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Indonesia's Financial System Stays Strong Amid Global Uncertainties

Amid global uncertainties, the United States' inflation rate declined, albeit still far from the preferred two percent rate, exacerbating doubts and uncertainty over the reduction in the Fed Funds Rate (FFR). The FFR, or the rate at which depository institutions lend money to one another, that is currently high, in the range of 5.25-5.50 percent, is forecast to last at least until the first half of this year. Geopolitical tensions globally remain unresolved, adding another layer of uncertainty to economic forecasts and financial markets.

China's economic growth had yet to reach the expected level on account of a property crisis and weakening consumption power. This trend will also contribute to the slowing down of the global economy and threaten the stability of the global financial system. Notably, China's GDP growth rate in 2023 was below target at 5.6%, reflecting the challenges faced by its economy. This has led to concerns among investors and policymakers about the broader implications for global economic performance.

Amid global uncertainties, Indonesia's financial system remains resilient and stable. This financial resilience is reflected in several aspects, including adequate liquidity, decreasing credit risks, potent capital, and a sound level of corporate resilience. Indonesia's banking sector, for instance, reported a non-performing loan (NPL) ratio of just 2.19 percent as of December 2023, marking a significant decline from the previous year. These indicators point to the effectiveness of Indonesia's financial policies in managing risk and maintaining stability.

In 2023, Indonesia's economy stood strong despite facing threats posed by global economic slowdown and rising global inflationary pressure, as evidenced by the country's success in achieving an economic growth rate of 5.05 percent. This feat was a result of the intensification of government spending at the end of the year as well as the acceleration of the development of several national strategic projects. Additionally, Indonesia's debt-to-GDP ratio remained manageable at 41.8% in 2023, reflecting prudent fiscal management amidst challenging economic conditions.

Source: click here

Government Announces 14 New National Strategic Projects

The Indonesian Government has determined 14 new national strategic projects (PSNs) in a range of sectors in a bid to actualize equitable development in the country.

Spokesperson of the Economic Affairs Coordinating Ministry Haryo Limanseto noted that the 14 projects are of enormous investment value and will bring about far-reaching economic impacts through the sectors of transportation, infrastructure, energy, health, and telecommunication. 

He also stated that the PSNs encompass not only physical infrastructure, as the projects are also meant to ensure an equitable economy, ample food stocks, as well as developments in border regions, technology, tourism, and education. He underlined that the development of the 14 new PSNs is fully funded by capital invested by private actors. The official also noted that the government had initially coordinated with relevant stakeholders and conducted thorough studies before determining the new PSNs.

According to Limanseto, the 14 newly announced projects are scattered in several provinces, namely Riau Islands, Banten, Jakarta, West Java, East Java, East Kalimantan, Central Sulawesi, and Southeast Sulawesi. In detail, the projects involve eight industrial zones; two tourism zones; two toll roads; one educational, research, technology and health zone; and one offshore oil and gas project.

Among the 14 projects is the development of an area of 1,756 hectares of land envisioned as a green tourism destination called Tropical Coastland in Pantai Indah Kapuk 2 area in Banten Province. The tourism project is worth Rp65 trillion (US$4.1 billion) of investment and is projected to absorb almost 20,000 workers.

Another newly announced PSN is the development of a special economic zone (SEZ) on 59.6 hectares of land situated within Bumi Serpong Damai (BSD) satellite city in the same province. The project is expected to draw investment worth Rp18.54 trillion (US$1.1 billion). The planned SEZ, expected to empower 10,000 workers, is designed as a center for education, medical research, digital economy, technological developments, and healthcare.

In terms of healthcare, the zone will drive developments in medical and biomedical services forecast to generate Rp5.6 trillion (US$350 million) of foreign exchange.

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Apple, Microsoft Keen to Invest in Indonesia: Deputy Minister

Tech giants Microsoft and Apple have expressed their interest in investing in Indonesia, according to Deputy Minister of Communications and Informatics Nezar Patria. He stated at a public discussion that they have informed him by letter and expressed their intention to invest in Indonesia as well. Satya Nadella of Microsoft and Tim Cook of Apple, CEOs of the two tech giants, seek to meet President Joko Widodo during their visit to Indonesia, he remarked.

The authority seeks to focus the collaboration on the development of human resources and manufacturing sectors, he noted. Investments from the two tech giants in Indonesia will also open up greater opportunities for the country and the people, Patria added. The deputy minister expressed hope that collaboration with the two tech giants would bolster Indonesia's efforts to develop its digital talent capacity and competency.

