MONEY MASTER

  Key Takeaways: The  Jakarta Composite Index dropped up to 1.8% , while the  rupiah slid 1% against the USD , the worst performer among emerging peers. Respected former Finance Minister Sri Mulyani Indrawati’s exit  raises investor fears of weaker fiscal discipline under President Prabowo’s administration. Foreign investors sold US$845M in September , amid protests and political uncertainty. New Finance Minister  Purbaya Yudhi Sadewa vows to keep fiscal deficit below 3% of GDP , but credibility remains to be built. Market Reaction: Sharp Selloff Across Assets Indonesian assets tumbled on Tuesday following the removal of long-time Finance Minister Sri Mulyani Indrawati. The Jakarta Composite Index lost as much as 1.8%, led by banking stocks such as Bank Rakyat Indonesia (-2.3%) and Bank Central Asia (-2.3%). Government bonds also sold off, with the  5-year yield climbing 11bps to 5.87%  and the  10-year up 5bps to 6.44% . The rupiah slumped 1% aga...

New Trade Era Begins! Indonesia has agreed to eliminate  tariffs on over 99% of US goods  and remove  all non-tariff barriers , giving American businesses—from farmers to automakers— unprecedented market access . In return , the US will reduce tariffs on Indonesian imports to  19% (from 32%) , aligning with deals recently reached with the Philippines and Vietnam. 🔍 What’s in the Deal:  No tariffs on  internet data flows  Indonesia to accept  US vehicle safety standards  Pre-shipment inspections on US agri goods  removed Export restrictions lifted on  industrial & critical minerals Local content rules for exports to US  scrapped  Easier entry for  remanufactured US goods Indonesia to join  Global Forum on Steel Excess Capacity Why it matters : With Indonesia's growing population (280 million+) and economic power, this deal is set to  reshape Southeast Asia–US trade , boost US exports, and  strengthe...

US President Donald Trump has reached a  tariff agreement with Indonesia , lowering proposed duties from 32% to  19% on Indonesian exports to the US. In return, US goods will  not face any Indonesian tariffs , and the US will gain  full market access . This deal is the  first successful renegotiation  following a wave of “tariff letters” sent by the White House earlier this month to multiple countries, ahead of an  Aug 1 deadline  for sweeping new duties. Indonesia’s Commitments US$15 billion  in US energy imports US$4.5 billion  in US agricultural goods 50 Boeing aircraft purchases , many of them widebody 777s Trump’s Statement “They are paying 19%, and we are not paying anything. We are going to have full access to Indonesia.” Trump added that  any transshipments  from higher-tariff countries through Indonesia will  incur additional duties , effectively closing a potential loophole. Market Reactions Boeing Co (BA.US) : S...

Indonesia is bracing for global trade disruptions  caused by  US President Donald Trump’s aggressive tariff policies , seeking to  diversify its markets and protect local industries  amid rising protectionism. 🌏 Indonesia’s Strategy: Expand Markets, Protect Local Trade 🔹  Indonesia aims to leverage the US-China tariff war  by expanding its market share if Chinese goods face higher US tariffs. 🔹  The country is also reinforcing local industries , particularly the  textile sector , which has been hit by  cheap imports and illegal shipments . 🔹  New trade agreements are in the works  to secure alternative markets, with  Peru, Canada, the EU, and India  on the priority list. 💬  Deputy Trade Minister Dyah Roro Esti Widya Putri: "We do not want to act too hastily on import regulations, but we will ensure policies are in Indonesia’s best interest." 🚨 Trump’s Tariffs: A Wake-Up Call for Global Trade 📌  Trump’s new...

Key Takeaway: Indonesia is considering reviving its tax amnesty program in 2025 to increase state revenue and broaden the tax base , amid economic challenges. Indonesia’s parliament has added a Tax Amnesty Law revision to its list of priority bills for 2025, signaling that the government may roll out its third tax amnesty as early as next year. This move comes as President Prabowo Subianto’s administration seeks to tackle weakening commodity prices and prepare for massive spending plans . Key Developments: Tax Amnesty Discussions in 2025 Lawmakers will revisit the Tax Amnesty Law during technical discussions with the government, aiming to follow up on previous programs that ended in 2017 and 2022 . According to Mukhamad Misbakhun, chairman of parliament’s finance commission, the revised law could take effect next year. Revenue Challenges Ahead Weaker commodity prices threaten to reduce tax receipts, increasing pressure on the government to find alternative revenue streams . Ind...

