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Showing posts with label Economy Update. Show all posts
Showing posts with label Economy Update. Show all posts
The three presidential and vice presidential candidates are yet to focus on efforts to optimize tax revenues as none of them has talked about taxation policies during their campaigns.
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Since the presidential election campaign started on June 2, the presidential and vice presidential candidates have been busy promoting the people's economy without explaining whether they will finance the economy with debts or tax.
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A taxation analyst at Tax Center UI Darussalam viewed the fact that the presidential campaign didn't touch upon taxation issues was sad since tax had been making huge contribution to state revenues.
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"It is ironic that taxation, which represents over 70% of state revenues, has not been a debate issued during the Presidential Election 2009," he told Bisnis yesterday.
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As a result, he continued, the people didn't know the amount of tax they had to bear to finance development programs offered by the candidates. "In addition, how tax will be collected from us? The people don't know a thing about it at the moment."
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Darussalam explained tax in principle was a result of political, economic, and legal process. "This concerns with the amount of tax that the people have to pay and the benefit of tax for the people."
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He added tax could also serve as a yardstick to measure tax compliance of public official candidates. Therefore, the presidential and vice presidential candidates should be willing to inform their yearly tax assessments (SPT) to the public.
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Chairperson of the Indonesian Taxpayers Association (APPI) RM. Hermantho previously suggested the presidential and vice presidential candidates announced their tax obligations publicly to show the public their compliance as citizens.
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"They will set examples for the people. If the leaders are tax compliant, the people will automatically follow."
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APPI even asked the Directorate General of Taxation to thoroughly examine the wealth reports of the presidential and vice presidential candidates to know about their tax compliance.
Imitate the US
Imitate the US
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Darussalam illustrated that the presidential election campaign in the US massively debated about taxation issues. "Obama with his progressive tax discourse plans to lower tax for people earning less than US$250,000 and raise tax for those earning more than US$250,000," he inserted.
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With the policy, he said, Obama believed he would be able to ease the burden of low-income people as around 95% of the US people only earned between US$100,000 and US$250,000 per annum.
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An economist at The Global Nexus Institute Christianto Wibisono viewed nearly all presidential and vice presidential candidates had the same way to bolster tax revenues, namely by extending tax base.
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"If the money flows into the state coffer, how we optimize the efficiency? Then, how we protect the money from being corrupted? Those issues have yet been clear."
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Fadhil Hasan, an economist at the Institute for Development of Economic and Finance and a member of the economic team of presidential and vice presidential candidates Jusuf Kalla-Wiranto, explained the JK-Wiranto couple in principle had already prepared a scenario to bolster tax revenues and increase tax ratio in the next five years.
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First, the couple would extend tax base or increase active new taxpayers. He hoped the tax ratio could be increased from the current 13.4%-13.6% to 18%-20% in 2014.
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"Our tax ratio is low compared to other countries'. We have potential to extend tax base in line with the GDP increase," he explained to Bisnis last week.
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Second, the couple would lower tax tariffs, especially income tax, to provide workers and employers with incentives in a bid to improve tax compliance.
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Third, the couple would improve bureaucratic reform in the directorate general of taxation. "It means that they will continue reform in a systematic and planned way."
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An economist at the Center for Information and Development Studies Umar Juoro argued the current Susilo Bambang Yudhoyono-Jusuf Kalla administration had been trying to improve tax administration system in the past two years. Therefore, one of them would only to continue their program should one of them win the presidential election.
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"The bureaucratic reform has showed improvements and taxpayers have acknowledged that. Therefore, we have to continue the reform. The sooner the better," said Umar imitating the campaign slogans of both SBY and Jusuf Kalla."
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Umar suggested the economic team of the presidential candidates fix a realistic tax ratio increase. He calculated tax ratio achievable in the next five years would reach no more than 16%-17%.
Labels: Economy Update, Tax Update
The presidential candidates and their running mates have lately been talking about their economic platforms, although still in broad and general terms.
Not surprisingly, all stressed economic growth as their main objective and even went further, projecting growth targets.
The incumbent SBY had the lowest and most conservative target, a 7 percent per year average for the 2009-2014 presidential term, JK was higher at 8 percent, while Mega promised the highest target, 10 percent, a double digit target, which the country has never reached.
However, each candidate is mapping different paths to get there.
Mega and her running mate, retired special forces commander, Prabowo Subiyanto, at one end is promoting the "people's economy," where the emphasis would be on improving the livelihood of those at the bottom end of the income scale, for instance, farmers, fishermen, and small traders in traditional markets.
Their economic policies are populist and nationalist in nature.
Foreign loans and investment will be restructured and priority will be given to local companies or state-owned enterprises to own and control the country's natural resources, which is raising concerns in some business circles.
