Monday, May 20, 2019
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PBoC Warns Trade Friction Could Harm Global Economy

US-China Trade Battle Hits Global GDP as Negative for 2-3 Years
US-China Trade War - Photo by GettyImages

JAKARTA (TheInsiderStories)People’s Bank of China (PBoC) warned that uncertainty caused by friction and trade tensions between the United States (US) and China could have a negative impact on the global economy, it said in its latest report on monetary policy implementation in first quarter 2019 last week.

According to the PBoC, in the future, trade friction and policy uncertainty could further drag the global economy through high inflation, damage to family and corporate sentiments, and financial market volatility.

The Chinese economy has some deep problems because some traditional sectors are in adjustment, manufacturing growth and private investment are slowing and economic growth is heavily dependent on property and infrastructure investment, the central bank said in the report.

In addition, uncertainties and impacts on the global supply chain caused by trade friction are gradually releasing, starting from postponed corporate investment decisions to easing external demand for some countries because the supply chain is disrupted.

The potential for disruption is considered to be severe because of a blow to rising tariffs on goods sold to the US, and related uncertainties caused by the worsening trade war.

However, the PBoC estimates that China’s economic outlook will remain stable thanks to many favourable factors.

“China is able to overcome various types of internal and external uncertainties because there is sufficient space for policy makers to maneuver and various monetary policy tools,” the central bank said.

The country’s economic indicators showed positive signs of stabilization in Q1, with the economy recording a better-than-expected 6.4 percent year-on-year (yoy), reflecting expansionary economic activity and improving economic structures.

That means, for China, the blow of President Donald Trump on Chinese export goods does not reflect some weakness in the credit and economic indicators in April or the latest US rate increase for Chinese goods in May.

“The People’s Bank of China hints in its latest quarterly report that it can start looking beyond the current cycle. We think that would be premature, given recent weakness and intensified pressure on the external sector,” Chief Asia Economist of Bloomberg Economics Chang Shu commented.

Looking ahead, the central bank promised to continue with targeted stimulus domestically while keeping its currency stable.

The Yuan traded on the ground broke the level of 6.8859 to the dollar on Friday as the weekly decline extended to the longest since August amid tensions with the US trade.

Policy makers will maintain a balance between tightening and easing measures, while making controls from targeted monetary tools.

“Monetary policy will keep liquidity conditions and credit growth steady, and the central bank is ready to provide counter-cycle support if the growth trajectory deteriorates suddenly,” said economists at China International Capital Corp Eva Yi and Liang Hong in their notes on Sunday ( 05/19).

In addition, the central bank also stressed the need to improve the credit structure, which meant he wanted to improve his ability to direct credit to the parts of the economy in need.

“China has accumulated experience and has sufficient policy tools to deal with foreign exchange market fluctuations,” State Foreign Exchange Administration Chief Pan Gongsheng said in an interview on Sunday.

Gongsheng viewed China’s stable economic and financial performance as providing strong support to keep the foreign exchange (forex) market and the Chinese currency stable. China’s forex market is expected to see more capital flows this year, he added.

Meanwhile, former PBoC official Sheng Songcheng stressed that China should not allow Yuan to be weaker than level 7. The fall of Yuan by passing level 7 could shake market confidence.

“Increase the pressure on capital outflows. Devaluing the Yuan only has a small positive impact on trade,” he said.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

Finance Minister Send Challenging 2020’s State Budget to House

Indonesia Assesses the Policy of Financial Liquidity Loan Collaboration
Finance Minister Sri Mulyani Indrawati said Indonesian Economy Its Expected Grow 5.3 - 5.6 in 2020 - Photo: Ministry of Finance

JAKARTA (TheInsiderStories) — Indonesia Finance Minister Sri Mulyani Indrawati officially submitted state revenue and expenditure budget draft for 2020 to House of Representatives, on Monday (05/20). In the draft, macro assumptions set are not much changing compared to the challenging 2019.

In the macro assumption, the government set 2020’s economy to grow 5.3 percent to 5.6 percent. This is not so different compared to the government’s macro assumption stated in 2019 state revenue and expenditure budget draft, at 5.3 percent.

But the government’s successful steps on maintaining inflation made Indrawati set a lower inflation target. In 2020, inflation is projected to be maintained at 3 percent, with 1 percent deviation each for below and above. While in 2019, the government projected inflation at around 3.5 percent, plus/minus 1 percent.

Indrawati estimated the rate for 3 months letter of the state treasury at 5 percent to 5.6 percent. In the 2019 draft, it was set at 5.3 percent.

Rupiah against US dollar is set at Rp14,000-15,000 in 2020, amid the fear of global uncertainty. In the last few weeks, Rupiah has been showing fall off, exceeded the government’s estimation for the year. In the state budget of 2019, the government set the Rupiah assumption at Rp14,400.

Then, Indrawati didn’t set an optimistic target for the oil and gas. Indonesia Crude Price (ICP) is predicted in a range of US$60-US$70 per barrel. The target for both oil and gas lifting are set to be lowered. She mentioned that oil lifting is projected to be 695,000 to 840,000 barrels per day. Meanwhile, the gas lifting is estimated at 1.19 million to 1.3 million barrels of oil equivalent per day.

In 2019, ICP is predicted at US$70 per barrel. Furthermore, oil lifting is estimated at 750,000 barrels per day, with gas lifting at 1.25 million barrels of oil equivalent per day.

Indrawati considered that external factor is still the main consideration in establishing the macro assumptions. Especially, the trade war between the United States and China has been burdening the world’s economy, while the end of it is still unclear until now.

“We must increase awareness for the slowdown in external factors reflected in the weakening of national export growth,” she said.

Indrawati mentioned that the government will focus on maintaining investment and export recovery. Moreover, it will boost people’s consumption through strengthening purchasing power, price stability, and consumer confidence.

Previously, the ministry reported that the realization of state expenditure for the 2019 State Revenue and Expenditure Budget in the first quarter (1Q) reached Rp452.1 trillion, equivalent to 18.37 percent of the 2019 State Budget ceiling, which amounted to Rp2,461.11 trillion.

On an annual basis, state expenditure in 1Q 2019 grew 7.7 percent compared to the same period last year. The growth of state expenditure is supported by the absorption of central government spending by Rp260.7 trillion or growing 11.4 percent year on year (YoY).

The realization of central government expenditure consists of ministry and agency expenditures of Rp128.8 trillion and non-ministerial and institutional spending of Rp 132 trillion.

“Overall, central government expenditure has fulfilled 16 percent of the stipulated ceiling, which is worth Rp1,634.34 trillion for 2019,” it said on its latest report in April.

Meanwhile, expenditure for transfers to regions and village funds reached Rp191.3 trillion or grew 3.1 percent compared to the previous year. The realization of the funds reached 23.1 percent of the ceiling stipulated in the 2019 State Budget of Rp 826.77 trillion.

Realization of funds included transfers to the regions of Rp181.2 trillion or 23.9 percent of the target. The distribution of village funds amounted to Rp10.1 trillion or 14.4 percent of the target in the 2019 State Budget, it said.

The Director-General of Finance and Risk Management at the Ministry of Finance Luky Alfirman said that the absorption of the 2019 state budget expenditure was still in line with its line to meet the ceiling.

The growth of state expenditure which reached 7.7 percent, he said, was also better than the same period last year which only grew 4.9 percent, which was assessed by the Ministry of Finance in line with the improvement in spending patterns. “We are still within our targets while maintaining a deficit of 1.84 percent of GDP,” he said.

Written by Staff Editor, Email: theinsiderstories@gmail.com

Australian Elections: Votes for Sound Fiscal Management

Australian Prime Minister Scott Morrison is close to securing a government as his conservative coalition is leading with 77 seats, only 76 are needed for a majority. Photo: Brook Mitchell.

JAKARTA (TheInsiderStories) – The surprise election victory of Scott Morrison’s Liberal-National Coalition in the Australian national elections held on 18th May reflected a mandate from the Australian electorate for sound fiscal management and a return to fiscal surpluses under the Coalition government’s medium-term Budget outlook.

While the Labor Party had also promised to deliver a return to fiscal surpluses over the medium-term, their extensive plans to increase public expenditure on health, education, politically-sensitive taxes likely eroded the confidence of the Australian electorate in Labor’s fiscal credentials.

Commenting on the election, Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit said that the election result signals that the Australian electorate is becoming more sophisticated in its ability to assess the economic policies of political parties, particularly as the average wealth of Australian households have continued to rise.

There has been significantly greater reliance on private savings and superannuation (pension assets) to fund retirement over the past two decades. Australia’s superannuation savings have reached an estimated Australian Dollars (AUD) 2.7 trillion, which has made it among the highest in the world on a per capita basis.

“Helped by the boom in superannuation savings and rising property prices, Australia is estimated to have the second-highest average wealth per adult in the world after Switzerland,” Biswas said an official statement today (05/20).

Despite opinion polls showing that the Labor party were expected to win on a two-party preferred basis, Scott Morrison’s Coalition won the election by a nose, in horse racing terminology. Prior to the election, Scott Morrison had said that if he was riding Winx, Australia’s legendary racehorse, the horse could never win as it would be carrying too much weight.

The Labor Party’s economic policies were also carrying too much excess baggage to win the race, notably the plan to remove dividend franking credit tax refunds, which would have hit many low-income households, especially retirees, hard.

State-specific issues also impacted on the overall result, notably the strong election results for the Coalition in Queensland, helped by a backlash over the Labor Party’s position on the Adani Carmichael coal project. There had been concerns about the loss of job opportunities in the state if the project did not proceed.

The Australian electorate were also likely sceptical of the ‘tax and spend’ track record of the Labor Party during its recent terms of office under former Prime Ministers Kevin Rudd and Julia Gillard, which had rapidly eroded the strong government surplus position they had inherited from Prime Minister John Howard’s term of office leading a Liberal/National coalition government.

This weak fiscal track record of the Labor Party had created uncertainties amongst some voters about the ambitious plans of Labor Party leader Bill Shorten to play Santa Claus, with planned large increases in public spending that some voters may have feared would erode Australia’s fiscal position despite the Labor Party’s plans for fiscal surpluses over the medium-term.

The Coalition’s economic policies were better attuned to the new, more affluent Australian economic landscape than the Labor Party, with a focus on achieving fiscal surpluses and delivering tax cuts for Australian households, combined with policies that encouraged Australian households to build up their own private savings to fund their retirement.

Prime Minister Scott Morrison’s election success has been helped by the intellectual firepower of his Treasurer, Josh Frydenberg, who has glittering credentials from his education at Monash, Oxford and Harvard universities as well as strong ministerial experience as well as his private sector track record at Deutsche Bank and Australian law firm Mallesons Stephen Jacques.

IHS Markit forecasts that the Australian economy will grow at a steady pace of 2.5 percent in 2019 and 2.6 percent in 2020, with growth momentum supported by the tax cuts announced in the Coalition’s April Budget, as well as strong Federal and state spending on public infrastructure projects over 2019-2020.

The economic outlook is also being boosted by the strength of iron ore prices, a key Australian export, and a source of fiscal revenue. Australian iron ore prices and exports have been pushed up following the Vale tailings dam disaster in Brazil, which has significantly cut Brazilian iron ore exports in 2019. Australia is also benefiting from the large ramp-up in LNG exports since 2017 as major new projects have come on stream.

Australia may also benefit from some trade diversion effects from the United States (US) – China trade war. An important aspect of the Chinese countermeasures applied in US-China trade war is that China has announced a hike on tariffs on imports of US LNG from 10 percent to 25 percent with effect from 1st June.

A protracted trade war could, therefore, act as a major constraint to new Chinese investment in US LNG projects, diverting Chinese LNG supply contracts and project investments to other global LNG suppliers, including Australia.