Indonesia affirmed that it does not recognize China's claims over the South China Sea , even after signing a maritime development agreement with Beijing. This stance comes as analysts warn that the deal could potentially compromise Indonesia’s sovereign rights . Despite China’s historical claims based on the disputed "nine-dash line," Indonesia’s Foreign Ministry reiterated that Indonesia is a non-claimant state with no overlapping jurisdiction in the South China Sea. The ministry emphasized that the agreement focuses on fisheries and conservation in the North Natuna Sea and does not affect sovereignty or sovereign rights . The joint statement from Indonesian President Prabowo Subianto’s recent visit to Beijing noted a "common understanding" on joint development, which some Indonesian experts argue could imply acknowledgment of overlapping claims and risk compromising Indonesia's exclusive economic zone (EEZ) rights.

China and Indonesia have agreed to significantly enhance cooperation in several key sectors, including lithium , new energy vehicles (NEVs) , green energy , and tourism . This development follows a meeting between Chinese President Xi Jinping and Indonesian President Prabowo Subianto , who is currently on a visit to China, marking the first country he has visited since assuming office last month. President Prabowo, who won the Indonesian presidential election in February, chose China as his first destination as president-elect, underscoring Indonesia's strong commitment to deepening its strategic ties with Beijing. Key Agreements and Cooperation According to a joint statement released on Saturday (Nov 9) , both nations have outlined a framework for collaboration in areas crucial for future global development. The two countries aim to boost their partnership in new energy vehicles , lithium batteries , and photovoltaic energy (solar power) , while also capitalizing on opportunit...

Indonesia’s economy grew 4.95% in the third quarter, missing the projected 5% growth, as factory closures and job losses dampened consumption and investment. This slowdown comes as newly inaugurated President Prabowo Subianto aims to ramp up growth to as high as 8% during his term. Key Factors Affecting Growth: Manufacturing Sector Decline : Labour-intensive industries like apparel and footwear are facing a significant drop in overseas demand, leading to factory shutdowns and increased debt distress among major players, including Sritex and Pan Brothers. Rising Unemployment : Job cuts surged 31% year-on-year by October, reaching nearly 60,000 as manufacturing activity contracted for the fourth consecutive month. Middle-Class Setback : About 9.5 million Indonesians have dropped out of the middle class since the pandemic, weakening a crucial driver of domestic consumption, which comprises more than half of Indonesia’s GDP. Government Response To support the economy, the government has: E...

Indonesia , the world's largest palm oil producer, saw its palm oil product exports rise by 15% year-on-year in August to 2.38 million metric tonnes , according to data from the Indonesian Palm Oil Association (Gapki) . This growth contributed to lowering the country’s end-August stockpile to 2.45 million tonnes , the lowest since March 2019. Despite the increase in exports, palm oil production has been affected by dry weather last year, leading to a projected 5% decline in output for 2024. Gapki estimates the total production of crude palm oil this year to be 51 million tonnes . Domestic palm oil consumption is set to rise further as Indonesia plans to implement a 40% biodiesel mix (B40) in diesel starting in January, an increase from the current 35% mix . This initiative is expected to boost domestic palm oil usage by an additional two million tonnes annually. Agriculture Minister Andi Amran Sulaiman reaffirmed the government's commitment to the B40 policy, which is...

In Jakarta, Indonesia’s government has initiated a free school lunch program as part of President-elect Prabowo Subianto’s strategy to combat malnutrition and boost educational outcomes. The program, which aims to address high stunting rates and improve economic growth , is expected to cost $30 billion annually , equivalent to 14% of Indonesia’s 2024 budget and more than double the country's yearly health expenditure. Prabowo’s ambitious plan aims to raise Indonesia's economic growth to 8% , with a focus on improving soft infrastructure , contrasting with former President Joko Widodo’s focus on physical infrastructure projects like roads and railways. The government hopes to fund the program through a tax system overhaul , with plans to double the country’s tax revenue ratio from its current 10%. However, economists and investors have expressed concerns about the program's financial sustainability and risks of waste and corruption . Critics point to India's free l...