At the opposite end is SBY with former central bank governor and coordinating minister for economy Boediono as his running mate, who will continue current economic policies, but with an increased emphasis on a cleaner and more effective government.
In some circles the economic policies of SBY and Boediono have been labeled as neoliberal economic policies, sparking a lively debate between proponents of neoliberal and people's economic policies.
Jusuf Kalla and retired General Wiranto are somewhere in between. JK feels there is a stronger role for government and is promoting a closer public and private initiative in key areas of the economy.
Question: How do you think the debate between neoliberalists and people's economists is faring?
Fauzi: The ongoing debate on Kerakyatan (populist) against Neoliberalism policies is misleading.
This debate is not one of economic policies but more of perception. It has nothing to do with economic platforms.
We have to remember that all three candidates Mega, SBY and Kalla have worked together in Mega's cabinet with Boediono as finance minister, which means that there is no ideological divide.
What exists are character differences. Prabowo is the only new person, but remember, his brother is a major capitalist (businessman) as well. In other words, reality limits the option of coming out with economic policies that are too different than what is currently in place.
What exists are character differences. Prabowo is the only new person, but remember, his brother is a major capitalist (businessman) as well. In other words, reality limits the option of coming out with economic policies that are too different than what is currently in place.
So long as you run a budget deficit (to spend on populist programs) the large multilateral (IMF, World Bank, ADB) and private financial institutions (Wall Street), investors (Asia and Middle East) and governments (US, Europe, Japan and Australia) will play a big role in funding this gap and cannot be ignored.
Faisal: Unfortunately, people like to talk about outer appearances rather than inner content.
In Europe, there is a party called the Anti-Capitalist Party and interestingly it still lets the market mechanism work, but focuses on providing a stronger social safety net for those in society that is most impacted during bad times.
In Europe, there is a party called the Anti-Capitalist Party and interestingly it still lets the market mechanism work, but focuses on providing a stronger social safety net for those in society that is most impacted during bad times.
What is your assessment about the candidates' respective economic plans?
Fadhil: The candidates have similarities and differences. All agree that there are certain preconditions for economic growth. One of them is bureaucratic reform and how to make government more efficient or good governance.
The difference is in the role of the state. SBY is more market oriented, where the role of the government is more limited and ends up more as a regulator.
At the other extreme, is Mega, where the state is expected to play a more significant role vis-a-vis the market. There will be more intervention and protection. However, even here the market will still play a role, but to a lesser degree than in SBY's case.
It is a matter of degree. In JK's case, there is more balance. He is not anti-market. Where the market works, that approach will be adopted, but where there is market failure then the state has a role to play.
On investment and trade, SBY will be more open. Bilateral and multilateral trade agreements will be encouraged. In contrast, Mega will be more restricted in this area, for example in foreign investment. JK again will be somewhere in between.
On macro-economic stability, SBY, will try to achieve this at all cost. In JK's case, economic stability plays more of a supporting role. For example, he would be more expansive (i.e. increasing government spending) and more tolerant toward the resulting rise in budget deficits and inflation.
Mega would go further and be more expansive on government spending, given her more interventionist stance, and tolerate larger budget deficits, at the cost of macro-economic stability.
Aviliani: This is where there is some contradiction on Mega's program as larger budget deficits require financing to cover the gap, which needs to come from the market and often comes from foreign sources.
We will soon be listening to presidential election campaigns. What further topics would you like to see debated to help voters make their choice?
Aviliani: All presidential candidates campaign for the people. But what the candidates forget are that economic liberalization policies, starting in the late 80s, with the banks and later extended to the capital markets, were never properly reviewed as to its impact on the public (especially the lower income segment).
They have never differentiated and reviewed those liberalization policies that were detrimental. If this is not done, there will be no significant change to economic policy. For example, our open foreign exchange system, results in a volatile currency.
This makes it difficult for businesses large and small to operate effectively. We need to review our open economic policies and change those that ultimately hurt the public.
On growth, they all talk about their different targets, but don't explain how this will be achieved. There are exports minus imports, government spending, consumption and investment. If we look at the last four years, government spending has been very low.
They have not discussed what kind of spending can stimulate growth. Next is how to promote exports. None have talked about what industry will be promoted to push exports. This is important to see which sector absorbs more labor. On investment, none have talked about what kind of incentives will be put in place to attract more investment.
None have talked seriously about the government budget. Our government has been in deficit for some time, which has increased the government's debt burden. If we talk about people's economy we need to talk about the government budget.
On foreign loans, SBY is relatively comfortable with foreign loans, while Mega-Prabowo talks about restructuring foreign loans to become more fiscally self reliant.
But we can't talk about budget deficits without talking about government debt. Not much has been said on how debt should be managed and how it links up with the government budget.