Still, there are some downside risks to the Australian economic outlook, notably from declining residential property prices in major cities such as Sydney and Melbourne, which could dampen consumer spending due to negative wealth effects on households as property prices decline.

However, the tax cuts that were announced in the Budget, together with a likely further near-term easing of monetary policy by the Reserve Bank of Australia, will likely help to mitigate the impact of recent declines in residential property prices on overall consumption and GDP growth.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

Indonesia’s Election Watchdog Rejects Opposition Lawsuit

The Indonesian Election Supervisory Board rejected the opposition faction's claim of alleged structured, systematic and massive election fraud which harmed Prabowo Subianto-Sandiaga Salahuddin Uno on Monday (05/20). Photo by TheInsiderStories.

JAKARTA (TheInsiderStories) – The Indonesian Election Supervisory Board expressly rejected the opposition faction’s claim of alleged structured, systematic and massive election fraud which harmed Prabowo Subianto-Sandiaga Salahuddin Uno. The rejection was made because the opposition’ evidence submitted did not support fraudulent claims.

The Chairperson of Election Watch Abhan said that after examining, researching and investigating the evidence related to alleged reporting that entered on May 15, 2019, the Election Supervisory did not find information that showed fraud was carried out in a structured, systematic and massive manner.

“We hereby establish and declare that reports of alleged structured, systematic and massive election administrative violations are not acceptable,” he said in Jakarta on Monday (05/20).

In its consideration, the Election Watchdog cited the evidence submitted by the National Team to Elect Subianto-Uno Djoko Santoso and Hanafi Rais not fulfilling the criteria because the evidence presented by the opposition was only a link or copy of news from online media.

“By only entering evidence in the form of a news link in a report on electoral administrative violations that occurs in a structured, systematic and massive manner, the value of the quality of evidence has not met the requirements,” said Supervisory member Fritz Edward Siregar.

Meanwhile, Commissioner Ratna Dewi Petallolo emphasized that the proof of online news print out could not stand alone, but must be supported by other evidence in the form of documents, letters, and videos that showed the existence of massive acts committed.

Petallolo added, evidence of fraudulent alleged fraud could not be in the small amount by the reported party. “At least 50 percent of the total provinces in Indonesia,” she said.

Thus, the quality of the evidence submitted by the reporter has not fulfilled the evidence criteria as stipulated in the Election Supervisory Agency Regulation No 08 of 2018 concerning the Settlement of Election Administrative Violations.

“The lawsuit filed by the litigant to the reported party is a candidate pair of Joko Widodo and Ma’ruf Amin,” she revealed.

Besides, the Election Watchdog also rejected a lawsuit filed by members of the winning team Subianto-Uno Dina Fatwa regarding allegations of structured, systematic and massive fraud committed by the Widodo-Amin pair during the 2019 Presidential Election.

But, the Election Watchdog rejected due to the evidence submitted did not meet the material quality as regulated in the Election Watch regulations.

However, the litigant Dian Fatwa stated that the refusal of the electoral supervisory institution was taken unilaterally and was too hasty because the Watchdog had not considered the statements of witnesses from the their team to strengthen the reporting proposition.

“We consider this trial unfair because it has prepared witnesses but has not been questioned,” she said.

Previously, the Subianto-Uno camp reported the alleged fraud at the 2019 Presidential Election to the Election Watch to follow up on findings related to alleged structured, systematic, massive fraud.

The opposition said that the evidence of fraud was in the form of electoral logistics, the seizure of opinion for the victory of the candidate pair, the deployment of state apparatus and electoral fraud abroad.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

Japan’s Economy Grows Beyond Expectation

Bank of Japan

JAKARTA (TheInsiderStories)Statistics Japan shows that the country’ economy advanced unexpectedly by 0.5 percent quarter-on-quarter in the three months to March of 2019, easily beating market expectations of a 0.1 percent contraction and after a downwardly revised 0.4 percent growth in the previous period, a preliminary estimate showed.

The solid expansion was mainly supported by net export gains, data showed on Monday (05/20), likely reflecting weak domestic demand, a point of concern for policymakers with a planned sales tax hike scheduled to take effect in October.

The largest contribution to the Gross Domestic Product (GDP) mainly came from net exports – added 0.4 percentage points, the data showed. At the same time, public demand was neutral while both private demand and changes in private inventories had a negative contribution of 0.1 percentage points, respectively.

Net exports technically drove growth in the economy, with imports declining faster than exports. Imports fell by 4.6 percent in the first quarter, reversing from a 3.0 percent growth in the preceding three-month period and marking the biggest yearly decrease since the March quarter 2009. The drop in imports was led by crude oil and natural gas, according to Cabinet Office officials.

Meantime, exports of goods and services contracted 2.4 percent, swinging from a 1.2 percent rise in the preceding period and reaching the steepest yearly fall since the second quarter of 2015.

Overall, private consumption figures suggest the Bank of Japan’s virtuous economic cycle remains incomplete. Private demand expanded 0.1 percent in the March quarter, compared to a 0.8 percent increase in the preceding quarter, despite declines in both private consumption (-0.1 percent vs 0.2 percent in Q4, matching consensus) and capital expenditure (-0.3 percent vs 2.5 percent in Q4, far less than expectations of a 1.7 percent drop).

Meanwhile, public demand rose by 0.2 percent, following a 0.3 percent gain in the December quarter, as public investment rebounded (1.5 percent vs -1.4 percent in Q4), while government spending contracted (-0.2 percent, the first yearly fall since a stagnation in the fourth quarter 2017, and following a 0.7 percent rise in Q4).

On an annualized basis, the economy grew unexpectedly by 2.1 percent in the first quarter, following a downwardly revised 1.6 percent expansion in the December quarter while markets had estimated a 0.2 percent contraction. The yearly growth was largely driven by net export gains.

The soft patches behind the headline GDP number could keep alive speculation that Prime Minister Shinzo Abe may postpone a twice-delayed increase in the sales tax in October. The government, previously, plans to raise the sales tax to 10 percent from 8 percent in October.

The GDP data comes as the government’s coincident economic indicator flagged the possibility Japan may be in a recession as exports and factory output was hit by China’s slowdown and his trade war against the United States. China was Japan’s biggest market–and rising trade tensions have hit corporate sentiment and business investment, which had supported Japan’s economy for most of the past two years.

GDP Growth Rate in Japan averaged 0.49 percent from 1980 until 2019, reaching an all-time high of 3.20 percent in the second quarter of 1990 and a record low of -4.80 percent in the first quarter of 2009.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

Saudi Arabia Asks Oil Producers Lowering the Production

Oil Tanker - Photo by PT Buana Listya Tama Tbk

JAKARTA (TheInsiderStories) – Delicate situation of oil price made Saudi Arabia recommended oil producer countries to gently driving oil inventories down. It sees no need to boost production quickly now, with oil at around US$70 a barrel, as it fears a price crash and a build-up in inventories.

Saudi Energy Minister Khalid al-Falih also asked OPEC to not make hasty decisions ahead of its next meeting in late June, to help it reach the best decision on output. While, Russian Energy Minister Alexander Novak said OPEC and non-OPEC oil producers ministerial panel had recommended to monitoring the market, due to uncertainties and the recommendations would be made in June.

He said, the option of easing had been discussed and that the oil supply situation would be clearer in a month, including from countries under sanctions.

Starting January and for the next six months, OPEC, Russia and other non-OPEC producers, an alliance known as OPEC+, has agreed to reduce output by 1.2 million barrels per day (bpd), a deal designed to stop inventories building up and weakening prices.

OPEC Sunday’ meeting comes amid concerns of a tight market. Iran’s oil exports are likely to drop further in May and shipments from Venezuela could fall again in coming weeks due to US sanctions.

Previously, Yemen Houthi’ drone targeting to attack two Saudi Arabian’ tankers and main pipe channels is considered not only hitting security, but also world oil supply and global economy.

Iran-backed Houthi’ action is also increasing the heated-already tension in Middle east. Saudi is known as the world’ biggest oil exporter, with 10 million barrels per day (bpd) production and around 7 million bpd export per day.

Its two pumping stations n the east-west pipeline transport five million barrels of crude oil per day, also provide a strategic alternative route for Saudi exports if the shipping lanes from the Gulf through the Strait of Hormuz is closed.

Meanwhile, Saudi tankers Al-Marzoqah and Amjad experienced significant damage in sabotage attacks at the Oman Sea, United Arab Emirates region. Houthi rebels, who have claimed responsible for the attack, stated that the action is a response for Saudi Arabia and its allies.

The attacked was occurred amid the increasing spat between the United States (US) and Iran over nuclear agreement.

Global oil supply in April slightly decreased by 0.07 million barrels per day (bpd) to average 98.82 million bpd, compared with the previous month, the Organization of the OPEC said on May 15.

According to the organization’ monthly oil market report, OPEC’ crude oil production remained marginally unchanged from the previous month to average 30.03 million bpd. However, non-OPEC supply, including OPEC natural gas liquids, decreased by 0.07 million bpd month-on-month to average 68.79 million bpd, up by 2.62 million bpd year-on-year.

The fall in non-OPEC supply was mainly driven by Kazakhstan, Canada, China, and Russia, according to the report. The share of OPEC crude oil in total global production stayed unchanged at 30.4 percent in April compared with the previous month.

Crude oil output decreased mostly in Iran, Saudi Arabia, and Angola, while production increased in Iraq, Nigeria, and Libya. Iran saw declines of 164 thousand barrels per day lowering the overall production figure to around 2.5 million bpd, while crude oil production in Iraq increased by 113 thousand bpd to reach 4.6 million bpd.

Unchanged from last month’ report despite some revisions within the regions, world oil demand growth for 2019 is projected to increase by 1.21 million bpd, to average 99.94 million bpd.

Demand for OPEC crude in 2019 was revised up by 0.3 million bpd from the previous report to stand at 30.6 million bpd. However, it is 1.0 million bpd lower than the 2018 level.

Top exporter Saudi Arabia cut output despite oil prices hitting 2019 high above US$75 a barrel and United States (US) President Donald Trump urging action to lower prices.

Supply losses in OPEC members Iran and Venezuela, both under US sanctions, have deepened the impact of an OPEC-led production-limiting deal. The so-called OPEC+ group of producers meets next month to review whether to maintain the pact beyond June. Vienna-based OPEC trimmed its estimate of oil supply growth from outside the group in 2019 and said the rapid rise in production of US tight oil.

“Supply growth is likely to be slower than last year amid the expected weaker global economic growth. The US tight oil production is increasingly faced with costly logistical constraints in terms of out-take capacity from land-locked production sites” OPEC said.

OPEC, Russia and other non-member producers are reducing output by 1.2 million bpd from Jan. 1 for six months. The producers meet on June 25-26 to decide whether to extend the pact.

OPEC+ returned to output cuts this year due to concern that an economic slowdown would produce a supply glut. But demand has weakened no further for now, as OPEC kept its estimate of global growth in oil use in 2019 steady at 1.21 million bpd.

However, in a development that may raise OPEC concern, the report said inventories in developed economies rose in March, after falling in February. Stocks in March exceeded the five-year average – a yardstick OPEC watches closely – by 22.8 million barrels, more than in February. The report suggests that if OPEC kept pumping at April’s rate it would undersupply the world market in 2019.

The 11 OPEC members required to cut output achieved 150 percent compliance in April with pledged curbs, compared with 155 percent initially reported in March. OPEC estimates it needs to provide an average of 30.58 million bpd in 2019 to balance the market, a figure increased by 280,000 bpd month-on-month partly due to the lower non-OPEC supply outlook.

Written by Staff Editor, Email: theinsiderstories@gmail.com

Widodo Hands Over the Security of Indonesia’s Election Results to Apparatus

Subianto Promises to Slice Electricity Price, Widodo Extends Autonomy Fund
Two Indonesian surveyor, Vox Populi Research Center and Charta Politika, puts Joko Widodo - Ma'ruf Amin pair ahead Prabowo Subianto - Sandiaga Salahuddin Uno - Photo: Special

JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo handed over the security of 2019 election results on May 22 to the apparatus. National Police, Army, and State Intelligence Agency, he said, must be able to anticipate security threat, act of terror and others, that could disrupt the country’ stability.

“I leave this country’ security to the police, army, and even the Intelligence Agency to anticipate the threat of terror until the announcement on May 22, as they have arrested nearly 30 suspected militants,” he told reporters in Jakarta on late Sunday (05/19).

The country is on edge following plans by an Islamist group to hold a two-day rally at the General Elections Commission (GEC) starting May 21 to 22, to protest the impending results of presidential polls.

The call for Moslems to throng the streets around the GEC and Election Watch Body’ headquarters in downtown Jakarta has been circulating on social media at the weekend – just before Wednesday’ deadline for the official vote count to be completed.

The rally organizers, who identified themselves as “Persaudaraan Alumni 212,” (PA 212) are calling the mass gathering a “constitutional Jihad.” The PA 212 refers to people who took part in a rally held in the capital more than two years ago on Dec 2, against former Jakarta governor Basuki Tjahaja Purnama for insulting Islam.

The 2017 protest, led by far-right Muslims, better known locally as the Front Pembela Islam (FPI), had threatened to destabilize the country during the gubernatorial election, which was marred by religiosity and sectarianism.

FPI leader Rizieq Shihab, who is in self-exile in Saudi Arabia to avoid police questioning in connection with a pornography case, is seen on the publicity material for the upcoming rally, flanked by opposition presidential Prabowo Subianto and his running mate Sandiaga Salahuddin Uno.

The photos of the two candidates appear to have been taken from their official campaign documents, with the hardline Muslim cleric digitally added between them.

Opposition leader Subianto is expected to lose the April 17 presidential race by 11 percentage points, according to Sunday’ tally of almost 90 percent of the votes by the GEC. The former general, however, has been adamant that he will not accept the results after making repeated allegations of electoral fraud.

He has claimed that opposition had lost votes due to the millions of fictitious names added to voter rolls, the exploitation of state apparatus, money politics, precast ballots and data entry errors by the election commission.

It is unclear how Subianto or his campaign team will respond the election results on Wednesday, although a close aide has said the former general has no plan to contest the GEC tally in court as he did when he first lost to Widodo at the 2014 election, because it would be a “waste of time”.

A campaign official, however, has denied reports in social media saying that Subianto will lead the PA 212 protest this week. “It is not true,” Ferry Juliantono, a spokesman for the opposition campaign committee, told reporters on Saturday (05/18).

The long election period, which started as early as August last year with the nomination of candidates for the polls, is set to come to an end later this month. GEC chairman Arief Budiman has confirmed that the elections commission will finalize the vote count by Wednesday, and declare the winner of the presidential race no later than May 28.

Reports of the rally this week raised similar fears among many in the city, prompting foreign missions such as the United States and Singapore embassy to issue a warning of “heightened risk of terrorism” and mass demonstrations in Jakarta, as well as other cities in Indonesia, such as Surabaya and Medan.

“Avoid areas where demonstrations or political rallies are occurring and exercise caution if within the vicinity of any large gathering. Stay current with media coverage of local events, be aware of your surroundings, and practice personal security awareness at all times” the US Embassy said in a statement late on Friday.

The security alerts also come after national police warned of possible attacks by terrorists targeting mass gatherings of people and security forces during the public rallies outside the election commission building. Police also said more than 32,000 troops, including hundreds supplemented from other provinces, have been mobilized to secure the city.

National Police spokesman, Muhammad Iqbal, told reporters in a briefing on Friday that the police have arrested 30 suspects – linked to Jemaah Ansharut Daulah (JAD) – from across the country in connection with a plot to strike at the elections commission on Wednesday. Several improvised explosive devices, as well as other bomb-making material, have been seized from the suspects during the police raids.

Some of the suspects have had paramilitary training and went to Syria as foreign fighters, Iqbal said. The police also revealed that some of the suspects have learned how to use Wi-Fi to detonate explosive devices, but it was not immediately clear how advanced their plans were.

Detonating bombs using a Wi-Fi network is considered a new technique, he adds and gets around using phone signals, which can be jammed during rallies involving large crowds.

“If there is (cell phone) jammer, then phones are not operable but the Wi-Fi signal will not be disturb, especially when using a signal amplifier,” Iqbal said.

The police arrested EY, a local leader of JAD in Bekasi, near the capital Jakarta, on May 8 in the capital for plotting attacks during next week’ announcement of the presidential election. JAD does not have an official spokesman, and it is not known if any of the suspects have retained legal representation.

“For this group, democracy is an ideology that they do not agree with. This would be dangerous because they want to attack anyone, including officers, with bombs,” Iqbal said, adding that the police advise people not to make unnecessary trips on the day the results are announced.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

Indonesian Stock to Watch on Monday, May 20

JAKARTA (TheInsiderStories) – The Jakarta Composite Index (JCI) closed at 5,826.87 in Friday’ trading, weakening 1.17 percent from the previous day, which closed up 0.59 percent to 5,930.27. For today, the composite index is estimated to strengthen at 5,800-5,900, said Reliance Sekuritas.

Top Gainers

On Friday, the top gainers were PT Inti Agri Resources Tbk (IDX: IIKP) stock which rose 30 percent to Rp65 per share and PT Jasnita Telokomindo Tbk (IDX: JAST) share which closed up 25 percent to Rp460 a piece.

Top Losers

While, the top losers were PT Sekar Bumi Tbk (IDX: SKBM) shares after closing down 21.05 percent to Rp300 each, followed by PT Yanaprima Hastapersada Tbk (IDX: YPAS) stock which declined 20.45 percent to Rp525 per share.

PT Astra International Tbk (IDX: ASII)

The holding company through its subsidiary PT Astra Tol Nusantara acquired 44.5 percent of PT Jasamarga Surabaya Mojokerto’ shares for Rp 1.7 trillion (US$118.05 million), to strengthen its investment in the Trans Java toll road section.

PT Bank Muamalat Indonesia Tbk

The Islamic bank approved Al Falah Investments Pte Limited, an investment company formed by Ilham Habibie, to acquire 50.3 percent of the company’ shares and also Kospin Jasa and Lynx Asia as minority shareholders. The three companies will absorb Bank Muamalat’ rights issue around Rp2 trillion.

PT Astrindo Nusantara Infrastruktur Tbk (IDX: BIPI)

The mining, oil and gas producer will work on nine new energy infrastructure projects at a cost of around $2.45 billion and potential annual revenues of more than $1 billion, said the company last week.

PT Bank Tabungan Negara Tbk (IDX: BBTN)

The state-owned lender does not extend the term of office of the Director of Finance and Treasury Iman Nugroho Soeko and his duties are held by Nixon Napitupulu. The company also appointed Asmawi Syam as President Commissioner replaces I Wayan Agus Mertayasa.

PT Sumber Alfaria Trijaya Tbk (IDX: AMRT)

The retail issuers recorded a net profit of Rp202 billion in first quarter of 2019, up 67 percent from the same period last year of Rp121 billion. Increasing in net income was in line with increasing in company revenue by 14 percent to Rp16.72 trillion.

Reliance Sekuritas recommended PT Bank Tabungan Negara Tbk (IDX:BBTN),  PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Jasa Marga Tbk (IDX:JSMR), PT Perusahaan Gas Negara Tbk (IDX: PGAS), PT Indomobil Sukses Internasional Tbk (IDX: IMAS), PT Adaro Energy Tbk (IDX: ADRO), PT Indika Energy Tbk (IDX: INDY) and PT Surya Citra Media Tbk (IDX: SCMA) stocks to be watched today.

US$1: Rp14,400

May you have a profitable day!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia

Weekly Briefing: Political Tension Heats Up in Indonesia

Indonesia's Political Tension Heat Up Ahead 2019 Presidential Election Final Result - Photo: Special

JAKARTA (TheInsiderStories) — Good morning! Political tension heats up in Indonesia ahead the announcement of the winners of 2019 presidential election. Starting today, an Islamist group planned rally to fight tyranny and called the movement called People’ Sovereignty Movement.

To anticipate the potential chaos during the rally, a Terrorist Unit from the Special Forces Command of the Indonesian Armed Forces, has prepared a scenario for rescuing the General Election Commissioners (GEC) and documents as well as the 2019 Election server, if there are riots due to the agency siege by the demonstrators.

This was revealed in a security exercise during the vote counting stage of the 2019 Election by National Army soldiers in the National Monument Cross, Central Jakarta, on Friday (05/17).  While, Metro Jaya Police spokesman, Police Commissioner Argo Yuwono, said that the polices was scheduled to examine Amin Rais, one of supporter of Prabowo Subianto – Sandiaga Salahuddin Uno this morning.

At the same day, the Election Oversight Body will summoned retired General Djoko Santoso and Ahmad Hanafi Rais to attend the verdict on the alleged administrative violations of the election. On May 22, GEC is expected to announce the official results of the Indonesian presidential and parliamentary elections.

Saw the developments, United States embassy has warned the American citizen to avoids the GEC and Election Watch Commission’ surrounding areal around May 20-22, after Indonesian police have publicly cited a heightened risk of terrorism in connection with the finalization of election results, and media has reported recent arrests of Indonesians on terrorism charges.

From economic side, the rocketing oil imports become one of the factors in the widening trade balance deficit to US$2.5 billion in April. Deputy Minister of Energy and Mineral Resources Arcandra Tahar said that the import hike was aimed at fulfilling demands ahead of Eid Al-Fitr. He added, fuel demands would increase in this homecoming season, as many people are projected to have road trip.

Indonesian Rupiah consistently depreciated last week. On the last day of trade, it weakened by Wednesday0.07 percent to 14,510 agains the American Dollar and feared to continue the fall off .

China’s senior diplomat Wang Yi hoped all parties will exercise restraint and act with caution to avoid escalating tensions between United States’ (US) coalition and Iran. Meanwhile, Venezuelan Oil Minister Manuel Quevedo said his country’ economy and oil industry was under economic and financial siege by the US government.

According to him, this generates disturbances in the flow of oil supply to the world market as well as serious economic damage and suffering to the Venezuelan people.

Ahead of this week, Japan will announce its first quarter Gross Domestic Product (GDP) which is forecasted having slowdown. Then the US will have announcement of its home sales, crude oil inventories, and core durable goods orders.

US’ Federal Reserves Chairman Jerome Powell will speak two days prior to Federal Open Market Committee (FOMC) meeting minutes in Wednesday. The minutes are a detailed record of committee’ policy-setting meeting held about two weeks earlier, which offers insights regarding its stance on monetary policy.

Then, Bank of England (BoE) Governor Mark Carney will give a statement signaling about United Kingdom (UK) further monetary policy. Moreover, European Central Bank President Mario Draghi is also going to speak, as ECB will publish the account of its monetary policy meeting.

On Saturday, the European Union will hold European Parliament election, with UK involvement amid its uncertain Brexit.

May you have a profitable week!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia

Indonesia, Inpex Renegotiates Masela Block Projects

Indonesian oil and gas field Masela Block in Arafura Sea, Maluku.

JAKARTA (TheInsiderStories) – Indonesian government renegotiated the Masela block‘ plan of development (PoD) with Japan’ Inpex Corporation, said the minister on Thursday (05/16). With this effort, its expected the giant gas block can operate soon.

Minister o Energy and Mineral Resources Ignasius Jonan explained the meeting was focused on to get the best option to finalize the Masela block’ PoD with an efficient costs.The block itself is one of the oil and gas fields with quite large gas reserves.

This field, which is often called the perpetual gas field, has been managed by Inpex and British oil producer’ Shell 30 years ago. During the negotiation, the government asked the contractor to change the development scheme which was originally offshore to land.

Both parties haven’t agreed on the amount of the block development costs located in the Arafura Sea, in the area of ​​Papua and Maluku provinces.

Inpex has taken several steps to determine accurate costs through the pre-front-end engineering design (Pre-FEED) mechanism. the Pre-FEED Work includes making initial designs of the Darat Abadi LNG plant and other Eternal LNG project facilities such as Floating Production Storage and Offloading, pipelines, also estimating project costs and schedule in the future.

In 2014, Inpex and Shell revised PoD after the discovery of new gas reserves in the Masela Abadi Field, from 6.97 trillion cubic feet (TCF) to the level of 10.73 TCF. In the revision, the two investors agreed to increase the capacity of the LNG facility from 2.5 MTPA to 7.5 MTPA with the offshore scheme.

As a consequence, Inpex must repeat the study process of LNG development with a new scheme. The plan is for refinery production capacity to reach 150 million cubic feet per day (mmscfd) of pipeline gas and 9.5 million tons per year (MTPA) of liquefied natural gas (LNG).

The government acknowledged, the problem of the two sides was also related to land and incentives, in which the contractor requested the acquisition of 1,400 hectares of land and is now being processed in the Ministry of Environment and Forestry.

While regarding incentives, the discussion was mainly related to split divisions in the gross split profit sharing scheme.

If both problems are resolved, then PoD will be agreed upon and will be developed with a capacity of 9.5 million tons of LNG per year and 150 MMSCF per day.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

Bank Indonesia Accelerates Commercial Bonds Transactions

Indonesian Bank to Maintain Benchmark Rate at 6% and Implements Mix-Policy
Governor of Bank Indonesia Perry Warjiyo - Photo: Privacy

JAKARTA (TheInsiderStories)Bank Indonesia (BI) accelerated the issuance and transactions of commercial bond instruments as a source of non-banking short-term funding, said the deputy today (15/17). It aims to encourage domestic demand and support the infrastructure of commercial bonds issuance and transactions.

According to deputy governor of BI Dody Budi Waluyo, by the presence of alternative non-bank financing its expected could boost liquidity in the market if the corporation face specific cycles and need higher cash.

Looking to the scene, the central bank cooperates with Indonesia Central Securities Depository will support the infrastructure of the commercial securities.

To date, there are several regulations that have been issued to support it, including rules of commercial securities and market-supporting institutions. Laterly, there are three arrangers registered, two rating agencies, 46 legal consultants, 84 public accountants, five notaries, four brokers, 15 custodians, and Indonesia Central Securities Depository as the infrastructure of commercial bonds.

The appointment of the institution for the deposit and settlement of commercial securities transactions is one of the efforts to improve governance in issuance and transactions, especially concerning the recording, administration, and settlement of commercial bonds transactions conducted in scripless manner.

Going forward, Bank Indonesia will continue to strive to develop the commercial bonds market through education to attract potential issuers and outreach programs. Bank Indonesia will coordinate with the Financial Service Authority to harmonize regulations of financial service institutions that can use commercial bonds as short-term funding as well as investment.

Meanwhile, the Indonesia government and state-owned enterprises (SOEs) has the potential to issue bonds around Rp100 trillion (US$6.99 billion) in the second quarter (2Q) of 2019. Most of the amount will be in government bond while six SOEs has reported to Indonesia Stock Exchange (IDX) to release obligations around Rp13 trillion.

The six issuer’s bond issuance details are as follows: PT PP Tbk (IDX: PTPP) Rp1.5 trillion, PT Semen Indonesia Tbk (IDX: SMGR) Rp4.9 trillion, PT Waskita Karya Tbk (IDX: WSKT) Rp1.84 trillion, PT Adhi Karya Tbk (IDX: ADHI) Rp2 trillion, PT Waskita Beton Precast Tbk (IDX: WSPB) Rp500 billion, and PT Kimia Farma Tbk (IDX: KAEF) Rp1.5 trillion.

The government estimated will issue a total gross government bond of 50-60 percent throughout the first semester of 2019, which includes retail government bond, foreign exchange government bond, and regular government bond instruments. The total issuance value is around Rp128 trillion.

Historically, the number of government bonds will tend to be stable because after the fasting period and Eid Al-Fitr in May-June, where the number of requests will return high.

Finance Ministry recorded the realization of the net government bonds issuance in the first quarter of 2019 reached Rp185 trillion, and SUKUK issuance reached Rp81.44 trillion so total will be Rp266.44 trillion.

Written by Staff Editor, Email: theinsiderstories@gmail.com

Indonesia’s ASTRA Infra Acquires 44.5% of Jasa Marga’s Concession

Surabaya-Mojokerto toll road.

JAKARTA (TheInsiderStories) – PT Astra International Tbk (IDX: ASII) infrastructure developer’ ASTRA Infra through PT Astra Tol Nusantara officially acquired 44.5 percent of PT Jasamarga Surabaya Mojokerto (JSM) shares to strengthen the investment portfolio in the Trans Java toll road.

The company hold the Surabaya  -Mojokerto toll road concession in East Java.

President Director of ASTRA Infra Djap Tet Fa said in an official statement, the acquisition of the shares was marked by the signing of a sale agreement with PT Moeladi (24.2 percent) and PT Wijaya Karya Tbk (IDX: WIKA) with total shares 20.3 percent.

With the completion of the acquisition process, ASTRA Infra now has 44.5 percent of JSM shares, while the remaining 55.5 percent is owned by PT Jasa Marga Tbk (IDX: JSMR).

“The 36.3 km Surabaya-Mojokerto toll road acquisition will increase the contribution of ASTRA Infra on the Trans Java Toll Road to 338.6 km or around 30 percent of the total length of the Trans Java toll road,” he said in a written statement on Friday (05/17).

ASTRA Infra’ contribution to the Trans Java Toll Road includes the Tangerang-Merak (72.5 km), Cikopo-Palimanan (116.8 km), Semarang-Solo (72.6 km), Jombang-Mojokerto (40.5 km) and Surabaya-Mojokerto (36.3 km).

The Surabaya-Mojokerto toll road which is connected to the Jombang-Mojokerto toll road and the Surabaya-Gempol toll road has been fully operational since 19 December 2017.

This toll road segment is one of the strategic Trans Java toll lanes because it connects the city of Surabaya with the western part of East Java.

Fa hopes that the existence of this toll road can reduce congestion along the Surabaya-Mojokerto route, improve connectivity and become the main national logistics route, so that it will increase the economic potential of the Mojokerto, Jombang and surrounding areas in particular, and East Java as a whole.

“The increasing contribution of ASTRA Infra on the Trans Java toll road is in line with ASTRA’s aspirations to prosper with the nation,” Fa said.

At present ASTRA Infra has 6 toll road sections where 5 sections have been fully operational on the Trans Java toll road with a total length of 338.6 km.

In addition to the five Trans Java toll roads, ASTRA Infra also has the Serpong-Kunciran toll road which is part of JORR 2 (Jakarta Outer Ring Road).

However, ASTRA Infra so far not yet booked profits from the portfolio in the toll road business. The estimated profit can only be obtained in the next 2-3 years in line with the increase in traffic.

Based on Astra International‘s financial report as of September 2018, revenues from the logistics and infrastructure segment reached Rp5.4 trillion. This amount is only 3 percent of Astra International’s total revenue of Rp174.88 trillion.

Meanwhile, Director of Human Capital and Development of WIKA Novel Arsyad, said that the company’s action was a strategic step that was beneficial for Astra Infra and WIKA.

“For WIKA, which is now being transformed from a construction company into an investment company, we want to focus on optimizing the business portfolio, which will benefit WIKA in terms of recurring income. This agreement is part of the process of restructuring our investment portfolio,” he explained.

This year, WIKA has provided a capital expenditure of Rp18.19 trillion which will be focused on investment projects in the energy and industrial plant, building and property and infrastructure sectors.

This investment project will also contribute a new contract significantly, so that it will provide multiple benefits for WIKA, he added.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

Indonesia on Terror Ahead of Presidential Race Result

Indonesia's anti-terrorism forces have arrested at least 10 terrorists who planned attacks during election result announcement next week.

JAKARTA (TheInsiderStories) – Indonesia’s anti-terrorism forces have arrested at least 10 terrorists who planned attacks during next week’s announcement about the results of the contested April presidential election, police said on Friday (05/17).

“They want to take advantage of the momentum of mass gatherings to create chaos and unrest in the community. They target as many victims as possible, including the police. Therefore we asked the peoples not to carry out the rally because of the large potential of terror,” said Dedi Prasetyo, police spokesman during a press conference in Jakarta.

The arrest came as tensions escalated and security was tightened ahead of the May 22 announcement by the General Election Commission. Especially after opposition leader Prabowo Subianto said he would not accept the election results. The discovery of a structured, systematic and massive fact of fraud became the main reason for the opposition.

Even opposition supporters who have been conducting street demonstrations are planning to hold massive rallies during the announcement on May 22. They are supported by Front Pembela Islam (FPI) which plans to repeat the success of “Aksi 212” on Jakarta governor’s election in 2017.

Nearly 32,000 police and military personnel were on standby in the capital Jakarta, including troops brought in from other provinces, to guard the event, according to police data. “Through interrogation, we found the suspects planned to attack the mass meeting on May 21, 22 or 23,” Prasetyo said, referring to the demonstration planned for next week.

The suspects belong to Jemaah Ansharut Daulah (JAD), a group associated with the country’s largest Islamic State, and the authorities are hunting for more members, he added.

Previously, the authorities shot dead an Islamic militant and arrested six people for planning to attack police during the planned demonstration. So we take precautionary measures to optimally thwart such actions, said Prasetyo.

Police and military personnel will also make a line around the Election Supervisory Body headquarters in downtown Jakarta. The building is located on the main highway where the first terrorist attack in Indonesia claimed by the Islamic State in Iraq and Syria (ISIS) occurred in 2016.

Last week, supporters of opposition-held two street rally there to pressure the elections watchdog to act on his allegations of electoral fraud until May 22. The move to beef up security, particularly around the elections commission and supervisory body buildings, comes after police last week busted a terror cell.

The group was armed with homemade bombs and had the ability to circumvent electronic safeguards set up to prevent bombs from being detonated remotely by a terrorist using a cellphone or radio transmitter. These signal jammers are effective defensive devices used to protect large areas from a remotely operated improvised explosive device (IED) in military speak.

One of the suspects arrested during the raids by counter-terrorism police last Wednesday had modified the switching mechanism of an IED so that a bomb can be set off using Wi-Fi technology instead. This means the suspect could use Wi-Fi to detonate a bomb in the event that regular cellphone signals are jammed by the police during a protest, Prasetyo said.

“With that, he can put (their bombs) in some backpacks, and later he would just detonate them from a distance of 1km for example,” he opined, referring to a terror suspect he identified only by the initials EY.

Prasetyo disclosed a total of 8 people in Lampung and 2 people in Bekasi had been arrested in last week’s raid and confirmed that a manhunt is ongoing for other members of the terror cell, which is linked to the JAD.

The JAD, a local militant group with loose ties to ISIS, is responsible for a series of terror plots in Indonesia including the 2016 ISIS-inspired attack in Jakarta, as well as the coordinated suicide bombings of three churches and the local police station in Surabaya in May last year, which killed 14 people.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

In One Week, Foreign Capital Out from Indonesia US$784M

JAKARTA (TheInsiderStories) – Bank Indonesia (BI) noted that foreign capital outflow from Indonesia on May 13-16 reached Rp11.3 trillion (US$784.72 million), consisting of Rp7 trillion from the government bond and Rp4 trillion from shares trading.