On Thursday (March 21), Minister of Communication and Informatics Budi Arie Setiadi stated that his side is preparing to meet representatives of tech giants Microsoft and Apple to accelerate Indonesia's digital transformation. Microsoft (representative) will visit in mid-April, while Apple CEO Tim Cook will visit on April 20. He intends to establish the Apple Academy, which we will observe and study during his visit as Setiadi remarked.

The minister said his side plans to discuss the development of digital talents and artificial intelligence (AI) technology in Indonesia with Microsoft. Meanwhile, the ministry seeks to focus the discussion with Apple on professional digital talent development.

Source: click here

ASEAN for Business Mar 2024: A Business-Friendly ASEAN Guide for AI Ethics and Governance

ASEAN recently endorsed a business-friendly ASEAN Guide for Artificial Intelligence (AI) Ethics and Governance that is crucial for the region's technological development and allows companies to confidently invest in AI while ensuring responsible development.

Access the full publication here.

The Guide is nominated for the United Nations (UN) World Summit on the Information Society (WSIS) Prizes 2024. The WSIS Prize is an international award to recognise projects and activities by individuals, governments, private sector, academia, international and regional organisations, and civil society for their success in implementing projects and activities that leverage the power of ICT to advance sustainable development. 

Vote the Guide to win the prize at this link.

Brunei ranks third in personal finance interest

Brunei Darussalam is third in Southeast Asia in the interest of personal finance management, with a significant indicator of 3.1 per cent, according to an analysis by UnaFinancial.

The study examined search requests related to personal finance management in 11 Southeast Asian countries over the past year.

The indicator of interest was calculated as a ratio of search requests to the average population over the previous 12 months.

Singapore leads Southeast Asia in interest in personal finance management, with a significant indicator of 9.8 per cent, followed by Thailand with 6.7 per cent.

“Singapore’s performance is driven by a rising income per capita and a growing number of wealthy people, who are interested in investment tools,” the experts noted.

The report said, “All three countries are characterised with a growing supply of investment tools, high levels of accumulated wealth and a large share of millennials and Gen Z (54 per cent), who are looking for financial management tools.”

Meanwhile, Thailand’s interest in currency depreciation also prompted residents to explore wealth preservation options.  Source: Borneo Bulletin

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Brunei continues to develop oil and gas industry, says minister

Brunei has never wavered in its commitment to developing the oil and gas industry, said Minister at the Prime Minister’s Office and Minister of Finance and Economy II Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah during the 20th session of the Legislative Council (LegCo) meeting.

Oil and gas companies will continue to review their costs of operation and introduce new technologies to enhance performance, he added.

Queries on how the Sultanate can benefit from free trade agreements (FTA) and whether businesses are prepared for the FTA were raised by Yang Berhormat Haji Salleh Bostaman, to which the minister said, “It depends on the company’s development. With the FTA, we have managed to penetrate markets such as Mexico and Chile, to export fertiliser.”

However, micro, small and medium enterprises (MSMEs) have yet to fully utilise these FTAs, he added.

He assured that “once our MSMEs are ready, they can export their products. These FTAs are here to stay”.

On the 11th National Development Plan, Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew said the progress was affected by the COVID-19 pandemic, with many private companies unable to carry out their projects due to foreign companies, workers and goods not being allowed to enter the country during the period.

“Many government projects could not be carried out. But the authorities held meetings with all ministries on development projects to seek ways to speed up the process. Meanwhile, for the 12th National Development Plan, steps have already been put forward to speed up the process,” the minister said.

On increasing national revenue through tax collection to reduce budget deficit, the minister said there are only corporate and withholding taxes.

“Some taxes practised in other countries are not available here. Before we introduce other taxes in the country, we should think of the implications especially for low income earners.

“These taxes are reviewed from time to time and we try to get feedback from the private sector and members of the public,” he added. 

Source: Borneo Bulletin

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More than 92pc ‘connected’

Initiatives furthering the modernisation and expansion of the country’s telecommunications network infrastructure since September 2019 saw more than 92 per cent of the Sultanate’s populated areas fiberised, said Unified National Networks Sdn Bhd (UNN) in a statement.

The fibre optic technology is now the mainstay of Brunei’s national backhaul network comprising more than 6,000 kilometres. Recent additions from 2023-2024 include Sungai Teraban, Kuala Balai, Labi, Kampong Ayer Bolkiah A and B, Merangking, Menunggol, Bukit, Long Mayan and Teraja, while, Pemadang, Ra’an, Rambai and Merimbun are expected to be completed by April.