Three of Southeast Asia’s largest economies — Indonesia , the Philippines , and Thailand — are set to announce their monetary policy decisions today, as they contend with politics, inflation, currency volatility , and geopolitical risks . Each central bank faces unique pressures, but the general consensus is that rate hikes are off the table, with policymakers expected to either hold or cut rates . Indonesia Bank Indonesia is widely expected to hold its benchmark rate at 6% , according to a Bloomberg survey of 41 economists. In September, Indonesia surprised markets with an early rate cut as part of an easing cycle, but recent rupiah weakness — down over 2% this month — may prompt a more cautious approach. With low inflation and subdued consumption, the case for further rate cuts remains, though foreign exchange reserves could provide support through market intervention to stabilize the rupiah. Philippines The Bangko Sentral ng Pilipinas (BSP) is poised to cut its target reverse...

  Indonesia has requested that Apple and Google block Temu , a Chinese fast fashion e-commerce platform, from their app stores to protect small and medium-sized businesses in the country, according to communications minister Budi Arie Setiadi . The move is aimed at pre-empting unhealthy competition from Temu , which offers cheap products by connecting consumers directly with factories in China, despite authorities not yet finding transactions involving Indonesian residents. Temu, owned by PDD Holdings , has faced scrutiny in several countries due to its low-cost business model. Indonesia's decision aligns with its previous move to force TikTok to close its e-commerce service in the country to protect local merchants and users' data. The government is also considering a similar block for Shein , another Chinese e-commerce platform. Indonesia’s e-commerce industry is growing rapidly and is expected to reach US$160 billion by 2030.

Indonesia has officially requested to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as part of its efforts to expand export markets and reform its economy, according to Coordinating Minister for Economic Affairs Airlangga Hartarto . The formal request was submitted to New Zealand , the CPTPP's depositary, marking a strategic move to enhance market access and attract more investment . "This is a decision we take to structurally reform our economy and open up market access for Indonesia's economy," Airlangga stated. Indonesia had previously announced its intention to join the trade agreement, which currently includes 12 member countries such as Australia, Japan, Canada, and the UK . The move has received backing from President-elect Prabowo Subianto , who will assume office on October 20, succeeding President Joko Widodo. By joining the CPTPP, Indonesia hopes to integrate more deeply into global trade networks, taking advantag...

Indonesia's central bank unexpectedly reduced its key interest rate for the first time in over three years, lowering the BI-Rate by a quarter-point to 6% . This surprise move, which was anticipated by only 10 of 36 economists in a Bloomberg News survey, marks a pivot toward supporting the country’s economic growth as the Federal Reserve gears up for its own policy changes. Governor Perry Warjiyo emphasized the need to act now, stating, "The time is right" for Bank Indonesia (BI) to step in and boost growth. Warjiyo added that this decision will help Southeast Asia's largest economy achieve higher growth , especially as the central bank anticipates further rate cuts by the Federal Reserve . The rupiah , which rallied nearly 7% this quarter, is trading close to its strongest level against the US dollar in a year, giving BI more flexibility to act sooner. The bank expects the Fed to cut rates by 25 basis points three times this year and another four times in 2025, con...

Indonesia and Britain signed a Memorandum of Understanding (MoU) on Wednesday, establishing a collaboration on critical minerals , further positioning both countries as key players in the global supply chain. The agreement aims to enhance policy dialogue, share technical expertise, and focus on areas like supply chain resilience , sustainable mineral processing , and addressing mineral criticality , according to a statement from the UK's embassy in Jakarta. Britain’s development minister, Anneliese Dodds, emphasized the significance of this partnership, saying it marks an important step for both countries in strengthening their roles within the critical minerals supply chain . Dodds signed the agreement with Indonesia’s energy minister, solidifying the collaborative efforts. Indonesia, renowned for its vast mineral resources including tin, copper, and bauxite, also holds the title of the world’s largest source of nickel ore , a key component in electric vehicle battery manufacturin...