Governor of Bank Indonesia Perry Warjiyo revealed a large number of foreign capital outflows due to the increase of tension between US and China. “It has led a shifting the capital from Indonesia to developed countries,” Warjiyo said.

He hope that the tension of the trade war between United States (US) and China will be over, so the market can back to normal and reduce the negative impact on developing countries. While the tension has already caused a negative impact on the rupiah exchange rate.

However, BI would be in the market by conducting multiple interventions through domestic nondelivery forward and buying government bonds on the secondary market.

Meanwhile, based on the price monitoring survey, until the third week of May, inflation reached 0.51 percent so the inflation rate in May 2019 would be 3.41 percent. Warjiyo rated the increasing of prices of several commodities such as red chili, garlic, chicken meat, and eggs caused inflation in May 2019.

Although, there are commodities that experience deflation such as shallots, rice, tomatoes, and vegetables. While, in terms of air transportation, it would be recorded to contribute to inflation of 1.04 percent, lower than 2.27 percent in April 2019. BI predicted inflation will be 3.5 ± 1 percent for this year.

Written by Staff Editor, Email: theinsiderstories@gmail.com

Indonesia’s Pertamina Increases Capacity of Two Refinery Projects

PT Pertamina will increase refinery capacity to 2 million barrels per day on two refinery projects. Photo by Privacy.

JAKARTA (TheInsiderStories) – Indonesia’s state-owned energy producer, PT Pertamina will increase refinery capacity to 2 million barrels per day on the modernization and construction of Pertamina’s Refinery Development Master Plan (RDMP) and Grass Root Refinery (GRR). This figure has doubled from the current capacity of 1 million barrels per day.

Pertamina’s Processing & Petrochemical Megaproject Director Ignatius Tallulembang said Pertamina made RDMP & GRR two focus strategic initiatives in the direction of world-class oil and gas companies.

“As the main agent of national energy development in Indonesia, Pertamina aims to become a world-class oil and gas company in 2025,” Tallulembang said in a press release on Thursday (05/16).

To reach the world-class standard, Pertamina will increase refinery capacity through the construction of four RDMPs and two GRRs as well as integrating them into petrochemical plants to develop new businesses with the support of reliable human resources, the latest world-class technology, he adds.

RDMP and GRR megaproject, he said, will simultaneously increase the ability to process crude from sweet crude to sour crude with a sulfur content of around 2 percent. In addition, increasing Yield of Valuable to around 95 percent from the previous 75 percent.

The refinery will produce environmentally friendly fuel products of the Euro5 standard and Petrochemical products ranging from 6,600 Kilotonnes Per Annum (KTPA) from the previous 600 KTPA so that it can significantly reduce imports of petrochemical products.

With the presence of these two large projects, he hopes to be able to increase oil production so that 100 percent meet national energy needs and support the growth of the petrochemical industry and strengthen Pertamina’s downstream business.

Pertamina continues to try to increase the Domestic Component Level because the project being run has high standards of material and service requirements, for the megaproject currently being run by Pertamina.

“Therefore, Pertamina also needs domestic manufacturing manufacturers, in order to improve its performance in various aspects, such as product specifications, timeliness to price,” he ended.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

Indonesia’s State Budget Deficit Swells to US$7B in April

Indonesia Assesses the Policy of Financial Liquidity Loan Collaboration
Finance Minister Sri Mulyani Indrawati said Indonesian Economy Its Expected Grow 5.3 - 5.6 in 2020 - Photo: Ministry of Finance

JAKARTA (TheInsiderStories) — Indonesia state budget deficit swelled to Rp101 trillion (US$7billion) in April, almost twice higher than Rp54.9 trillion in the same period last year. Finance Minister Sri Mulyani Indrawati, in a press conference Thursday, explained that Indonesia’s revenue collection was Rp530.7 trillion, while the expenditure reached Rp631.78 trillion.

Indonesia state revenue only grew 0.5 percent from last year. During the period, the revenue collection reached 24.51 percent target.

The revenue realization contributed by taxation revenue for Rp436.41 trillion and non-tax revenue for Rp94 trillion that reached 24 percent and 24.8 percent target respectively. Meanwhile, the grant received was Rp354.3 billion or 81.3 percent target.

Tax revenue realization recorded a slowdown growth by only 1.02 percent compared to the previous year. Until April, the government collected at Rp387 trillion tax or 24.53 percent target. Customs and excise grew significantly by 47 percent YoY to RP49.4 trillion or fulfilled 23.66 percent target, supported by excise receipts that rocketed 82.3 percent. According to Indrawati, there’s shifting so there was more collection at the beginning of the year.

Amid the slowdown revenue, Indonesian government spent more on the state expenditure. Until April, the allocated expenditure was Rp631.78 trillion or 25.67 percent limit. The realization increased by 8.38 percent from the same period last year.

“Based on the achievements until the end of April 2019, it is estimated that the implementation of 2019 state budget can be maintained to support economic growth targets and state budget deficit is 1.84 percent per GDP (gross domestic product),” said Indrawati.

She considered that Indonesia’s state budget could maintain economic growth above 5 percent. So far, Indonesia’s inflation could be maintained below 3 percent, even though there was pressure on horticulture commodities, chicken eggs, and air freight rates price. In April, the year-on-year inflation was 2.83 percent. Meanwhile, month-to-month inflation was 0.44 percent.

“Government will continue to be aware of the slowing down and uncertain global economy dynamics by implementing a countercyclical state budget. The government will also manage state finances with a prudent, measurable, and transparent manner so that the state budget remains credible,” said Indrawati.

1US$=Rp14,200

Written by Staff Editor, Email: theinsiderstories@gmail.com

Trump Ramps Up Pressure on China to Reach Trade Deal

President Donald Trump signed an order to restrict access for Huawei Technologies Co., into the US market and suppliers.

JAKARTA (TheInsiderStories) – United States (US) President Donald Trump gives another pressure on China to reach a trade deal. Trump signed an order to restrict access for Huawei Technologies Co., into the US market and suppliers.

Shortly afterward, the US Commerce Department said it had put Huawei and 70 of its affiliates on a blacklist that could prohibit it from doing business with American companies. In the executive order, which didn’t name any countries or companies, Trump declared a national emergency relating to threats against information and communications technology and services. That could effectively halt business for some of Huawei’s product lines that rely on American suppliers.

The department’ move to put Huawei on its “Entity List”, means US companies will need a special license to sell products to the Chinese company. A similar move against ZTE last year nearly forced the company to shut down before Trump intervened and a deal was reached.

The US government, along with several other nations, has long suspected that Huawei is using its 5G broadband network to spy on behalf of the Chinese government. Last month, the Times of London reported that the Central Intelligence Agency (CIA) has evidence that Huawei “has received funding from branches of Beijing’s state security apparatus” and shared that information with the United Kingdom (UK) to pressure its ally not to adopt Huawei’s 5G network.

“The President has made it clear that this Administration will do what it takes to keep America safe and prosperous, and to protect America from foreign adversaries who are actively and increasingly creating and exploiting vulnerabilities in information and communications technology infrastructure and services,” the White House said in a statement.

Responded the decision, Huawei stated that Trump’ restriction will not make the US safer or stronger. In its official statement, Huawei management said that it will only limit the US into cheaper alternative sources and make the US lags behind in 5G technology development.

Huawei has vehemently denied the spying accusations. Its CEO even recently stated that the firm was willing to sign “no-spy” agreements with foreign governments such as the UK to ease concerns and open up a business. But those promises weren’t enough to stop the Trump administration from taking major steps that will limit business with Huawei over security concerns.

This isn’t the start of Huawei’s troubles with the US government. In January, US federal prosecutors charged the company and one of its top executives with 23 indictments for allegedly stealing US trade secrets and other crimes, and requested to extradite Huawei’s CFO, Meng Wanzhou, from Canada, where she is being held under charges of fraud.

In the end, it will harm US companies and consumers, according to the company. US official claimed to do the restriction, following charges against Huawei and some other companies in January, for giving the banned financial services to Iran. Huawei is considered being involved in conflicting activities to US national security or foreign policy interest.

While the US isn’t alone in its legitimate concerns about Huawei’s 5G technology, the executive order, and national emergency isn’t all about security; it’s inextricably tied to this political moment and an intensifying trade war.

The executive order comes at a time when the tit-for-tat trade war between China and the US is rapidly escalating. Since 2018, the president has launched a series of higher and higher tariffs on Chinese imports into the US, and Beijing in return has done the same for US imports.

Last year, the US imposed tariffs of up to 25 percent on US$250 billion in Chinese goods, from handbags to railway equipment, out of $539 billion in Chinese imports total. China followed suit, imposing tariffs on $110 billion worth of goods (out of $120 billion in US imports, total). Currently, the US is upping the ante to increase its tariffs up to 25 percent on virtually all Chinese imports — hitting an additional $300 billion.

Hopes that the countries could reach an economic ceasefire were crushed last week when two days of intense trade negotiations fell apart in Washington. Shortly after the talks ended, Trump raised the rate of $200 billion worth of Chinese products, particularly auto parts, from 10 to 25 percent. China, in turn, announced it would significantly raise taxes on a large but undisclosed total amount of American goods, including natural gas from 10 to 25 percent.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

Indonesia’s GEC Violates Election Administration Rules

Indonesian Election Watch decided the General Election Commission had been proven to be legally violating election administration. Photo by Privacy.

JAKARTA (TheInsiderStories) – Indonesian Election Watch decided the General Election Commission (GEC) had been proven to be legally violating election administration. The Commission was declared to have violated the procedures for inputting data into the vote counting information system.

“To prosecute, one, stated that the election commission was proven to be legally violating the procedures and procedures in the data input of the vote counting information system,” said Abhan, the judge’ panel chairman in a hearing in Jakarta, on Thursday (05/16).

Furthermore, Election Watch asked the commission to improve the system and procedures in the data input process. “Ordering the commission to improve the procedures in the voting information system data input,” Abhan said.

The agency says the existence of a counting system has been recognized in the applicable law. Therefore, they suggested that the counting system be maintained as an instrument used by the commission in ensuring information disclosure.

“Nevertheless, the election commission in using the vote counting application must still pay attention to accuracy, accuracy in entering data into system applications so that it does not create polemic in the community and must pay attention to every input of data improvements,” said assembly member Ratna Dewi Petalolo.

Previously, complaints about reports of fraud in the GEC counting system were submitted by the opposition national winning team beginning of the month. In the report, they brought evidence of input errors and requested that the vote count process be stopped immediately. But the commission decided to continue the calculation process while promising to correct the mistakes.

The election commission was also declared to have committed an administrative violation related to the quick count organizer. The commission is said to be proven not transparent in announcing the registration of survey institutions that administer quick counts.

“We conclude as follows: One, that the election commission did not make an official announcement regarding the registration of 2019 general election quick counting activities,” the agency said.

Then, the commission was declared proven not to have submitted a written notice to the survey institution to be included in the funding source and methodology report. The agency explained that the report should be carried out 15 days after the announcement of the results of the survey as stipulated in the law on voter socialization or community participation.

According to the agency, the GEC’ actions contravene the provisions of Article 449 paragraph 4 of Law Number 7 Year 2017 concerning Elections, Article 29 and 30 paragraph 1 PKPU 2018 concerning Socialization, Voter Education, and Community Participation.

Therefore, the agency decided the election commission had violated the administrative procedures for registration and reporting of survey institutions. Furthermore, GEC was asked to immediately announce survey institutions that did not submit reports.

