US-China Trade Battle Hits Global GDP as Negative for 2-3 Years
United States and China have agreed to resume trade talks - Photo by GettyImages

JAKARTA (TheInsiderStories) — Good morning! Easing the trade war tension with the United States (US), China says its scrapped it’s ‘Made in China 2025’ plan. As a replacement, China will create a new blueprint that will open the Chinese market up to all companies, including foreign firms.

The ‘Made in China 2025’ program was developed to nurture local expertise in research and development, also to reduce the nation’s reliance on foreign technology. 10 emerging sectors will be targeted, including robotics, aerospace, clean-energy vehicles, and biotechnology.

Following the trade war easing, a US government official has informed that China has agreed to cut tariffs on the country’ cars to just 15 percent, from a previous 40 percent. It also intends to resume soybean purchases from the US shortly.

Reportedly, the Chinese have communicated with the US through Chinese Lie He Deputy Prime Minister and Trade Representative Robert Lighthizer and Finance Minister Steven Mnuchin by phone on Tuesday (12/11).

in other news, Canada has granted bail to Huawei Chief of Finance Meng Wanzhou, after her having been detained for almost 2 weeks. Meng is now under surveillance, wearing an ankle GPS tracking device and facing a curfew between 11 p.m. and 6 a.m.

The decision was made after US President Donald Trump mentioned that he would intervene in the case if it serves national security interests or helps seal a trade deal with China.

But China seems to still have ill feelings towards Canada. The bamboo curtain country detained former Canadian diplomat Michael Kovrig. It is still not clear about the exact reason for his detainment.

In United Kingdom, Prime Minister Theresa May has won a confidence vote by her own party. May won the vote by 200 to 117.

Even so, she is still facing Brexit uncertainty, as she plans to visit the European Union (EU) Summit, in Brussels, Belgium. There, she will discuss the situation in parliament which has debated the backstop clause over Northern Ireland. While, EU stressed that there will be no renegotiation over the Brexit deal that was agreed to last November.

Following May’s confidence vote winning and calming tensions between US and China, the Rupiah exchange rate strengthened by 0.24 percent to 14,577 against the greenback. Then, the Jakarta Composite Index rose by 0.64 percent to 6,115.57 although foreign sold Rp847.79 billion funding.

From domestic side, Finance Minister Sri Mulyani Indrawati said the government prepared Rp400 trillion (US$27.58 billion) will be allocated in the 2019 State Budget for the development of infrastructure across Indonesia. Next year, Indonesia will enjoy a healthy State budget and protected economic momentum, the minister affirmed.

Furthermore, Finance Ministry’ Directorate General of Taxation expects that next year’s election will provide larger tax income in accordance with higher predicted consumption. Until the end of 2018, state revenue is targeted to reach Rp1,936 trillion (US$133.52 billion) which is an increase of 18.2 percent from last year. The government also projected tax revenue stands at Rp1,577 trillion, up 16.8 percent from this year’s outlook.

The Indonesia Financial Services Authority (FSA) has called for banks to block all accounts related to illegal financial technology companies (FinTech), in order to break the chain of unlicensed online loan providers. FSA Investment Alert Task Force stated that there are 404 illegal FinTech companies in November.

The task force has made a number of efforts, ranging from announcing the list of illegal FinTechs to submitting regular page blockages and applications to the Ministry of Communication and Information.

While, state-owned energy producer PT Pertamina has appointed South Korea’s SK Engineering & Construction Co. Ltd and Hyundai Engineering Co. Ltd as engineering and construction contractors for its Balikpapan refinery project. The $4 billion project will be jointly undertaken by other state-owned company, PT PP Tbk (IDX: PTPP) and Rekayasa Industri.

Moreover, PT Bank Tabungan Pensiunan Nasional Tbk (IDX: BPTN) and Japan-owned PT Bank Sumitomo Mitsui Indonesia (BSMI) merger plan will be delayed until February 2019, according to an official release. Previously, the merger was scheduled to be effective on January 1st, 2019.

The fair equity market value for BSMI is Rp9.83 trillion while BTPN is Rp24.62 trillion. The merger calculates that each Bank Sumitomo equals to 799.19 BTPN shares.

After the merger, Sumitomo Mitsui Banking Corporation will hold 56.93 percent shares of the company. While Summit Global Capital management B.V. will own 14.34 percent, PT Bank Central Asia Tbk (BBCA) 0.28 percent, PT Bank Negara Indonesia Tbk (IDX: BBNI) 0.15 percent, and 27.63 percent shares of public.

May you have a profitable day!

US$1: Rp14,500
Written by Linda Silaen and TIS Intelligence Team, Please visit our new website to get more insight on Indonesia’s economy: