policy Archives - SCCI - Singapore Chamber of Commerce Indonesia

17Dec, 2018

Indonesia plans to make 30 percent biodiesel blend mandatory, studies B100

While the government expanded the mandatory use of a 20 percent biodiesel blend ( B20 ) in September, it plans to further boost domestic biodiesel consumption to absorb more crude palm oil (CPO) amid fluctuation in the global market price of the commodity.

Apart from improving the distribution of the B20 blend across to the country, the government is also carrying out research to increase the portion of biodiesel in the fuels rom 20 percent to 30 percent ( B30 ) or even to 100 percent ( B100 ).

State-owned oil and gas holding company Pertamina supply chain operations manager Gema Iriandus Pahalawan further explained that three more biodiesel refineries would be developed, likely in Plaju in South Sumatra, Dumai in Riau and Balikpapan in East Kalimantan, to produce more biodiesel.

Gema said the production of B30 biodiesel was expected to be implemented, while the government was still improving the B20 distribution, which had reached 97 percent in November and was planned to be completed in December.

19Nov, 2018

54 sectors now fully open to foreign capital, The Indonesian govt relaxes regulations to attract investors

The Indonesian government is going on a streak to weather down external shocks affecting the country’s economic performance.

After Bank Indonesia raised its seven-day repo rate by another 25 basis points to six percent on Thursday, the government announced on Friday that it had launched the 16^th economic package aimed at relaxing regulations pertaining to investment.

The package comprises three main points, namely the expansion of the tax holiday, the adjustment to the negative investment list (DNI) and the provision of tax incentives for the mandatory saving of export earnings in Indonesian bank accounts.

Coordinating Economic Minister Darmin Nasution argued that the economic package should not be seen as “pro-foreigner” and should instead be perceived as a means to enhance productivity.

The government noted Rp 14.4 trillion (US$985.23 million) worth of foreign capital entering Indonesia through government debt papers between January and November.

Darmin said it was a sign of confidence from foreign investors toward Indonesia despite the external situation going against the country, such as monetary tightening in the United States, which prompted investors to pull their money out of emerging markets and move it to the US.

Below are the economic stimulus measures:

New tax holiday

The new tax holiday in the 16th economic package expands the categories, duration and amount it applies to. A revision to Finance Ministerial Regulation (PMK) No. 35/2018 on the tax holiday will be issued, along with a new PMK to regulate a special tax holiday for smaller investments in special economic zones (SEZs).

The ministry’s undersecretary for macroeconomics and finance, Iskandar Simorangkir, said President Joko “Jokowi” Widodo had instructed his office and the Finance Ministry to issue the two regulations by next week.

Eighteen sectors were offered various tax holiday incentives, with the new sectors being the processing industry based on agriculture, plantations or forestry and the digital economy.

With the new regulation, investments worth between Rp 100 billion and Rp 500 billion can now benefit from a 50 percent income tax reduction for five years.

Investments worth between Rp 20 billion and Rp 100 billion in SEZs are also eligible for the same incentive, whereas investments over Rp 100 billion in SEZs can be fully exempted from income tax for between five and 20 years.

54 sectors now fully open to foreign capital

The new economic package revises the DNI by excluding 87 business sectors, thereby allowing them to benefit from partial or full investment from foreign investors.

Out of the 87 sectors, 54 are now fully open to foreign capital, such as offshore oil and gas drilling, clove and white cigarette production, certain categories of medical equipment production, dairy farming and fabric printing.

investment in the past few years, with the latest Coordinating Investment Board (BKPM) data showing a 1.4 percent quarterly decline of investment growth in the third quarter, following a 4.9 percent decline in the second quarter.

With the decline, the BKPM has revised down this year’s investment target to Rp 730 trillion from Rp 765 trillion.

The ministry’s special staffer, Edy Putra Irawady, reassured that the revision of the DNI would not suppress opportunities for domestic investors, particularly those from small and medium enterprises (SMEs).

He also emphasized that the removal of the sectors from the DNI was based on the discretion of each ministry responsible for them, hence it would be up to each ministry to explain the benefits of allowing foreign investment in the sectors.

Similar to the new tax holiday, Jokowi mandated the administration to issue a new regulation pertaining to the DNI adjustment approximately a week after the economic package was launched.

Incentives for export earnings (DHE)

The third incentive prepared in the 16^th economic package is to provide final income tax cuts for exporters who deposit their earnings (DHE) in designated bank accounts in order to provide liquidity to the domestic financial system.

The regulation stipulates that export earnings from mining, plantation, forestry and fishery sectors be deposited with domestic lenders who are authorized to conduct foreign exchange transactions or in branches of foreign lenders in Indonesia.

The ministry’s special staffer on economic and political relations, law and security, Elen Setiadi, said a zero percent final income tax cut would be provided to exporters who deposit at least 90 percent of their earnings for more than six months, both in the form of US dollars or rupiah.

Various tax rates will also be applied to earnings deposited for less than six months, such as a 7.5 percent final income tax for US dollars and 5 percent final income tax for rupiah earnings deposited for three months.

The designated accounts will also be able to serve as the exporters’ escrow account, meaning that they will be able to withdraw money from their accounts to pay routine bills or dividends and keep the rest of the funds under Bank Indonesia’s supervision.

The incentives and sanctions will be regulated through a PMK and BI regulation, which will be established 30 days at the latest after the economic package was launched, and will be implemented by Jan. 1 next year.

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This article has published at The Jakarta Post.com titled “Indonesia’s latest economic stimulus package: What you need to know”
http://www.thejakartapost.com/news/2018/11/17/indonesias-latest-economic-stimulus-package-what-you-need-to-know.html

27Sep, 2018

Jakarta Governor Anies Baswedan revokes reclamation project permits

Jakarta Bay reclamation. Photo: Antara / Aditya Pradana Putra

Jakarta Governor Anies Baswedan has voided principle permits to stop work on 13 man-made islands in the controversial Jakarta Bay land reclamation project.

Anies said that the decision on Wednesday was made after hearing a recommendation from the Northern Coast Management Coordinating Agency (BKP-Pantura).

“Based on the recommendation, we can assure you that we will stop the development of the 13 reclaimed islands,” Anies told reporters at City Hall, as reported on the administration’s website.

The governor was referring to islets A, B and E, which are being developed by PT Kapuk Naga Indah; islets I, J and K, developed by PT. Pembangunan Jaya Ancol; islet M, developed by PT. Manggal Krida Yudha; islets O and F, developed by PT Jakarta Propertindo; islets P and Q, developed by KEK Marunda Jakarta; islet H, developed by PT Taman Harapan Indah; and islet I, developed by PT Jaladri Kartika Pakci.

Anies added that the existing islets would be used for the benefit of the public, without specifying what that meant.

Anies claimed the developers, which have already obtained principle permits, had failed to follow the correct procedures, including with regard to submitting the design and Environmental Impact Analysis (Amdal) reports.

Source: The Jakarta Post

26Aug, 2018

Europe set to ban use of halogen light bulbs from Sept. 1

The European Union is set to ban the use of halogen bulbs and households are expected to switch to more energy-efficient lights, starting next month.

A continent-wide switchover to light-emitting diodes (known as LEDs) is underway that will slash emissions and energy bills, according to industry, campaigners and experts.

LEDs consume five times less energy than halogen bulbs and their phaseout will prevent more than 15 million tons of carbon emissions a year.

The new notification will enforce a ban on the production and import of globe and candle-shaped halogen bulbs. Manufacturers and shop owners will not be allowed to store, import or sell the classic-style halogen lights starting on Sept 1. However, it is not a total ban.

(read more: The Jakarta Post)

20Aug, 2018

America’s top brands sweat over next step in trade war

America’s corporate bosses could be excused if they don’t agree with President Donald Trump’s boasts that a trade war is “easy to win.” They can just reflect on the levers of pain China pulled against South Korean-owned businesses last year to imagine a state-nudged boycott against Starbucks or shutdown of Nike’s factories.

China vows to retaliate against all U.S. tariffs but hasn’t announced a response to Trump’s proposal to put duties on another $200 billion in Chinese imports next month. Since that’s more than the value of all U.S. exports to China, the Asian nation will need more than tit-for-tat tariffs to punch back.

If China employs a similar strategy to the one used when its neighbor installed a missile defense system — shuttering stores and factories owned by South Korean companies and stoking boycotts — a slew of U.S. brands could pay dearly. That’s because China is both an essential supplier and also the biggest growth market for many U.S. companies.

Nike

Just last year, China showed that it wasn’t afraid to poke Nike when a program on state-run television criticized it for false advertising. That’s troubling for the world’s largest sports brand because consistent growth in China stabilized Nike Inc. when it struggled to fend off competition in the U.S. Revenue in China surged 21 percent in the past year to $5.13 billion, growing to 14 percent of Nike’s total sales. Meanwhile, revenue in North America declined about 2 percent. And China is a major supplier, too, producing about one-fifth of its goods.

Starbucks

The coffee chain counts the U.S. and China as its two key markets. Last year, China was “a standout,” posting 7 percent same-store sales growth, Chief Executive Officer Kevin Johnson said. Starbucks Corp. expects strength to continue with an accelerated expansion plan that will add 600 stores a year to hit 6,000 by 2022. But there are already signs of weakness in the country, with sales at existing stores declining 2 percent last quarter.

Starbucks is also more exposed than other U.S. restaurant chains because it owns most of its stores in the country, rather than selling franchise rights. But that may also shield it from a backlash because it’s seen as a good employer and founder Howard Schultz travels to the region often for public events.

(Read more: Bloomberg)

16Aug, 2018

New Zealand to ban foreign home buyers – except Australians and Singaporeans

New Zealand’s Parliament passed a law on Wednesday (Aug 15) to ban many non-resident foreigners from buying existing homes, completing the Labour-led government’s election campaign pledge.

The ban only applies to non-residents. Australians and Singaporeans are exempted because of free-trade deals.