“To declare that the election commission is proven legally and convincingly violates the procedures for the registration and reporting of institutions that carry out quick counts. Then instructs the commission to announce a quick counting agency that does not include reports.”

In response, the election commission claimed that since the beginning it had corrected all data input errors, especially after receiving input from the opposition team.

“So far, this is the mechanism that we are running. Every mistake will be corrected immediately. From the beginning we emphasized that it will be open for every input and immediately improve,” said Pramono Ubaid, GEC’ commissioner.

However, the opposition itself considers the calculation process in GEC cannot be repaired. But the election watch’s decision proved what the opposition had been fighting for so far. From the very beginning, the opposition has been prepared to be careful, honest and fair in the process of counting the votes. Even since the polling station level.

“It has been conveyed that there must be improvements to C1 that are uploaded. But what else will be improved? They continue to do so even though we requested that they are stopped since they discovered the initial mistake,” said Sufmi Dasco Ahmad, opposition legal and advocacy director.

While the incumbent team did not question the election watch decision while stressing it was important to transparency the vote counting process.

“We are not a problem. This means that the method used by GEC is wrong. Therefore it must be corrected. Although not an official result, the system is a form of transparency that can be accessed by the public,” said Arya Sinulingga, spokesman for the incumbent team.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

Indonesia’s Waskita Raises Funds US$128.67 from Bond Issuances

Depok-Antasari toll road on the progress development. Photo by Waskita Karya.

JAKARTA (TheInsiderStories) – Indonesian toll road developer,  PT Waskita Karya Tbk (IDX: WSKT) raised funds Rp1.84 trillion (US$128.67 million) from a bond issuances. While, its subsidiary PT Waskita Toll Road (WTR), added paid-up capital around Rp2 trillion and placed cash to PT Citra Waspphutowa in the amount of Rp61 billion.

WSKT Management revealed, the offering period had been held on May 13, the allotment was conducted on May 14, and listing today at the Indonesia Stock Exchange.

It said, Series A will mature on May 16, 2022 with a fixed interest rate of 9.0 percent per year. Then Series B mature on May 16, 2024, with a principal amount of Rp1.36 trillion and fixed interest rate of 9.75 percent per year.

Furthermore WTR, injected capital to meet the operational needs of Citra Waspphutowa, said the spokeswoman, Shastia Hadiarti. The unit owned 25 percent at the Depok-Antasari toll road concession holder.

While, other state-owned company, PT PP Tbk (IDX: PTPP) has shares as much as 12.5 percent or worth Rp125.5 billion and toll operator PT Citra Marga Nusaphala Persada Tbk (IDX: CMNP) owns 62.5 percent shares or valued at Rp627.5 billion.

“Initial capital for the construction of the Depok-Antasari toll road space amounted to Rp1 trillion, but then increased to Rp2.12 trillion,” said Hadiarti in an official statement on Thursday (05/16).

She added, if WTR as a shareholder did not increase the capital, it would indirectly affect WKST as a contractor on the toll road construction project owned by Citra Waspphutowa.

US$1 = Rp14,300

Written by Daniel Deha, Email: daniel@theinsiderstories.com

Business Potential of Indonesia’s Bakrie Group in Third Generation Hands

Anindya Novyan Bakrie - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – The third generation of Bakrie family now leads Bakrie Group businesses. As an oldest grandchild of the founder, Anindya Novyan Bakrie trusted to lead the group businesses to the new dawn.

In the group, whose business interests control a number of public companies with a combined market capitalization around US$15 billion, he serves as the director. Other businesses under the group also been handled by his cousins, sons and daughters of Nirwan Bakrie and Indra Bakrie.

His grandfather Achmad Bakrie start the business group in 1942 and now known as PT Bakrie & Brothers Tbk (IDX: BNBR). Latterly, Anindya just appointed as a new president director of the investment holding, replacing Bobby Gafur Umar, who held the position since 2002.

He also founder and CEO of PT Visi Media Asia (IDX: VIVA) Group, which owned television stations TVOne and ANTV, and the news portal VIVA.co.id. The oldest son of Aburizal Bakrie and Tatty Murnitriati born in Jakarta, on Nov. 10, 1974

Based on an interest in finance and technology, and the desire to follow in the footsteps of his father and grandfather’ business, Anindya initially wanted to take the economy as a major in the lecture bench. But later, he earned a bachelor’ degree in Industrial Engineering from Northwestern University, Illinois, in 1996.

He then obtained a master degree from the Global Management Immersion Experience program at the Stanford Graduate School of Business in 2001. Anindya began his career as an investment banker at Salomon Brothers, Wall Street, United States in 1996.

But his father asked him return to Indonesia after the 1998 riots. He later served as Deputy to Chief Operating Officer and Managing Director of Bakrie & Brothers.

The businessman first started his carrier in the media field at the Cakrawala Andalas Television (ANTV) company. In 2002, Anindya sent a restructuring proposal to more than 200 creditors and persuaded them to restructure their debt to equity. The debt is cut to zero, even though that means cutting Bakrie’ shares from 60 percent to 21 percent.

Anindya also makes content adjustments, changing the mix of individual general programming to focus on family-friendly events such as quizzes, children’s shows and soccer matches.

In 2007, he bought a second TV station, Lativi Media Karya, from a businessman and former Minister of Manpower, Abdul Latief. The station was renamed TVOne and was reconstructed to focus on news for middle-class viewers. Together, ANTV and TV One control around 15.6 percent of TV advertising expenditure in Indonesia.

In 2011, Anindya collaborated with businessman Erick Thohir, to take the two television stations, plus the online news portal Vivanews. At Visi Media Asia or the Viva group, he is the chairman and Erick Thohir is the president director.

In 2014, the Bakrie Global Group led by Anindya invested in Series C in Path, a private social network, with an active number of users from Indonesia reaching 4 million people. However, the social networking site Path was finally closed on October 18, 2018.

In December 2003, he became President Director & CEO of PT Bakrie Telecom Tbk, the largest public CDMA wireless telecommunications provider in Indonesia at that time, with more than 11 million customers in 2011.

As a new leader of BNBR, Anindya wants to bring the Bakrie’ family business to the next chapter after suffered for years. He planned to bring BNBR as the classy company. 

According to him now, the company’ capital structure is stable. The core business is in PT Bakrie Metal Industries (BMI) through its unit PT Bakrie Pipe Industries and PT Bakrie Otopart, also PT Bakrie Constructions.

Now, BNBR also set up new businesses through PT Bakrie Automotive to provide electric cars in the archipelago. In Jakarta, the unit has collaborated with Trans Jakarta, state-owned transportation operator Perum PPD and Pahala Kencana with 15,000 units and with mini bus to 25,000 units.

He also look to continue Kalimantan -Java pipe projects, power plant, toll road and other business. He believed with a better capital structure, the group can develop productive businesses helped by Bakrie Investment Holding.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com

Indonesian Stock to Watch on Friday, May 17

JAKARTA (TheInsiderStories) – The Jakarta Composite Index (JCI) closed down 1.42 percent to 5,895.74 from previous day which weakening 1.42 percent to 5,969.86. For today, the composite index is estimated lowering atthe range 5,811-5,853, said PT Binaartha Sekuritas.

Top Gainers

The top gainers on yesterday’ trading were PT Jasnita Telekomindo Tbk (IDX: JAST) stock which increase 49.59 percent to Rp368 per share and PT Alfa Energi Investama Tbk (FIRE) share which shot 19.85 percent to Rp11,775 a piece.

Top Losers

While, the top losers were PT Bliss Properti Indonesia Tbk (IDX: POSA) share after closed down 24.80 percent to Rp370 each, followed by PT ABM Investasi Tbk (IDX: ABMM) stock which ended down 24.40 percent to Rp1,425 per share.

PT Bakrie & Brothers Tbk (IDX: BNBR)

The Subsidiary from Bakrie Group appointede Anindya Novyan Bakrie as the new president director, replacing Bobby Gafur Umar, who held the position since 2002. The company is also preparing for its subsidiary, PT Bakrie Industries’ initial public offering (IPO) in the first quarter of 2020.

PT Semen Baturaja Tbk (IDX: SMBR)

Cement companies recorded sales volume up 24 percent during 2018 and led to revenue which increased 29 percent at Rp1.99 trillion from revenue of Rp1.55 trillion in 2017.

PT Harum Energy Tbk (IDX: HRUM)

The energy company eyes the coal production rise from 4 million tons (MT) in 2018 to 5 (MT) in this year. The production will come from PT Mahakam Sumber Jaya of 3.5 MT of coal, PT Santan Batubara 750,000 tons to 1 million tons and Karya Usaha Pertiwi 250,000-500,000 tons of coal.

PT Surya Citra Media Tbk (IDX: SCMA)

The media issuer targeting the revenue grow 8 percent this year after experienced increased 8.1 percent in 2018 worth of Rp1.15 trillion (US$79.86 million) in the first quarter of 2019. In addition, the company also targeted net profit rise 10 percent after up 9.5 percent to Rp394.09 billion in the first quarter.

For today, Binaartha Sekuritas recommends PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Bank Mandiri Tbk (IDX: BMRI), PT Gudang Garam Tbk (IDX:GGRM), PT Telekomunikasi Indonesia Tbk (IDX: TLKM), PT United Tractors Tbk (IDX: UNTR) and PT Unilever Indonesia (IDX: UNVR) stocks to be watched.

US$1: Rp14,400

May you have a profitable day!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia

Morning Briefing: Winners of Indonesia’s 2019 Presidential Election Set on May 28

The two pair of Presidential Candidates mingle at the GEC's office on Friday (21/09) - Photo: Privacy

JAKARTA (TheInsiderStories) — Good morning! General Election Commission (GEC) set the winners of Indonesia’ 2019 presidential election on May 28, said the chairman. Aried Budiman hoped all the recapitulation completed on Wednesday (05/22) and give to all participant to challenge the result in three days after.

If Joko Widodo – Ma’ruf Amin pair win, they set up investment funds RP5.957 trillion (US$413.68 billion) to construct 25 airports to new power plants during 2020 – 2024, according to the country’ planning minister Bambang Brodjonegoro. As much as 40 percent of the total will be funded directly by the government, 25 percent through state-owned enterprises and the rest through the private sector, he said.

Further, Indonesia strengthens its cooperation with Malaysia to bring European Union discrimination over palm oil to World Trade Organization (WTO). Both countries agreed on intensifying campaign to solve the issue, as Indonesia Vice President Jusuf Kalla met Malaysia Vice Prime Minister Wan Azizah Wan Ismail, during his visit for Global Platform for Disaster Risk Reduction forum in Geneva, Swiss.

Indonesian government is now preparing complaints to WTO’ Dispute Settlement Body, which will be started with negotiation process for the next 60 days.

Then, Bank Indonesia lifted up its projection over current account deficit (CAD) from 2.5 percent to 3 percent of gross domestic product (GDP). The central bank sees there’s a potential the CAD to be widen. The Governor Perry Warjiyo rated that global economic uncertainty would affect Indonesia’ export performance to weaken.

While, Indonesia’ State budget deficit swelled to Rp101 trillion (US$7billion) in April, almost twice higher than Rp54.9 trillion in the same period last year. Finance Minister Sri Mulyani Indrawati, in press conference Thursday, explained that Indonesia’ revenue collection was Rp530.7 trillion, while the expenditure reached Rp631.78 trillion.

From abroad, United States (US) President Donald Trump gives another pressure on China to reach trade deal. Trump signed an order to restrict access for Huawei Technologies Co., into the US market and suppliers.

Shortly afterward, the Commerce Department said it had put Huawei on a blacklist that could prohibit it from doing business with American companies. In the executive order, which didn’t name any countries or companies, Trump declared a national emergency relating to threats against information and communications technology and services.

