JAKARTA (TheInsiderStories) – Good morning, we provide several pieces of important news that might help your business decisions today:
Stocks Jump, While Currency Weakens
Indonesia stocks finished higher at the close on Tuesday, as gains in the Mining, Miscellaneous Industry and Trade sectors led shares upward: the IDX Composite Index gained 0.43 percent to hit a new all-time high. Meanwhile, USD / IDR was down 0.20 percent to Rp13,530.0, hitting its lowest point in 10 months.
Bank Indonesia projects inflation could reach 3.5 percent this year
Bank Indonesia has suggested inflation could reach 3.5 percent by end-2017. Senior Deputy Governor Mirza Adityaswara mentioned the inflation target in the lower range could be realized with better price control, as these conditions have allowed the central bank room to stimulate economic activity. Meanwhile, Bank Indonesia said it expects gross domestic product to pick up in the third quarter, helped by a recovery in consumer spending and higher government disbursement; private-sector banks are however still reluctant to beef up their loan books.
Jokowi urges State-Owned Enterprises to slash subsidiaries
President Joko Widodo has instructed State-Owned Enterprises (SOEs) to sell or merge any subsidiaries not in line with core concerns of its parent business. Currently, there are 118 SOEs with more than 800 subsidiaries. In a meeting of the Indonesian Chamber of Commerce and Industry coordination last Tuesday, Widodo told entrepreneurs this issue has been worked on in recent plenary meetings.
Medco Energi, Higher Production and Revenue in the First Half
Indonesian oil and gas company PT Medco Energi Internasional Tbk. (IDX:MEDC) has announced first half 2017 revenue was US$403,5 million, 54.3 percent higher than the same period last year, with higher sales and increased average realized price of US$49.3/bbls (+28.8 percent) for oil and US$5.6/mmbtu (+32.8 percent) for gas. The Company recorded 1H 2017 gross profit of US$198.2 million and a 49.1 percent gross margin. Cash costs continue to be an area of concern with 1H 2017 gas and oil units at US$8.2/BOE, well below the Company’s vow to remain below US$10/BOE until 2020. Meanwhile EBITDA (Earnings before Income, Taxes, Depreciation and Amortization) increased by 61.7 percent YoY to US$200.3 million, with an improved EBITDA margin of 49.6 percent. PT Amman Mineral Nusa Tenggara, the Company’s mining affiliate, continues to make steady progress with its plans to reduce costs and fund future developments.
Freeport might get fiscal incentive
Indonesia Finance Minister Sri Mulyani Indrawati confirmed that the government is preparing policies to create a more conducive mining investment climate; one aspect is taxation. She said the Finance Ministry is preparing a draft that will regulate the transfer of implementation of Contract of Work (KK) policy into a Special Mining Business License (IUPK). Sri Mulyani hinted that the Income Tax of mining business entities will be equal to the final income tax, which is only 25 percent. This means PT Freeport Indonesia might benefit from a lower rate: from 35 percent to 25 percent.
Demand for Jakarta office increases in 3rd Quarter
Demand for office space in Jakarta began to recover in the third quarter of 2017. Based on a Colliers International Indonesia survey, improvements in demand for tenants mainly occurred in the financial sector, shipping companies, consumer companies, and especially IT-based enterprises (such as ecommerce and co-working spaces). Office occupancy in the Central Business District (CBD) area was recorded at 83.3%, its lowest since 2009; the rental rate fell 9% from the same period of 2016 to Rp 284,368 per meter square. By end-2017, Collier estimates that occupancy in the CBD will drop 4% -5% to 80% YoY.