bank Rakyat Indonesia Tbk (BBRI) is one of the state-owned banks that consistently helps develop MSMEs.

Erick Thohir: 92% UMKM RI Dibiayai Bank BUMN

Menteri BUMN Erick Thohir mengungkapkan, Usaha Mikro Kecil dan Menengah (UMKM) masih menjadi tulang punggung dalam pertumbuhan ekonomi nasional.

www.cnbcindonesia.com

 

[Indos]

The Rise of Indonesia’s Banks​

The sector has made a roaring recovery since the doldrums of the Asian Financial Crisis of the late 1990s.

Bank Negara Indonesia (BNI) Head Quarter, Jakarta.

In the late 1990s, during the Asian Financial Crisis, the Indonesian banking sector essentially collapsed. The crash of the rupiah pulled back the curtain and revealed that the balance sheets of many banks were stuffed with bad loans. Many of them went under, or had to be rescued and recapitalized by the government. Four such failing state-owned banks were merged into a new entity in 1998, which was re-named Bank Mandiri. Today, Bank Mandiri is the largest bank in Indonesia with $138 billion in assets and net income in 2023 of around $3.9 billion.


Indonesia’s banking sector is dominated by state-owned banks and has rebounded pretty well from the doldrums of the Asian Financial Crisis. The three largest state-owned banks in the country are Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia. The government owns between 57 and 60 percent of each, with the rest held by the public.


In 2023, the combined assets of these three banks were $335 billion and they had a cumulative net income of $9.2 billion. As a point of reference, the largest privately owned commercial bank in Indonesia is Bank Central Asia, which had $3 billion in profits and $90 billion in assets in 2023.


So what is behind the rise of Indonesia’s banks? One obvious answer is that the pandemic drove up the national savings rate consierably. According to the World Bank, in 2019 gross national savings in Indonesia was 31 percent of GDP. By 2022, it had shot up to 37 percent. This means people have been saving more of their income, often in the form of bank deposits.


When banks collect more deposits they can issue more loans, and this generally leads to higher profits, assuming the loans are properly underwritten. Growth in deposits has slowed now that the pandemic is over, but the savings rate is still moving upwards. Bank Mandiri, for instance, saw its deposit base grow by 4 percent in 2023.


Increased savings are only part of the picture, however. Another important factor is that these savings are being recycled into productive investments. Not only are Indonesian banks making more loans in recent years, a lot of these loans are being used to finance things like infrastructure or to provide working capital for business development.


In Indonesia, the big banks don’t typically do a lot of consumer lending or home loans. One of the smallest of Indonesia’s state-owned banks is called BTN, and it is specifically focused on mortgages. In 2023, BTN booked a net profit of $245 million on $29 billion in assets. That’s not bad, but it’s eclipsed by a bank like Mandiri, which is heavily involved in industrial development and infrastructure and often lends to other state-owned companies that are developing large-scale national projects.


Indonesian banks aren’t just making loans though. Since the pandemic, they have also been busy buying government bonds. Looking at Bank Mandiri again, the value of government bonds on their balance sheet rose from $9.3 billion in 2019 to $21 billion in 2022, an increase of 126 percent.


During the pandemic, the state increased spending to offset the drop in economic activity, and this was financed by issuing billions of dollars in government bonds. Indonesian banks, with their rising deposit bases, were well-positioned to absorb a lot of that new debt. This is, incidentally, what banks in a moderately well-functioning financial system are supposed to do.


They are intermediaries, taking accumulated savings and channeling it into productive economic activity. Indonesian banks are pretty conservative in this regard, especially state-owned banks. They are not highly leveraged, and generally like to fill the asset side of the ledger with good old-fashioned loans and bonds. Lately, they have been financing a lot of infrastructure, industrial development and other government spending.


Another thing worth mentioning is that regulatory oversight and management of Indonesia’s banking sector is much improved from where it was in the 1990s. Are there still cases of financial malfeasance and chicanery? Sure, but it’s much less systemic, there is a lot more transparency, and it is highly unlikely that the banking system is stuffed full of the same kind of bad loans as it was during the Suharto era.


This means the solid performance of Indonesian banks is probably not a fluke, and the incoming administration of Prabowo Subianto is in all likelihood going to manage the banking sector in much the same way as the previous administration did. Indonesian banks are on a pretty good run right now and no one, least of all Prabowo, whose grandfather was involved in founding Bank Negara Indonesia and who is intimately familiar with what happens to Indonesian presidents when banks collapse, wants to see a repeat of the 1990s.

The Rise of Indonesia’s Banks

The sector has made a roaring recovery since the doldrums of the Asian Financial Crisis of the late 1990s.

thediplomat.com

 

[Indos]

Government Advocates for Biodiesel Mandate Up to B-40 Level​

Arnoldus Kristianus
March 30, 2024 | 10:13 am

Officials showcasing samples of B-20, B-30, and B-100 fuel in Jakarta, Tuesday Feb. 26, 2019. (ANTARA FOTO/Aprillio Akbar).