The department’ move to put Huawei on its “Entity List”, means US companies will need a special license to sell products to the Chinese company. A similar move against ZTE last year nearly forced the company to shut down before Trump intervened and a deal was reached.

Yesterday, Rupiah dropped by 0.06 percent to 14,572.50, remains at its lowest point since early January. Warjiyo also said that Rupiah depreciation against US Dollar is also impacted by global uncertainty and seasonal demand of foreign exchange.

US$1: Rp14,400

May you have a profitable day!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia

Moody’s Assigns Baa2 Ratings to Indonesia’s Samurai Bonds

Indonesian Samurai Bond Get Baa2 Rating from Moody's - Photo by MoF Office

JAKARTA (TheInsiderStories) – Moody’s Investors Service (“Moody’s”) has assigned Baa2 ratings to the proposed senior unsecured yen-denominated notes to be issued by the Government of Indonesia (Baa2 stable). The six planned drawdowns have maturities ranging from three to 20 years.

According to the terms and conditions available to Moody’s, the notes to be issued under the government’ samurai shelf program will constitute direct, unconditional and unsecured obligations of the Government of Indonesia (the issuer), and will rank pari passu among themselves and at least pari passu in right of payment with all other present and future unsecured obligations of the government.

The proceeds of the notes to be issued under the programme are intended to finance the budget deficit or for general financing purposes. The ratings mirror the Government of Indonesia’s long-term issuer rating of Baa2 with a stable outlook.

Indonesia’ Baa2 rating is underpinned by policy emphasis on macroeconomic stability that increases its resilience to shocks. The sovereign’ credit profile is supported by narrow fiscal deficits and low government debt ratios.

The large size of its economy and healthy and stable growth
prospects act as credit supports. Credit challenges include low revenue mobilization, and a reliance on external funding.

The stable outlook reflects balanced risks at Baa2. It incorporates
downside risks from political challenges to further implementation of
broad economic, fiscal and regulatory reforms.

“Because they seek to address entrenched constraints and go through various institutional hurdles, we expect effective reforms to proceed relatively slowly, with potential delays or reversals to occur. The stable outlook also takes into account upside risks from a potential improvement in competitiveness as a result of effective reform implementation,” says Moody’s.

It said, the stable outlook indicates that rating changes are unlikely in the foreseeable future.Over time, indications that fiscal policy measures can durably and significantly raise government revenue would put upward pressure on the rating.

Higher revenue would enhance fiscal flexibility and provide more
direct financial means for the government to address large social and physical infrastructure spending needs.

An upgrade would also result from further progress towards achieving stronger growth potential, commensurate with the country’s population growth and income levels, including through a deepening of financial markets and improved competitiveness. A reduction in external vulnerabilities and improvements in institutional strength would also add upward pressures.

This assessment would be supported by a reduction in
the government’ reliance on external debt, or tangible evidence that reforms foster investment, competitiveness or sustained increases in revenues.

Downward pressure would arise if evidence indicates that the
strengthening of Indonesia’ policy framework and institutions stalls or reverses. Moody’s concluded that the prospects of medium-term
broadening of the revenue base are limited, indicating limitations to
policy effectiveness and posing continued constraints to economic growth.

Then, SOEs’ financial strength materially worsened pointing to a rising likelihood for material contingent liabilities to crystallize on the
government’ balance sheet.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com

Indonesia Raises US$1.62B from Samurai Bond Issuances

Indonesian government raised ¥177 billion (US$1.62 billion) funds from six series of Samurai bond sales - Photo: ING

JAKARTA (TheInsiderStories) – Indonesian government has raised ¥177 billion (US$1.62 billion) funds from six series of Samurai bond sales, finance ministry reported today (05/16). This make the Indonesia become the biggest issuance of such bonds by an Asian country.

Ministry of Finance (MoF) sold the Japanese-currency-denominated bonds with 3 to 20-year maturities that have a range of coupons of 0.54 per cent to 1.79 per cent per annum. Joint lead arrangers for the transaction were Daiwa Securities, Mizuho Securities, Nomura Securities and SMBC Nikko Securities, it added.

Previously, the MoF has issued Samurai Bonds of ¥100 billion in 2018, equal to the issuance of previous year. The notes consists of four series RlJPY0521 mature 2021, RlJPY0523 mature 2023; RlJPY0525 mature 2025, and RlJPY0528 mature2028, with a value of respectively ¥49 billion, ¥39 billion, ¥3.5 billion, and ¥8.5 billion.

Each series has a coupon rate of 0.67 percent, 0.92 percent, 1.07 percent, and 1.27 percent.

Indonesian government has potential to issue bonds around Rp388.96 trillion ($27.20 billion) in this year. The government estimated will issue a total gross government bond of 50-60 percent throughout the first semester of 2019, which includes retail government bond, foreign exchange government bond and regular government bond instruments. The total issuance value is around Rp128 trillion.

Finance ministry recorded the realization of the net government bonds issuance in the first quarter of 2019 reached Rp185 trillion and SUKUK issuance reached Rp81.44 trillion. Totally, the bonds issuance value reached Rp266.44 trillion.

The Directorate of State Debt Management at the Directorate General of Financing and Risk Management of the MoF stated that the total gross bonds reached Rp330.1 trillion in 1Q 2019. This value reached 39.98 percent of the bonds issuance target throughout 2019 worth Rp825.7 trillion.

In fourth quarter of 018, the government recorded 8 series of government bond with a total value of Rp12 trillion. However, this achievement is still in line with the projection set in 2019 State Budget, which so far is still on track because foreign and domestic interests are still quite favorable looking at Indonesian instruments, said a senior official at the end of last month.

At present, government bond listed in IDX are 100 series with a nominal value of Rp2,504.01 trillion and $ 400 million, while Asset Backed Securities are 10 emissions worth Rp9.32 trillion. While, the government bond maturing throughout the 1Q of 2019 was recorded at Rp148.1 trillion. This value reached 38 percent of the total maturing debt throughout 2019 worth Rp382.4 trillion.

Recently, the directorate general Luky Alfirmansaid said the ministry seek alternate funding channels in responding the rising of country’ bond yields due to current global situation. In recent months there has been turmoil in financial markets such as the depreciation of the Rupiah against U.S dollar which is almost simultaneously with the rise in global oil prices.

Initially this condition had a negative impact on the market of Government bond due to the tendency of investors to avoid risk. To anticipate fluctuating financial market conditions and impact on potential yields and unfavorable Government bond auction results, the ministry has prepared alternative sources of financing through additional withdrawal and private placement, as well as opening options to increase the portion of foreign currency financing.

The government has also run Crisis Management Protocol to manage risks in the government bond market and prepare Bond Stabilization Framework scheme to mitigate the impact of sudden reversal by involving the related state-owned enterprises.

Indonesia needs foreign money to help bridge funding gaps in the government’s ambitious plans for new infrastructure across a nation of more than 250 million people. This year, the government also has other options to secure State budget financing such as loans from multilateral agencies or private placement.

US$1: JPY109.46,

by Linda Silaen, Email: linda.silaen@theinsiderstories.

BI Maintains Benchmark Rate Amid Global Tension

Consumer Confidence Index Decline in March 2019
Bank Indonesia assessed the Consumer Confidence Index in April 2 was 128.1, higher than 124.5 in the previous month. Photo by Bank Indonesia.

JAKARTA (TheInsiderStories) – Bank Indonesia (BI) decided to maintain the benchmark interest rate, BI 7 days reverse repo rate at 6 percent. It is in line with global and domestic economic conditions.

Governor of BI Perry Warjiyo explained, some central banks have begun to loosen the macroeconomic policies, but it is not able to help the recovery of global economics. The tension between the United States (US) and China is getting stronger so it impacts the shifting of inflow from developing to wealthy countries.

From the domestic side, the Indonesian economy is still growing in the range of 5-5.4 percent. The inflow of foreign capital will continue to support the improvement in the current account deficit in the range of 2.5-3 percent at the end of 2019, improved from 2018.

In terms of the rupiah exchange rate, it continues to weaken until 1.45 percent at May 15, 2018, from 1.36 percent in April 2019. It is occurred due to trade wars and seasonal patterns, dividend payments and increased demand. However, BI will remain in the market and deepen the financial market in anticipation of further weakness.

Furthermore, loan growth was recorded 11.5 percent in March 2019, weakening from February 2019 of 12.1 percent. However, BI is still optimist, the loan will grow 10-12 percent at the end of this year.

Previously, the tension between two the great countries in the world impacted to Jakarta Composite Index and rupiah exchange rate. Indonesia government takes into account of rupiah movement and trade war in the global market. Therefore, President Joko Widodo summoned ministers and related stakeholders in the financial sector to highlight the latest economic developments.

Coordinating Minister for Economic Affairs Darmin Nasution explained the meeting between President Jokowi and the stakeholders discussed currency movement and trade war between the US and China because of the potential to disrupt stability.

To anticipate it, the government is currently pushing for investment flows to enter various sectors so it will support in maintaining national economic resilience amid the dynamics of global economic uncertainty.

Analyst of PT Binaartha Sekuritas M. Nafan Aji explained there are two factors affected the movement of the index. One of them is the unsolving negotiations between the US and related to trade war. According to Aji, the US did not see a full commitment from China to resolve disputes bilaterally. Consequently, the US imposed import duty on Chinese products of 25 percent which caused both of their currencies to move fluctuated.

Furthermore, investors also realize there will be many selling actions in this month or called Sell on May and Go Away. In this action, many investors change their portfolios by moving their investments from stocks to bonds or vice versa. “However, it will not last in a long time, so tomorrow there will be a sign of a rebound,” he said.

Economist of PT Bank Central Asia Tbk (IDX: BBCA) David Sumual also did not see any significant impact from the weakening of the rupiah because it lasts temporarily. As a result, it will not impact on economic fundamentals such as economic growth or lending.

The two parties, US and China, that caused the weakening of the rupiah are also believed will renegotiate to solve the issue because there is no fastest way other than that to complete the issue of a trade war.

Written by Staff Editor, Email: theinsiderstories@gmail.com

S&P: Indonesia’s GDP to Improves by Investment and Infrastructure

S&P Ratings: Indonesian Developers Potentially to Downgrade This Year

JAKARTA (TheInsiderStories) – International rating agency Standard & Poor’s Global Ratings (S&P) stated that Indonesia’ Gross Domestic Product (GDP) is considered to be far better due to the investment and infrastructure development. The rapid infrastructure development is good for investment and for economic growth, the agency said.

Kim Eng Tan, senior director for sovereign ratings at S&P, said at Indonesia in 2019-Coping With A Post-election Year in Jakarta on Thursday (05/16), that Indonesia has positive potential from the transfer of investment objectives, in line with global economic situations and the United States (US) monetary policy.

He believes that Indonesia’ sovereign credit fundamentals will remain robust as the exchange rate movements and foreign exchange reserves remain stable.

But he warned, government stepped relying on debt securities than foreign debt could harm Indonesian financial conditions. So far, he noted, investors sentiments relatively stable, thanks to the proactive economic policies.

Indonesian government is considered to implemented a good and appropriate fiscal policy to bring the fiscal more healthy, which is marked by a decrease in the State Budget deficit from 2.51 percent in 2017 to 1.76 percent in 2018.

This reduction in the State Budget deficit is driven by improvements in tax revenues and increased quality of spending. Careful fiscal policy is also indicated by Indonesia’s low debt with a ratio of 29.8 percent to GDP in 2018.

Indonesia targets to become one of the developed countries by 2045 and the economic growth at 7.3 percent at the year, said a minister on Thursday (05/09). The vision makes Indonesia a high-income country with the fifth highest GDP in the world with an average economic growth rate of 5.5-6.0 percent up to 2025 and an average of 7.3 percent in 2045.