In July 2022, collaborative efforts from Datastream Digital (DST), imagine Sdn Bhd, Progresif Sdn Bhd and UNN kickstarted the copper-to-fibre migration programme which targeted customers connected by copper to mitigate them toward fibre optics.

Source: Borneo Bulletin

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‘MSMEs backbone of economy’

Micro, Small and Medium Enterprises (MSMEs) form the backbone of the economy, with 97 per cent of some 6,570 active enterprises classified as MSMEs, said Deputy Minister of Finance and Economy (Economy) Dato Seri Paduka Haji Khairuddin bin Haji Abdul Hamid yesterday.

“These MSMEs serve as a significant contributor to job creation in Brunei Darussalam, accounting for over 60 per cent of the total employment in the private sector and contribute to approximately 40 per cent of our nation’s gross domestic product, highlighting their importance in fostering economic resilience and sustainability,” said the deputy minister during the second ‘Enterprise Growth Connect: A Forum and Networking Event’ (EGC) at Tarindak D’Seni.

The deputy minister, also the Co-Deputy Chairperson of the Brunei Economic Development Board (BEDB) and Darussalam Enterprise (DARe) said because of MSMEs contribution to economic development, it is the responsibility of stakeholders and advocates of the entrepreneurial community to ensure MSMEs have access to the skills and resources for their growth and sustainability.

He added the government is actively supporting the growth and development of MSMEs through DARe, and introduced policies and initiatives to make the country’s environment more conducive and business friendly.

“These include facilitating access to financing, providing comprehensive training and development programmes, offering incubation facilities, enhancing infrastructure and facilitating international market access,” he said.

“MSMEs are also instrumental in promoting inclusive growth and reducing income inequality by providing opportunities for skills development and grassroots entrepreneurship. By integrating small businesses into the value chains of larger corporations, we create symbiotic relationships that yield mutual benefits for both parties.”

Such integration will open doors to new markets, resources and expertise as well as fostering MSME growth and competitiveness while larger corporations stand to diversify supply chains, access innovative solutions and enhance social impact by supporting the growth of smaller businesses. The deputy minister said the EGC serves as an invaluable platform to forge meaningful connections, exchange ideas and explore potential synergies.

Source: Borneo Bulletin

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Australia to create $1.3 bln fund to invest in Southeast Asian projects

Australia said on Tuesday it would set up a A$2 billion ($1.3 billion) finance facility to boost trade and investment in Southeast Asia as it looks to deepen ties in a region where many are also searching for ways to live with a more assertive China.
The fund will focus on clean energy and infrastructure and provide loans, guarantees, equity and insurance. Australia will also tip in an extra A$140 million to extend an existing programme which advises the region on infrastructure projects.
Prime Minister Anthony Albanese announced the fund, which was recommended last year by Australia's envoy to the region, in a speech on Tuesday to business leaders at the Association of Southeast Asian Countries (ASEAN) summit in Melbourne.
"Australia and Southeast Asia must together face this moment with a sense of optimism and urgency," he said. "Because while there is so much untapped potential, there is not unlimited time. We must act together, and we must act now."
Two-way trade between Australia and ASEAN states passed $178 billion in 2022, greater than Japan or the United States, Albanese said.
Australia is hosting the ASEAN summit, which marks the 50th anniversary of its ties to the bloc, amid growing recognition in Canberra that the region needs to be cultivated at a time when China's increasing assertiveness is reshaping the Indo-Pacific.
Stances on China across the 10-member bloc range from wary to warm. Philippine Prime Minister Ferdinand Marco Jr. told an audience in Melbourne on Monday that his country would grow its security ties with the US and resist when China ignores its maritime rights in the South China Sea.
However, at a joint press conference with Albanese hours earlier, Malaysian Prime Minister Anwar Ibrahim criticised growing "China-phobia" in the west.
Asked by reporters about China's push to join regional trade group the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Albanese and Singaporean Prime Minister Lee Hsien Loong said any decision would be by consensus.
Beijing has long sought to join the 12- member CPTPP, which includes Singapore, the U.K. and Japan, but faces opposition from some members including Australia over its coercive trade policies.
($1 = 1.5363 Australian dollars)

Source : REUTERS

OIKN develops creative economy of Nusantara City

The Nusantara Capital Authority (OIKN) is developing the creative economy (ekraf) in Nusantara City by compiling a regional creative economy development road map (Talanpekda).

