Daily Business Briefing – Oct. 2

JAKARTA (TheInsiderStories) – Good morning, we provide several important news that migh help your business decision today:

JCI Almost Hit 6,000 Last Week

Indonesia Stock Exchange (IDX) has achieved record heights on the Jakarta Composite Index (JCI) throughout the week, ending up 0.18 percent to 5,900.85 points from 5,911.70 points at the close of the previous weekend. The average daily transaction on Sept. 25 to 29 rose 5.46 percent to Rp6.95 trillion, compared to Rp6.59 trillion in the previous week. Meanwhile, the average daily transaction volume this week also shifted slightly, by 1.26 percent to 8.63 billion shares, from 8.74 billion.

Indonesia’s PMI Down 50.4 in September

The Nikkei Indonesia Manufacturing Purchasing Managers’ Index, or PMI, fell slightly to 50.4 in September from 50.7 in August. A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.Aashna Dodhia, economist at IHS Markit, said the output fell fractionally due to raw material shortages. Meanwhile, concerns regarding future business prospects echoed a note of caution, with confidence dipping to the lowest level since December 2012, the economist added.

Freeport Far from Agreement with Government of Indonesia on Divestment

Freeport-McMoRan Inc., the world’s second-largest publicly traded copper company, has indicated it disagrees strongly with a proposed divestment plan put forth by the Indonesian government, based on a company letter reviewed by TheInsiderStories. This missive to Indonesia’s Finance Ministry reflects persistent and deep divisions between Freeport and the state, an issue which has weighed on the miner’s stock and operations, despite a framework agreement announced in late August. Under that deal, Freeport agreed to divest a 51 percent stake in Grasberg, among other terms, while retaining operational control until 2041. T

Pension Investment Fund Grow 10.78%

The total investment by pension funds grew 10.78% as of the end of August 2017, along with the development of asset value reaching Rp256.33 trillion. The Financial Services Authority data on pension fund statistics as of August 2017 shows total investment value of Rp248.82 trillion. The realization grew 10.78% YoY, as in August 2016 it was reported at Rp224.61 trillion. Meanwhile, the total value of pension fund assets grew by approximately 9.60% YoY against last year’s Rp233.89 trillion.

Angkasa Pura II offers investment package for Kualanamu Airport 

Indonesian airport operator company PT Angkasa Pura II (AP II) is offering an Rp11 trillion investment package for the development of Kualanamu International Airport, North Sumatra. Investors can hold up to a maximum share of 49 percent in the company. This investment package includes the development of runways, so the airport can serve wide-bodied aircraft up to and including the Airbus 380-800. Next, the expansion of the cargo area to 24,715 square meters from a current 13,450 square-meters. Kualanamu is the second-largest airport run by AP II, after Soekarno Hatta International Airport in Jakarta. The movement of passengers in Kualanamu is increasing every year, currently reaching an annual 9 million passengers, thus straining airport capacity. AP II has a development plan for a passenger terminal with a capacity of 42 million passengers by 2027.

Mortgages Grew 10.4% in August

Bank Indonesia (BI) recorded housing loan and mortgage distribution in August 2017 reaching Rp389.2 trillion, or 10.4 percent YoY over last month’s 9.1 percent. Mortgage growth was also higher than overall credit growth for the same period (8.4 percent YoY). Based on data from BI money supply, overall credit distribution in August was 7.4 percent YoY higher than the number set last July, in terms of total disbursements reached Rp4,514.5 trillion. Meanwhile, property loans in August grew 13.5 percent YoY, or slowed compared to July at 13.9 percent YoY. The stalling of property loans amid growth in mortgages was caused by sluggish action in construction and real estate loans. In August, construction credits grew slower, from 23.4 percent YoY to 22.1 percent YoY, while real estate loans went down from 12.4 percent to 8.5 percent.

PT PP Secures Rp31.9 Trillion in Contracts in September 

State-owned construction company PT PP Tbk (IDX: PTPP) managed to record a new contract book of Rp 31.9 trillion, growing by 40.5% compared to the same period last year (Rp 22.7 trillion). The additional work is derived from parent Company PTPP (Rp 28.1 trillion) and the subsidiary (Rp 3.8 trillion). The company also managed to snare a number of projects in September, such as Yogyakarta Kulonprogo Airport at Rp 6.5 trillion, Transmart Bali (Rp 497 billion) and Gempol-Pasauruan Toll Road (Rp 423.5 billion). In terms of ownership composition (project owner) the acquisition of new contracts until the end of September 2017 is dominated by SOEs at 60.8%, followed by private at 28.9% and government at 10.2%.

China Steers Credit to Small Business with Targeted Reserve Cut

China took action to ensure credit reaches small businesses, rural borrowers and startups, a move tailored to shore up the economy as a vital political transition approaches. The People’s Bank of China announced late Saturday that it would reduce the amount of cash that banks must hold as reserves from next year, with the size of the cut linked to the flow of funding to parts of the economy where credit has traditionally been scarce. That distinction was underlined Saturday by manufacturing sector indicators which showed that while large firms are feeling bullish, smaller producers are less so.