My concern is that all this will be difficult to implement. We have difficulty becoming fiscally more independent with the informal sector, in terms of work force, being larger than the formal sector. The large informal sector keeps tax revenue low and thus government debt is still needed to cover the gaps in government spending.
Also, we need to remind ourselves that 44 percent of the labor force is in agriculture. And when we talk about the agricultural sector, it is impossible not to talk about subsidies.
The argument again is the strength of the government budget to cover subsidies in a sector that employs most of the country's manpower.
The argument again is the strength of the government budget to cover subsidies in a sector that employs most of the country's manpower.
Another issue is regional autonomy, which provides significant power to the regional government. If the regional autonomy laws are not amended then directives from the central government might not be carried out effectively if the regional government comes from a different political party than that of the central government.
Going forward, whoever wins, what does the new president need to worry about when it comes to economic policy?
Anton: On growth, I don't care much about the numbers (candidates' growth targets). What is important is the reality and the constraints we are facing. I think a more useful approach would be to discuss the quality of growth.
For example, what sector and how does it link with employment? Growth has to be supported by a better balance between tradable and non-tradable sectors, with a stress on sectors that better absorbs labor.
Also, what is the growth impact on equity for the poorer segments of society? The government should improve farmers' welfare by increasing food productivity, economizing on fertilizer usage that doesn't degrade the soil, helping farmers' move up the production chain, and cut the middle man.
Policies on education, health, water (not just limited to clean water) and the environment should be strengthened to improve the quality of life. Here, improving water management is becoming a strategic and urgent concern.
The price of accessing clean water is rising and periodic water shortages are faced by many of our dams, which are used to generate electricity and irrigate paddy fields.
Another important area of concern is how to gradually integrate the informal sector into the formal economy and thus enlarge the fiscal funding base, as Aviliani has argued earlier, thus making the country less reliant on government debt, both foreign and local.
Faisal: My major concern is the lack of integration in our national economy and how to expedite bureaucratic reform. For instance, the price of an orange from Brastagi sold in Jakarta is much higher than from China.
This is because our infrastructure needs significant development, improvement and continued maintenance to bring transportation and transaction costs down.
On our bureaucracy, my concern is that we need to strengthen our regional government capabilities more and not just add people in the central government. I observe that the "echelon" rank in the central bureaucracy keeps on rising.
It is also time we review the effectiveness of having coordinating ministers and consider doing away with it.
We are the only country that has coordinating ministers, which I think creates additional layers in the decision-making process and ultimately is not efficient.
In the end, what do you expect economic policies to look like?
In the end, what do you expect economic policies to look like?
Fauzi: I look at things in a much simpler way. At the end, whoever wins, realism will kick in.
Whoever becomes president, businesspeople would support the new government and, in the process, influence it to adopt economic policies that would be more business friendly.
So, at the end, I don't expect to see a major change in economic policy
from Jakarta Post
Labels: Economy Update
JakartaPost:
As businesses are crippled by the global economic crisis, forcing companies to lay off workers, the tax office has come up with a new regulation to cut taxes imposed on businesses hard-hit by the downturn.
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Issued last week, the regulation allows eligible companies a reduction of up to 25 percent in their income tax during the January-June period.
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The cut is derived from the amount of taxes businesses will pay under Article 25 of the Income Tax Law.
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The amount businesses must pay for the January-June period is calculated using as a benchmark the amount of income tax they paid the previous December, tax office chief Darmin Nasution said in the regulation.
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However, for businesses that have submitted their 2009 tax reports, the amount of Article 25 tax they must pay will be based on the tax report.
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Article 25 tax is an annual tax paid by businesses in monthly installments, to reduce the burden to businesses of having to pay large amounts of tax by the year's end.
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If businesses end up paying more tax than they are supposed to, they will get a refund at the end of the year.
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The tax office added certain businesses would not be eligible for the Article 25 tax cut.
These include banks, state- and regional-owned firms, publicly listed companies, and other companies that are legally required to file regular financial reports publicly.
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These include banks, state- and regional-owned firms, publicly listed companies, and other companies that are legally required to file regular financial reports publicly.
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The new regulation is valid for six months, but can be extended until the end of the year.
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Should businesses believe they will not be able to meet their tax obligations for the July-December period, they can submit a written proposal, in June at the latest, showing their tax obligations will drop by a maximum 25 percent from their previous estimates.
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Businesses also need to submit their latest revenue figures a month before they submit the written proposals, and their estimated revenue figures until the next December.
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The tax office will then study the proposals and come up with a decision within 15 days.
The newly introduced tax relief is one of several tax incentives planned by the government to help businesses at least maintain current production capacity, amid rapidly weakening worldwide demand.