National Development Planning Minister Bambang Brodjonegoro said that in order to achieve these big goals, Indonesia must be able to plan sustainable development to create a superior nation in human, industrial, cultural, scientific and technological resources.

There are three scenarios for achieving economic growth in the next five years, namely a baseline level of 5.4 percent, a moderate level of 5.7 percent and a high scenario of 6 percent.

“The target is that in 2045 our economy will grow 7.3 percent,” he said at the opening of the 2020 Government Work Plan in Jakarta.

To achieve this vision, the government will improve the performance of economic sectors that make a major contribution to economic growth. At least there are three strategic steps that will be taken by the government, among others: first, improving the trade balance in the service sector which is still in deficit, such as the services of shipping vessels.

Second, boost the tourism sector to increase foreign exchange inflow into the country. In 2025, the government targets the number of foreign tourists to reach 25-30 million and as many as 73 million foreign tourists by 2045.

Third, diversify export-based production centers with more focus on the development of manufactured products than those that have continued to depend on natural resource products such as coal and petroleum. Strengthening manufacturing products in the food, textile, chemical, pharmaceutical and automotive products sectors will be the government’s main concern, he said.

Finally, the government will reduce the current account deficit (CAD), economic transformation in the fields of industry, agriculture and services.

S&P believes that Indonesia’ economy remains stable amid the weakening global economy. Structural and fiscal reforms carried out by the government together with stakeholders are an effort to maintain the stability of the economy.

“So the Indonesian economy is still believed to remain robust amid the weakening global economy tension,” Kim ended.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

ING: Rupiah Under Pressure Again, BI-7 DRR Seen to Remain on Hold

Bank Indonesia 7 Days Reverse Repo rate on hold for now, ING reported in the latest report - Photo by ING

JAKARTA (TheInsiderStories) – The recent round of tariff slinging between the United States (US) and China has sparked emerging market (EM) foreign exchange weakness again, which should keep Bank Indonesia 7 Days Reverse Repo (BI 7-DRR) rate on hold for now, said ING in the latest report.

Nicholas Mappa, ING Senior Economist said, the Indonesia Rupiah had been performing relatively well in the first four months of the year as a now dovish US Federal Reserves (Fed) signaled a possible window for emerging market’ central banks to pause and maybe even reverse their aggressive tightening of 2018.

Positive expectations for US – China trade negotiations bolstered the case for this but the month of May has added a wrinkle to that narrative: its tariff slinging time again, he added.

The recent escalation of trade tensions has sparked a heavy risk-off tone and EM currencies have been on the run since. For the month, the local currency has pulled back by 1.39 percent with the Rupiah under additional pressure as Indonesia recorded a wider-than-expected trade deficit for the month of April.

With these developments, market players are expecting BI 7-DRR to remain on hold as Governor Perry Warjiyo deploys measures to stabilize the currency.

Last month Board governor of BI decided to maintain a BI- 7DRR at 6 percent, a Deposit Facility interest rate of 5.25 percent, and a Lending Facility interest rate of 6.75 percent.

Previously, Warjiyo stressed that it could reduce the benchmark rate with a note that macroeconomic and financial stability is maintained. He revealed, the Bank had raised its benchmark interest seven times in recent months, so that the current benchmark interest rate had reached its peak.

Macroeconomic and financial stability, according to him, can be done through increasing the portion of government bonds for foreigners so that there is a flow of funds into the country. This is done by cooperation with ministry of finance.

This year, Warjiyo said BI has asked Finance Minister Sri Mulyani Indrawati to issue more retail bonds in order to reduce the long-term fiscal burden in the era of high interest rates due to the nature of long-term government bonds while retail bonds were more short-term.

While, Vice President Jusuf Kalla urged that bank’ interest rates not to be too high and could match loan interest rates in Thailand and Malaysia. In addition to the high loan interest rates, Kalla also highlighted the yield of state bonds not to be too high.

“All ask for 8 percent of the yield. How can the capital market grow, if interest is high,” he added.

Warjiyo said the decision is consistent with efforts to strengthen external stability, particularly to control the current account deficit  within a safe limit and maintain the attractiveness of domestic financial assets. The central bank also continues to pursue a monetary operations strategy to increase the availability of liquidity in driving bank financing.

He revealed, the decision was made in regarding to global and domestic conditions. He considered, world economic tends to be slowed, caused by reduced uncertainty in the global financial market. As an example, said Warjiyo, US economic growth slowed due to the limited fiscal stimulus, structural problems of the workforce, and the decline in business confidence.

In line with the slowing outlook for world economic growth, global commodity prices are predicted to decline, including world oil prices, as well as the normalization of monetary policy in developed countries which tends to not be as stringent as the original estimates and uncertainty in the global financial market is diminishing.

The increase in the Fed Fund Rate is expected to be lower and the reduction in the central bank balance sheet becomes smaller than planned. Global economic and financial developments on the one hand provide challenges in encouraging exports, but on the other hand increase the inflow of foreign capital to developing countries, including Indonesia.

“Going forward, Bank Indonesia will take an accommodative macro-prudential policy and strengthen payment system policies in order to expand economic financing,” he said.

Going forward, BI convinced will continue to consistently maintain price stability and strengthen policy coordination with the government, both at the central and regional levels, to keep inflation low and stable in the target range of 3.5±1 percent, Warjiyo said.

Written by Staff Editor, Email: theinsiderstories@gmail.com

Cooling Tension Appears US, China Trade War

Trump Declared National Emergency, Us Retail Sales Dropped
Manufacturing in America is Booming Again - Photo by the White House

JAKARTA (TheInsiderStories) – Cooling tension on trade war appeared, when United States (US) President Donald Trump said he would meet Chinese President Xi Jinping late June at the G20 Summit in Japan. The higher tension between the world’ largest economies, sending shivers through global markets.

China on Monday (05/06), announced higher tariffs on US goods worth $60 billion, in effect on June 1, in response to a US decision on Friday to raise levies on Chinese imports worth $200 billion.

Yesterday, President Xi revealed his country would only be more open to the world when no country claimed to have cultural superiority, in his first public speech since tensions with the US increased last week.

China was very upset with comments reported in US media last month by a State Department official who said the US was involved in “very different civilizations” fighting with China.

The world hoped that the two leaders with different protectionist and ideologies strategies will soon cool down and are expected to improve again.

According to the Federal Reserves (Fed), US economy showed a slowdown amid a re-tense trade war with China. The slowdown was seen in the decline in manufacturing industrial production and retail sales during April 2019.

The Fed reported that US industrial output in April fell 0.5 percent from the previous month, defying market expectations from a flat reading and reversing a 0.2 percent increase in March. That was the biggest decline in industrial production since May last year.

This decline occurs after an average decline of about 0.4 percent per month, for the previous three months, said the central bank.

Amid a bitter dispute with China, US pain was reflected in various production sectors, where industrial output in the first quarter fell 1.9 percent over the same period last year, according to the latest data, revised from a decline of only 0.3 percent last reported month.

In April alone, the production of durable goods fell by almost 1.0 percent, although the index for non-durable goods only fell slightly. Among durable goods, a loss of 2 percent or more is posted by the machine; electrical equipment, equipment, and components; and motorized vehicles and their parts.

In addition, among items that cannot be repaired, the results vary – the largest increases are recorded by clothing and paper and products, and the biggest decline is recorded by textile and product manufacturers and by plastic and rubber products.

The index for other manufacturing (issuance and logging) fell 0.3 percent and was well below the level of the previous year.

Utility output also fell 3.5 percent in April, with a decline in the index for natural gas and electricity utilities; demand for heating declined last month due to warmer than usual temperatures.

However, after falling for three consecutive months, mining yields increased 1.6 percent in April and 10.4 percent above the level a year earlier. The increase in the mining index reflected gains in the oil and gas sector as well as a surge in coal mining which followed several months of decline.

Meanwhile, capacity utilization for manufacturing fell 0.5 percentage points to 75.7 percent, a level that is 2.6 percentage points below the long-term average.

In addition to shrinking manufacturing production, US retail trade in April also shrank to 0.2 percent from the previous month, following a revised 1.7 percent growth in March, which was the biggest increase in sales for one and a half years.

“6 of the 13 major retail categories show a month-to-month decline,” said US’ Census Bureau on Wednesday.

Year after year, retail trade growth slowed to 3.1 percent from 3.8 percent in the previous month. Excluding cars, gasoline, building materials and food services, retail sales were flat in April after a 1.1 percent increase in March, it said.

The Bureau reported that receipts at motor vehicle dealers and spare parts dropped 1.1 percent, after a 3.2 percent increase in the previous month and those in building materials stores fell 1.9 percent, reversing a 0.8 percent increase in March.

President Trump has repeatedly touted strong first-quarter growth figures as evidence of economic policy and tough trading tactics to fruition. However, US economists have long warned that the data includes unsettling signs that could indicate an impending slowdown, mainly due to short-term explosions of 2017 fading tax cuts and higher tariffs biting rates.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

Escalating US, China Technology and Trade War Adds Storm Clouds

IHS Markit: US-China Trade War Escalates Again as Truce Collapses
IHS Markit Predicts President Donald Trump’s decision to hike US tariffs from 10 percent to 25 percent on US$200 billion of Chinese imported products will hit Chinese exporters hard. Photo by TheInsiderStories.

JAKARTA (TheInsiderStories) – The combined impact of the United States (US) – China technology war and the escalating US-China trade war is clouding the outlook for the Chinese economy amidst signs that domestic economic growth momentum also softened in April, according to IHS Markit in its official statement today.

“Weak Chinese industrial production and retail sales data for April highlight the downside economic risks to the Chinese economy in 2019 from moderating domestic demand combined with the impact of the escalating US-China trade war,” said Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit, today (05/16).

With private consumption has become an increasingly important growth engine for the Chinese economy in the past five years, the significant slowdown in the pace of retail sales growth in April is a key concern, he adds.

On 15 May 2019, US President Donald Trump signed an executive order that will ban US firms from using telecommunications equipment made by firms that are deemed to pose a national security risk.

While no country or company is specifically named in the executive order, it is expected to result in a US ban on the use of equipment made by many telecommunications companies from mainland China once the order is implemented by the US Department of Commerce. This follows just days after the US Federal Communications Commission rejected an application by China Mobile to provide communications services in the US.

Many recent Chinese M&A proposals for acquisition of US technology companies have also been rejected by the Committee on Foreign Investment in the United States (CFIUS), a US government interagency committee that reviews the effect of such proposed M&A deals on national security. The heightened US regulatory restrictions have resulted in a collapse of Chinese M&A acquisitions in the US during 2018 and early 2019 by deal value.

Adding to the downside risks for China’s export sector, the US government announced on 13 May that another tranche of US tariff measures against China is under preparation, with a 25 percent tariff planned to be imposed on a further USD 300 billion of Chinese products that are exported to the US. This next tranche of US tariffs would be another significant negative shock to China’s export sector.

Biswas sees it is not a realistic strategy for China to try to mitigate a 25 percent tariff by allowing further sharp declines in the yuan. A key priority for the Chinese government since 2015 has been to stabilize the exchange rate and prevent large capital outflows, in order to protect its foreign exchange reserves. Furthermore, if the US assesses that there has been significant currency manipulation, countermeasures could be applied by ratcheting up the tariff rates on Chinese imports to even higher rates.

Confronted with increasing downside risks to the economic outlook, IHS Markit advice Chinese policymakers need to roll out further fiscal and monetary policy stimulus measures to ensure that GDP growth in 2019 reaches the target range of 6.0 percent to 6.5 percent that was set by the Chinese government in March in its annual Government Work Report presented by Premier Li Keqiang.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com