"We are currently carrying out the process of compiling Talanpekda to develop creative and creative economy in Nusantara City," OIKN Director of Culture, Tourism and Creative Economy Muhsin Palinrungi stated in Penajam, Saturday.

The Directorate of Culture, Tourism, and Creative Economy of OIKN held a discussion forum involving stakeholders, including local governments and tourist destination managers, in the Nusantara City area.

He remarked that the discussion on drafting the Talanpekda was held on Thursday (March 21), and various inputs from stakeholders attending the forum were collected by the facilitation team that had been formed.

The facilitation team will thereafter conduct field visits in six sub-districts in the Nusantara City area to collect supporting data.

"We have carried out several stages to prepare the Talanpekda and are targeting completion in May 2024," he remarked.

Talanpekda is a guiding document for the OIKN Directorate of Culture, Tourism, and Creative Economy to plan creative and creative development programs and activities in Nusantara City, the future capital city of Indonesia.

Creative economy development in Nusantara City is a sector that must be prioritized, as it not only contributes to the Indonesian economy but also has a positive impact on the social, cultural, and environmental aspects.

"Creative economy can grow the economy in an inclusive and sustainable manner as well as raise a positive image and national identity in addition to preserving culture and the environment," he affirmed.

He also said that the creative economy can foster creativity that encourages innovation and increases social tolerance among members of all levels of society due to increased understanding between cultures.

Creative economy development in Nusantara City can be more focused and systematic with the Talanpekda, Palinrungi remarked.

Source: click here

Thai ice cream licks Asian rivals with 7.3% export growth

Thai ice cream exports rose for the seventh consecutive year, to US$148.21 million in 2023, according to the Trade Policy and Strategy Office.
TPSO director-general Poonpong Naiyanapakorn said ice cream products still have a bright future for Thai exporters with export value rising 7.3% year on year for a compound annual growth rate of 12.43% per year.
He added that Thailand is now the No 1 ice cream exporter in Asia and ranked 11th in the world.
Poonpong said exports were still growing, with Thailand shipping $9.91 million worth of ice cream in January this year – 10.1% up from the same month last year.
Thailand’s top five foreign ice cream markets are Malaysia with a 29.5% share, South Korea (11.3%), Vietnam (9.5%), Singapore (6.5%), and Cambodia (6.3%).
Poonpong said Thailand had an advantage with domestic ingredients that produced outstanding flavours, including durian ice cream.
He also noted growing global demand, citing a Euromonitor International study showing the world ice cream market expanded 8.8% to $86.719 billion in 2023 from a year earlier.

Source : THE NATION

US to renew Generalized System of Preferences (GSP) scheme for Thailand

The Commerce Minister of Thailand, Mr Phumtham Wechayachai, met with US Secretary of Commerce Gina Raimondo to strengthen trade relations and discuss renewing the Generalized System of Preferences (GSP) scheme for Thailand.
The Generalized System of Preferences (GSP) is a U.S. trade preference program established in 1974 to promote economic development by eliminating duties on thousands of products when imported from 119 designated beneficiary countries and territories.
The United States plans to reinstate the Generalised System of Preferences (GSP) scheme for Thailand, aiming to strengthen trade relations. This decision follows a strategic dialogue between Thailand’s Commerce Minister and US officials, where they discussed trade collaboration, the Indo-Pacific Economic Framework, and intellectual property enforcement.
The US is ready to renew the Generalized System of Preferences (GSP) scheme for Thailand, highlighting the potential for continued trade benefits between the two countries.
Both Thailand and the US are committed to strengthening economic relations and promoting bilateral trade and investment, with a focus on supply chain development and modern industries.
The Indo-Pacific Economic Framework (IPEF) negotiations have made significant progress, with Thailand and the US aiming to drive economic cooperation and connect supply chains in the region.
Both sides also addressed the Indo-Pacific Economic Framework (IPEF) negotiations and Thailand’s request to be removed from the US watch list for intellectual property (IP) enforcement, and highlighted the importance of supply chain development, with Thailand ready to partner with the US in modern industries.
The meeting highlighted the significance of the Thailand-US alliance and trade partnership, with an emphasis on supply chain development. Thailand seeks to become a production base for advanced US industries while showcasing its economic policies. In 2023, the US was Thailand’s second-largest trade partner, with a focus on technology, aviation, and other key exports.

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