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The newly introduced tax relief is one of several tax incentives planned by the government to help businesses at least maintain current production capacity, amid rapidly weakening worldwide demand.
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By reducing the burden on the private sector, the government expects to minimize layoffs and keep the economy growing at a respectable level of between 4.5 and 5.5 percent.
Last year, the economy was predicted to have expanded by 6.2 percent.
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Last year, the economy was predicted to have expanded by 6.2 percent.
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However, critics say the government's commitment to preventing layoffs, which would boost unemployment and poverty rates, has more to do with trying to maintain or even increase its popularity ahead of the upcoming general elections this April.
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The National Development Planning Agency (Bappenas) estimates the number of people living under the poverty line may rise to 33.71 million, or 14.87 percent of the total population, by the time official figures on unemployment and poverty are revealed in March by the Central Statistics Agency (BPS).
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The figure is based on the assumption that inflation hovers at around 9 percent.
For the full year, however, Bappenas forecasts poverty to reach 13.28 percent, or 29.99 million people, as inflation declines to 6 percent and economic growth to 4.5 percent.
For the full year, however, Bappenas forecasts poverty to reach 13.28 percent, or 29.99 million people, as inflation declines to 6 percent and economic growth to 4.5 percent.
Labels: Economy Update, Export Tax
Some passengers at Ngurah Rai Airport in Bali have been caught by surprise by the increase in the fiskal or exit tax for travelers going overseas, unaware of the new policy that exempts registered taxpayers from paying the exit tax.
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Ritchy, an Australian living in Bali, who planned to depart from the airport the second day the new rules came into effect, appeared astonished to learn that the exit tax had been increased to Rp 2.5 million (US$222).
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He paid the exit tax without much complaint but was unable to hide his disappointment about not getting enough information about the rise.
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He paid the exit tax without much complaint but was unable to hide his disappointment about not getting enough information about the rise.
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"I think it's a bit too much. What makes me upset is that there was no written announcement on the rise," he said Friday.
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Even at the airport, he said, he did not get thorough information about the exemption for registered taxpayers, with the young tax officer on duty mentioning only "NPWP", the initials for the registered taxpayer's number.
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Ritchy was not alone, with a number of people -- mostly foreign nationals -- also taken aback when it came to paying the increased exit tax.
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The written announcement about the exit tax increase, written in Indonesian and English on two pieces of white paper, simply read, "According to the new regulation UU No. 36/2008 and PP No. 80, rate of fiscal tax Rp 2,500,000".
Copied from Indonesia News Blog: http://indosnesos.blogspot.com
Labels: Economy Update, Tax Update, Taxation
Pertamina Wins License to Distribute Subsidized Fuel in Indonesia
0 comments Posted by Me and Me at 15:11Indonesia's state-owned integrated oil and gas firm Pertamina has been awarded the license to distribute subsidized fuel in Indonesia by the country's downstream regulator BPH Migas.
AFP quoted a senior official of BPH Migas as saying that the license will permit Pertamina to distribute an estimated 9.47 billion gallons of subsidized fuel. The Indonesian government reportedly subsidizes about 60% of the country's fuel consumption.
Pertamina was selected from a field of competitors that included local firm Aneka Kimia Raya, oil giants BP, Royal Dutch Shell, Total and the Malaysian state-owned energy firm Petronas.
BPH Migas has stated that the award of the license was because Pertamina was better qualified in terms of higher number of gas stations and fuel storage facilities.
Source: Datamonitor
Labels: Economy Update
Jakarta Post: The government will extend its "sunset policy" tax program until February 2009 following requests by businesses which are unable to complete their accounts due to problems related to the global economic downturn.
"The sunset policy is delayed to February 2009," Finance Minister Sri Mulyani Indrawati said in Tuesday's gathering with investors at the Indonesia Stock Exchange.
"But I expect businesses will not wait until the deadline (to improve their tax filings or for people to have a tax registration number," she said.
The initial deadline for the policy was on Dec. 31.
As a result of a new tax law on general tax procedures late last year, the government has issued rules requiring all taxpayers to register and to honestly report their taxes and comply with the existing regulations.
Under the new policy, often referred to as the "sunset policy", the government has also given potential taxpayers time to get a tax registration number and start to comply with the regulations.
The government had originally given one year in which it waived administrative penalties for previous non-compliance in exchange for registration and subsequent accurate tax reporting before starting to impose stiffer sanctions on violators next year.
Mulyani said this month, particularly in the past few days, that tax offices nationwide had been inundated by thousands of people wanting to register for a tax number, or fix their tax reports.
"We are now busy handling people who wanted to comply with the policy," she said.
The extension of the policy will be laid down in the form of a regulation-in-lieu-of-law.