Jacinda Ardern, New Zealand’s popular 38-year-old prime minister, campaigned before last September’s election on a promise to clamp down on house price growth and reduce high rates of homelessness, in part by banning foreign buyers.

(read more: The Straits Times)

2Aug, 2018

China vows it won’t back down after Trump’s latest tariff threat

Commerce Secretary Wilbur Ross signaled there’s more pain ahead unless China changes its economic system, as the Asian nation repeated it will never surrender to U.S. trade threats.

“We have to create a situation where it’s more painful for them to continue their bad practices than it is to reform,” Ross said in an interview on Fox Business Network on Thursday. The U.S. will keep turning up the pressure on China for as long as the country refuses to level the economic playing field, said Ross.

“The reason for the tariffs to begin with was to try and convince the Chinese to modify their behavior. Instead they have been retaliating. So the president now feels that it’s potentially time to put more pressure on, in order to modify their behavior,” he said.

President Donald Trump fanned tensions by ordering his trade office to considering imposing a 25 percent duty on $200 billion worth of Chinese goods, up from an initial 10 percent rate. The move for a higher tariff, which was announced Wednesday, is intended to bring China back to the negotiating table for talks over U.S. demands that China make structural changes to its economy and narrow the U.S. trade deficit. The negotiations broke down last month.

(read more: Bloomberg)

1Aug, 2018

Steel imports in Indonesia will be limited, good news for issuers in the steel sector

The government is attempting to withstand the potential for domestic imports due to the effects of trade wars, including imported steel products. One way is to apply non tariff barriers.

The entry of imported steel products will certainly affect the performance of metal issuers such as PT Krakatau Steel Tbk (KRAS), PT Gunawan Dianjaya Steel Tbk (GDST), PT Beton Jaya Manunggal Tbk (BTON) and PT Saranacentral Bajatama Tbk (BAJA).

Binaartha Parama Securities analyst Muhammad Nafan Aji Gusta said the non-tariff policy of the barrier to be issued by the government aims to protect domestic industrial products. “Because our export level is less than imported, this policy is automatically required by the government to anticipate no deficit on the trade balance,” he said on Tuesday.

Nafan said that as goods such as steel, commodities, food and electronics could be produced domestically, policies to reduce imports needed to be done. “Provided that local entrepreneurs are able to maintain the quality of their products so as to compete in the domestic market,” he explained.

Regarding shares of steel companies, Nafan recommends buying KRAS shares with long-term price target at Rp 755 per share. Tuesday (31/7), KRAS share price recorded Rp 410 per share or down 10.87% from the previous day.

He also recommends buying BTON shares. “As long as price movements stay above the 252 level, we can buy short-to-medium term targets at Rp 344 per share,” Nafan said. BTON share price on Tuesday (31/7), up 2.16% to the level of Rp 284 per share

As for BAJA and GDST, Nafan recommends wait and see because technically the stock movement is still not good.

KRAS Marketing Director Purwono Widodo said the non-tariff barriers policy plan to reduce imports will be a positive sentiment for KRAS. “This will greatly assist KRAS as it will reduce the steel imports indicated by circumvention such as alloy steel from China,” he explained, Tuesday (31/7).

Purwono said, so far there is an increase in steel imports with cheap prices in the form of alloy steel indicated circumvention resulting in unfair trade or damage to domestic market prices.

Prevention can not be in the usual way because they use the loopholes of existing rules. “Well, if there is a government policy aimed at preventing or reducing the imports would certainly help KRAS and the domestic steel industry,” he added.

According to him, the impact of this policy will make the volume of steel imports sold KRAS will be reduced and expected steel prices in the domestic market will return to normal. “Yes, if the import of cheap alloy steel is reduced, then KRAS can maximize the utilization of steel production capacity in the country,” said Purwono.

(Source: Kontan)

3Jul, 2018

Bank Indonesia Home Monetary Leeway Helps Growth?

Bank Indonesia (BI) predicts a relaxation loan to value (LTV) policy can contribute 0.04% to gross domestic product (GDP) until the end of the year. Meanwhile, the government is targeting for 2018 economic growth to reach 5.4%.

“This LTV leeway can contribute as much as 0.04% to GDP,” said Assistant Governor Head of Makroprudential Policies Department Filianingsih Hendarta to the media when found in the BI Building, Jakarta, Monday (2/7/2018).

Furthermore, Filianingsih also mentioned, until December 2018, with this LTV relaxation, BI estimates mortgage growth will be 13.46% -14%, from 12.75% position in May 2018. As for the overall credit growth, until the end of the year BI is still optimistic in the figure of 10% -12%.

Previously, BI has relaxed the terms of down payment of home ownership loans through LTV relaxation. This policy will be effective as of 1st of August 2018.

One of the central bank policies set forth in the regulation, is the freedom of banks to determine the minimum amount of down payment to be paid for home ownership, so as to allow zero percent cost for the first buyer without excluding any amount of land or building.

“We are giving the first time buyer, not DP zero percent,” said BI Deputy Governor Erwin Rijanto, Friday (29/6/2018).

Source: CNBC Indonesia

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