Jakarta. The government continues to push for mandatory biodiesel usage, which has now reached B-35 and is being tested for B-40. The domestic biodiesel sales in 2023 amounted to 12.2 million kiloliters (KL).

The B-35 is a policy that increases the palm-oil-based biodiesel blend from 30 percent to 35 percent. B-40 will increase the blend to 40 percent.

"The government is steadfast in its promotion of mandatory biodiesel, having advanced to B-35 and currently under examination for B-40. The achievement of 12.2 million kiloliters in domestic biodiesel sales for 2023 undoubtedly impacts the absorption of CPO within the country," said Coordinating Minister for Economic Affairs Airlangga Hartarto during the National Coordination Meeting on the Sustainable Palm Oil Plantation National Action Plan at Hotel Indonesia Kempinski, Jakarta, on Thursday.

As the world's largest palm oil producer, with a total production of 56 million tons and exports of 26.33 million tons, palm oil has emerged as a pivotal commodity bolstering the national economy. In 2023, exports of palm oil and its derivatives reached US$ 28.45 billion, constituting 11.6 percent of total non-oil and gas exports, while employing 16.2 million direct and indirect workers, including smallholders.

"Palm oil serves as a catalyst for economic growth in palm oil-producing regions and fosters rural development, thereby mitigating poverty levels," Airlangga added.

During the 2024 presidential election presidential debate, Vice President-elect Gibran Rakabuming Raka pledged to enhance B-35 production and intends to elevate the blend to 40 percent. Gibran emphasized that the biodiesel policy has significantly aided Indonesia in reducing its oil imports.

Gibran stressed the necessity for Indonesia to persist in its energy transition towards renewables. “We should not rely on fossil fuel anymore. We shall continue to encourage the use of renewables, particularly those based on vegetable raw materials, such as bioethanol, Bioavtur [aviation fuel], and biodiesel,” Gibran said.

Government Advocates for Biodiesel Mandate Up to B-40 Level

The government continues to push for mandatory biodiesel usage, which has now reached B-35 and is being tested for B-40

jakartaglobe.id

 

[Indos]

Nvidia plans to build a $200 million AI center in Indonesia amid push into Southeast Asia​

Published Fri, Apr 5 2024
2:42 AM EDT

Dylan Butts@in/dylan-b-7a451a107



Key Points

• Nvidia will partner with the telecommunications firm Indosat Ooredoo Hutchison for the project expected to bolster local telecommunications infrastructure and digital talent, according to Indonesia’s communication minister.
• The U.S. tech giant’s increased presence in Indonesia represents a broader push into Southeast Asia this year as data demand in the region booms on the back of the growing digital economy.

Nvidia is planning to build a $200 million artificial intelligence center in Indonesia in partnership with local telco giant Indosat Ooredoo Hutchison, as the U.S. tech darling continues its push into Southeast Asia.

According to Indonesia’s Communication and Information Technology Minister, Budi Arie Setiadi, the new facility will be based in the city of Surakarta in the Central Java province and will bolster local telecommunications infrastructure, human resources, and digital talent.

Indosat did not respond to a request for comment, while Nvidia declined to comment on the matter.

Last month, Indosat announced that it was ready to integrate Nvidia’s next-generation chip architecture, Blackwell, into its infrastructure, with “the goal of propelling Indonesia into a new era of sovereign AI and technological advancement.”

Indosat Ooredoo Hutchison is Indonesia’s second-largest mobile telco after a 2022 merger between Qatar’s Ooredoo and Hong Kong’s CK Hutchison.

Nvidia’s increased presence in Indonesia represents a broader push into Southeast Asia this year as data demand in the region booms on the back of the growing digital economy.

In January, Singapore telco provider Singtel announced its partnership with Nvidia to deploy artificial intelligence capabilities in its data centers across Southeast Asia.

Singtel said in March that the initiative would provide businesses in the region with access to Nvidia’s cutting-edge AI computing power by this year, without the need for clients to invest in and manage their own expensive data center infrastructure.

Southeast Asia has proved to be a major revenue driver for Nvidia. A U.S. Securities and Exchange Commission filing last year showed that about 15% or $2.7 billion of the company’s revenue for the quarter ended October came from Singapore.

Singapore trailed the U.S., which generated 34.77% of Nvidia revenue, Taiwan with 23.91%, and China and Hong Kong, at 22.24% in sales rankings that quarter.

Revenue from the small nation-state that quarter represented a 404.1% increase from the $562 million recorded in the same period the previous year, outpacing Nvidia’s overall revenue growth and putting it as the company’s fourth largest market.

According to Nvidia’s latest blowout quarterly earnings report, data centers comprised the majority of its revenue, generating $18.40 billion on the back of global AI euphoria.

— CNBC’s Sheila Chiang contributed to the report.

https://www.cnbc.com/2024/04/05/nvidia-to-build-a-200-million-ai-center-in-indonesia-amid-southeast-asia-push.html