Mulyani said people had grown more aware of the need to register and become taxpayers, as seen from the growing number of people registering for a tax file number, especially recently.
People are flocking to the tax registration offices following the government's plan to slap a higher exit tax on travel overseas for those having no tax registration number, forcing most of the country's middle to upper-income people to comply with the requirements for tax registration.
According to the Directorate General of Taxation, between 50,000 and 100,000 people applied for a tax registration number this month, up from between 7,000 to 8,000 people on average in previous months.
"It is expected that no one who wants to comply with the sunset policy will be left unserved," Darmin said.
"On the other hand, the extension (of the policy) will strengthen the base for national taxation," he added.
The tax office anticipates a decline in tax revenue from the corporate sector, while tax from individuals is forecast to be more stable despite the impact of the global economic slowdown.
According to the directorate general of taxation, Indonesia only has about 6 million taxpayers, including individuals, companies, and institutions, out of a population of 230 million people.
Darmin also said that it was estimated that tax revenue for this year, including oil-and-gas tax revenue, would reach Rp 566.2 trillion, or 5.9 percent higher than the Rp 534.5 trillion targeted in the revised 2008 state budget.
Labels: Articles, Economy Update, Tax Update
The government will again cut the prices of subsidized Premium gasoline and diesel fuel starting Monday, President Susilo Bambang Yudhoyono announced Sunday.
"Considering inflation, we have to set the right fuel price. I have decided to cut the prices of Premium and diesel fuel," the President was quoted by Antara news agency as saying.
The price of subsidized Premium gasoline has been cut by Rp 500 to Rp 5,000 (45 US cents) per liter, and the price of diesel fuel has been cut by Rp 700 to Rp 4,800 rupiah per liter.
The decision to cut fuel prices was taken after a limited Cabinet meeting chaired by the President and attended by Vice President Jusuf Kalla and economic ministers.
Finance Minister Sri Mulyani said the decision to cut fuel prices took into consideration the falling price of crude oil on the international market.
"With this fuel price cut, we hope there will be a reduction in inflation by 0.3 to 0.5 percent, so that it should help maintain people's purchasing power," she said.
The Jakarta Post
Labels: Economy Update
JAKARTA, 06 December 2008 -
Indonesia has secured emergency loans worth five billion dollars to help plug its budget deficit and boost growth, authorities have said. "The loans, which come from the World Bank, the Asian Development Bank, Japan, Australia and France, can be drawn upon whenever Indonesia needs them," finance ministry official Rahmat Waluyanto told on Saturday.
"Donors still perceive Indonesia as an important and strategic country. We should keep the momentum of our economic development going," he said, adding that raising money through government bonds would prove expensive due to high interest rates. Waluyanto said that Indonesia would only use the standby loans if economic growth slowed to 5.8 percent in the first quarter of 2009.
The Indonesian economy grew by 6.1 percent in the third quarter of this year. However, the government has adjusted its 2009 growth forecast from 6.3 percent to 4.5-5.0 percent in light of the global downturn.
Labels: Economy Update
JAKARTA, 02 December 2008 -
Indonesia`s exports in October 2008 dropped 11.61 percent to US$10.81 billion, according to the country`s Central Bureau of Statistics (BPS). BPS chief Rusman Heriawan said here on Monday Indonesia`s oil and gas exports dropped most drastically by 25.72 percent to US$1,808 million while non-oil and gas exports slid 8.10 percent to US$9 million from the month before.
"The decline of rubber exports was the steepest reaching US$172.5 million while mineral fuel exports` decline reached US$251.5 million," he said. Cummulatively (from January to October) the year 2008 saw a rise of 26.92 percent or US$118.43 billion compared with the same period last year when non-oil and gas exports rose 21.63 percent.
"Non-oil and gas exports to Japan were the largest reaching US$1.38 billion, followed by the US around US$922.7 million and Singapore US$797.8 million where contribution from third countries toAmerica reached 34.46 percent from total exports," he said. Agricultural, industrial and mineral exports from January to October 2008 rose respectively 34.65 percent, 21.04 percent and 21.57 percent compared with the same period last year.
Labels: Economy Update
Indonesia, a vast polyglot nation, struggles with persistent poverty and unemployment, inadequate infrastructure, pervasive corruption, a fragile banking sector, a poor investment climate, and unequal resource distribution among regions. Declining oil production and lack of new exploration investment turned Indonesia into a net oil importer in 2004.
The cost of subsidizing domestic fuel strained the budget in 2005, ultimately prompting the government to enact a 126% average fuel price hike in October. The resulting inflation and interest rate hikes dampened growth through mid-2006, while large increases in rice prices pushed millions more people under the national poverty line.
The economy accelerated throughout 2007, but keys to sustained future growth remain internal reform and building up the confidence of international and domestic investors. The high global price of oil in 2007 increased the cost of domesic fuel and electricity subsidies, which consume a significant share of government spending. Significant progress has been made in rebuilding Aceh after the devastating December 2004 tsunami, and the province now shows more economic activity than before the disaster.
Unfortunately, Indonesia suffered new disasters in 2006 and early 2007 including: a major earthquake near Yogyakarta, an industrial accident in Sidoarjo, East Java that created a "mud volcano," a tsunami in South Java, and major flooding in Jakarta, all of which caused additional damages in the billions of dollars. Donors are assisting Indonesia with its disaster mitigation and early warning efforts.
GDP (purchasing power parity): $845.6 billion (2007 est.)
GDP (official exchange rate): $287.4 billion (2007 est.)
GDP - real growth rate: 6.1% (2007 est.)
GDP - per capita (PPP): $3,400 (2007 est.)
GDP - composition by sector: agriculture: 12.4% industry: 47.7% services: 39.9% (2007 est.)
Labor force: 108 million (2007 est.)
Labor force - by occupation: agriculture: 43.3% industry: 18% services: 38.7% (2004 est.)
Unemployment rate: 9.7% (2007 est.)
Population below poverty line: 17.8% (2006)
Household income or consumption by percentage share: lowest 10%: 3.6% highest 10%: 28.5% (2002)
Distribution of Family Income - Gini index: 36.3 (2005)
Inflation rate (consumer prices): 6.3% (2007 est.)
Investment (gross fixed): 23.6% of GDP (2007 est.)
Budget: revenues: $88.21 billion expenditures: $95.41 billion (2007 est.)
Public debt: 35.4% of GDP (2007 est.)
Agriculture - products: rice, cassava (tapioca), peanuts, rubber, cocoa, coffee, palm oil, copra; poultry, beef, pork, eggs
Industries: petroleum and natural gas, textiles, apparel, footwear, mining, cement, chemical fertilizers, plywood, rubber, food, tourism
Industrial production growth rate: 6.1% (2007 est.)
Electricity - production: 125.9 billion kWh (2006 est.)
Electricity - consumption: 108 billion kWh (2006 est.)
Electricity - exports: 0 kWh (2006 est.)
Electricity - imports: 0 kWh (2006 est.)
Oil - production: 1.07 million bbl/day (2006 est.)
Oil - consumption: 1.1 million bbl/day (2006 est.)
Oil - exports: 470,000 bbl/day (2006 est.)
Oil - imports: 500,000 bbl/day (2006 est.)
Oil - proved reserves: 4.301 billion bbl (1 January 2006 est.)
Natural gas - production: 74 billion cu m (2006 est.)
Natural gas - consumption: 37.5 billion cu m (2006 est.)
Natural gas - exports: 29.6 billion cu m (2006 est.)
Natural gas - imports: 0 cu m (2006)
Natural gas - proved reserves: 2.63 trillion cu m (1 January 2007 est.)
Current account balance: $10.21 billion (2007 est.)
Exports: $118.4 billion f.o.b. (2007 est.)
Exports - commodities: oil and gas, electrical appliances, plywood, textiles, rubber
Exports - partners: Japan 19.4%, Singapore 11.8%, US 11.5%, China 7.7%, South Korea 6.4%, Taiwan 4.2% (2006)
Imports: $86.24 billion f.o.b. (2007 est.)
Imports - partners: Singapore 29.6%, China 11.2%, Japan 8.8%, South Korea 5.3%, Malaysia 4.8% (2006)
GDP (official exchange rate): $287.4 billion (2007 est.)
GDP - real growth rate: 6.1% (2007 est.)
GDP - per capita (PPP): $3,400 (2007 est.)
GDP - composition by sector: agriculture: 12.4% industry: 47.7% services: 39.9% (2007 est.)
Labor force: 108 million (2007 est.)
Labor force - by occupation: agriculture: 43.3% industry: 18% services: 38.7% (2004 est.)
Unemployment rate: 9.7% (2007 est.)
Population below poverty line: 17.8% (2006)
Household income or consumption by percentage share: lowest 10%: 3.6% highest 10%: 28.5% (2002)
Distribution of Family Income - Gini index: 36.3 (2005)
Inflation rate (consumer prices): 6.3% (2007 est.)
Investment (gross fixed): 23.6% of GDP (2007 est.)
Budget: revenues: $88.21 billion expenditures: $95.41 billion (2007 est.)
Public debt: 35.4% of GDP (2007 est.)
Agriculture - products: rice, cassava (tapioca), peanuts, rubber, cocoa, coffee, palm oil, copra; poultry, beef, pork, eggs
Industries: petroleum and natural gas, textiles, apparel, footwear, mining, cement, chemical fertilizers, plywood, rubber, food, tourism
Industrial production growth rate: 6.1% (2007 est.)
Electricity - production: 125.9 billion kWh (2006 est.)
Electricity - consumption: 108 billion kWh (2006 est.)
Electricity - exports: 0 kWh (2006 est.)
Electricity - imports: 0 kWh (2006 est.)
Oil - production: 1.07 million bbl/day (2006 est.)
Oil - consumption: 1.1 million bbl/day (2006 est.)
Oil - exports: 470,000 bbl/day (2006 est.)
Oil - imports: 500,000 bbl/day (2006 est.)
Oil - proved reserves: 4.301 billion bbl (1 January 2006 est.)
Natural gas - production: 74 billion cu m (2006 est.)
Natural gas - consumption: 37.5 billion cu m (2006 est.)
Natural gas - exports: 29.6 billion cu m (2006 est.)
Natural gas - imports: 0 cu m (2006)
Natural gas - proved reserves: 2.63 trillion cu m (1 January 2007 est.)
Current account balance: $10.21 billion (2007 est.)
Exports: $118.4 billion f.o.b. (2007 est.)
Exports - commodities: oil and gas, electrical appliances, plywood, textiles, rubber
Exports - partners: Japan 19.4%, Singapore 11.8%, US 11.5%, China 7.7%, South Korea 6.4%, Taiwan 4.2% (2006)
Imports: $86.24 billion f.o.b. (2007 est.)
Imports - partners: Singapore 29.6%, China 11.2%, Japan 8.8%, South Korea 5.3%, Malaysia 4.8% (2006)
Economic aid - recipient: ODA, $2.524 billion (2006 est.) note: Indonesia ended 2006 with $67 billion in official foreign debt (about 25% of GDP), with Japan ($25 billion), the World Bank ($8.5 billion) and the Asian Development Bank ($8.4 billion) as the largest creditors; about $6 billion in grant assistance was pledged to rebuild Aceh after the December 2004 tsunami; President YUDHOYONO disbanded the Consultative Group on Indonesia (CGI) donor forum in January 2007 (2005)
Reserves of foreign exchange and gold: $53.27 billion (31 December 2007 est.)
Debt - external: $137.2 billion (30 June 2007)
Stock of direct foreign investment - at home: $21.91 billion (2006 est.)
Stock of direct foreign investment - abroad: $9.225 billion (2006 est.)
Market value of publicly traded shares: $138.9 billion (2006)
Currency (code): Indonesian rupiah (IDR)
Exchange rates: Indonesian rupiah per US dollar - 9,056 (2007 est.), 9,159.3 (2006), 9,704.7 (2005), 8,938.9 (2004), 8,577.1 (2003)
Fiscal year: calendar year
Labels: Economy Update
Urip Hudiono, The Jakarta Post, Jakarta
The central bank will limit the type and amount of corporate bonds eligible for its new regulation, which will allow banks to account for such investment holdings as loans, following growing criticism over the plan.
With the revision, only ""investment grade"" corporate bond holdings of banks could be categorized as loans and used to account for their loan to deposit ratio (LDR), Bank Indonesia (BI) deputy governor Siti C. Fadjrijah told reporters Tuesday.
""The corporate bond must also be marked to market,"" Siti said, asking banks to adjust the value of such holdings to their fair market prices.
Siti further said BI would still assess the details of the planned regulation, including the proportion of corporate bond holdings that banks can claim as part of their lending.
The central bank recently unveiled a plan to issue a new regulation which will allow banks to regard their corporate bond holdings as lending so that the banks will be able to raise their LDR.
The banks have had difficulties matching their LDRs to the central bank's standards due to the low growth of lending.
The banks have had difficulties matching their LDRs to the central bank's standards due to the low growth of lending.
The BI has argued that such holdings could be categorized as loans, as the issuing company would in the end also use the funds raised for expanding its business and contributing to the total economic growth.
The central bank is targeting 20 percent lending growth for this year, after last year's slump to 14 percent. Bank lending added another Rp 38.5 trillion (US$4.27 billion)in June to reach Rp 854.9 trillion, or growth of 19.4 percent compared to the same first six-month period last year.
Industry analysts have, however, already criticized the plan, saying it may only improve the on-paper performance of banks in terms of their LDR, but not actual lending for the better of the economy.
They suggested BI instead require banks to allocate a greater proportion for productive lending such as to small businesses, and limit less productive ones such as consumer loans, if it really wanted to support growth through lending.
Banks have lately been in something of a dilemma -- while on one hand, demand for new loans is actually still slow, they have been under criticism for opting to invest their excess liquidity in market investments such as central bank bills rather than productive lending.
Further criticism over BI's latest plan came from tax office chief Darmin Nasution, who said that with the new regulation, the level of banks' LDR would be misleading because they did not represent the actual increase in their lending.
He also feared that with the new regulation, his office's plan to give incentives to encourage bank mergers could go to the wrong banks, because the planned tax breaks would be given only to those with high LDRs.
A 50 percent minimum LDR level is among the requirements for the so-called anchor banks, which will lead the BI's consolidation of the industry through mergers and acquisitions by 2010.
Siti has, however, maintained BI's argument that such ""indirect lending"" from the new regulation will have a positive effect on the economy, and on efforts to deepen Indonesia's financial market, once it has ironed out the details
Siti has, however, maintained BI's argument that such ""indirect lending"" from the new regulation will have a positive effect on the economy, and on efforts to deepen Indonesia's financial market, once it has ironed out the details
Labels: Economy Update
The Indonesian Trade Ministry required exporters and producers to pre-register chemical products and other industry-related goods exporting to European Union (EU) markets, an official said.
"If Indonesian exporters don't do that, they can not export the products. The regulation will be effective starting Dec. 1," Partogi Pangaribuan, head of chemistry and mining directorate of the ministry.
EU imposed a new regulation on foreign exporters, requiring them to follow procedural registration, evaluation, authorization and restriction of chemical products (REACH) under the European Chemical Agency (ECHA).
According to Pangaribuan, two Indonesian exporters association of palm oil and basic chemicals have proceeded with the pre-registration process recently.
"ECHA will be strict to regulate the chemical data otherwise they will not let the goods coming to EU. They say that no data no export," he said.
Based on the data of the Trade Ministry, there are 10,293 companies which regularly export the goods to EU such as textile, furniture and shoes.
Labels: Economy Update
Indonesia has approached Australia, Japan, the World Bank and other official creditors to line up credit to help cover a projected $4.4 billion budget deficit next year, a finance ministry official said on Wednesday.
Indonesian policy makers are worried they may face problems raising funds amid market turmoil sparked by fears it could become the next casualty of a worldwide flight from risky assets. The rupiah currency has fallen almost 25 percent this year.
Marking another potential missing revenue stream, an official said plans by state firms for IPOs had been dropped for now.
Marking another potential missing revenue stream, an official said plans by state firms for IPOs had been dropped for now.
Rahmat Waluyanto, the Indonesian finance ministry's treasury director general, said the Asian Development Bank had indicated it would make $1 billion available but the terms of other loans were still being discussed.
"This is actually a precautionary measure in case there is trouble in the financial markets which disturbs our bond issues," he told Reuters by telephone, adding that loans would be agreed on a basis whereby they would only be released if there was a trigger.
"Basically they all support us, but as for the numbers, how much they will be, what the terms and conditions are, we have not agreed on those yet," he added.
Australian Treasurer Wayne Swan confirmed Indonesia had approached Australia for a loan, which newspapers reported amounted to about $2 billion.
Indonesia previously sought help from Australia during the 1997/1998 Asian financial crisis, with Canberra lending $1 billion for structural reform in a government-to-government arrangement.
TESTING TIME
"It is the case that the Indonesians have approached a number of international organisations, including the World Bank, and also have approached the Australian government for some assistance at a time which is very testing," Swan told Parliament in Canberra.
Indonesia has forecast its budget deficit will be around 52.7 trillion rupiah ($4.37 billion) next year.
But financial turmoil is making it hard for emerging economies to secure loans or sell bonds as international investors shy away from markets perceived as high risk.
Plans to privatise a number of state firms this year, either through IPOs or sales to strategic investors, had been dropped for now, the state enterprises minister said.
"For now we can forget about any plan for state companies to go public," Minister Sofyan Djalil said.
In September, an Indonesian parliamentary commission approved plans to privatise three state firms including the country's biggest steel maker PT Krakatau Steel, home lender PT Bank Tabungan Negara and national airline PT Garuda Indonesia.
Planning Minister Paskah Suzetta said that Indonesia planned to offer tax incentives in 2009 to help labour-intensive industries including possibly food and beverages, electronics and automotives, amid concerns over potential layoffs.
There has also been market talk that Indonesia was considering assessing the IMF's special Short-term Lending Facility, to boost its foreign exchange reserves.
But President Susilo Bambang Yudhoyono was reported as saying on a recent overseas trip that the government would not seek such loans, saying authorities would prefer to seek funds from other sources.
Once approved, the facility, which is different from a rescue package and is unconditional, allows the recipient country to get up to five times its drawing rights, which should add up to more than $15 billion for Indonesia, analysts said.
Indonesia, Southeast Asia's largest economy, has slashed its 2009 growth forecast from 6.3 percent to 4.5-5 percent next year, as global economic conditions deteriorate.
Labels: Articles, Economy Update
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