Indonesia, the world's largest palm oil exporter, plans to reduce export levy rates on palm oil to enhance its competitiveness against other vegetable oils like soybean and sunflower oil. The move aims to attract major buyers such as India and China and improve small farmers' income, a government official said on Wednesday. Key Highlights: Restoring Price Competitiveness : Palm oil, traditionally the cheapest among vegetable oils, has lost its price advantage in recent months due to ample supply, making it less attractive to buyers. By lowering the export levy, Indonesia hopes to restore palm oil’s competitive pricing and improve the welfare of small farmers, who often face lower prices due to higher export taxes. Current and Proposed Changes to Levy Structure : Under the existing rules, Indonesia imposes a levy ranging from $55 to $240 per metric ton for crude palm oil exports, depending on global prices. The levy is charged on top of a separate export tax. The new plan involv...

Global investors are increasingly focusing on Indonesia and Malaysia, betting that these markets will benefit more than other developing nations as the Federal Reserve looks set to ease monetary policy. These two Southeast Asian markets are becoming attractive due to sound fiscal policies and a focus on new technology sectors, such as electric vehicles and data centers, which are drawing in more funds. Key Highlights: Increased Inflows to Indonesia and Malaysia : Indonesia, Malaysia, and the Philippines were the only countries in Asia to see net overseas inflows into stocks in August. Foreign investors bought $1.8 billion of Indonesian shares, the highest since April 2022, helping the Jakarta Stock Exchange Composite Index reach record highs. Foreign buying of Malaysian stocks reached $491 million by August 29, the highest since March 2022. Attractive Factors : Indonesia : The potential easing of monetary policy, fiscal discipline, and its role in the global electric vehicle and batter...

President-elect Prabowo Subianto is banking on his free school meal program to unlock Indonesia’s growth potential, taking cues from large Asian countries that have implemented similar initiatives with varying degrees of success. Key Highlights: Program Details: Prabowo’s campaign includes providing 15,000 rupiah (US$1 or RM4.28) worth of free lunches to schoolchildren. The goal is to lower stunting rates and improve academic performance. He has studied similar programs in China and India. Inspiration from China and India: India’s school feeding program showed an 18% improvement in reading scores and a 9% increase in math scores after five years. China’s four yuan (RM2.56) lunch subsidy helped improve children’s average heights and weights in poorer areas. Potential Benefits: The program aims to boost productivity, crucial for Indonesia to achieve high-income status before its population ages. Free lunches can attract more children, especially girls, to school, enhancing learning and h...

Indonesia has adjusted its 2025 budget deficit projections, indicating a smaller shortfall than previously estimated. This update provides key insights for those interested in global markets and the economy. Key Updates: Budget Deficit Adjustments: New Target Range: The 2025 budget deficit is now projected to be between 2.29% and 2.82% of GDP, lower than the previous lower estimate of 2.45%. Revenue Strategies: Indonesia plans to boost state revenues by expanding the tax base and optimizing fiscal incentives. Additionally, streamlining energy subsidies will free up more funds. Economic Impact: Investor Confidence: Keeping the deficit below the legal limit of 3% of GDP aims to reassure investors, particularly as President-elect Prabowo Subianto prepares to implement new initiatives, such as a US$4.3 billion free meal project. Debt Ratio Target: Lawmakers approved a target debt ratio of 37.82%-38.71% of GDP for 2025, improving from roughly 39% this year. This move indicates a commitm...

Introduction Indonesia is on the verge of implementing significant tariffs and other protective measures against textile imports from China. This move comes as part of a broader strategy to safeguard its domestic textile industry from the flood of inexpensive Chinese goods, which have been harming local businesses. As Southeast Asia's largest economy, Indonesia faces the delicate task of protecting its industries while maintaining vital trade relations with China. The Catalyst: Local Industry Concerns The local textile sector has raised alarms about the surge in imports, prompting associations to call for government intervention. The dramatic influx of cheap textiles has threatened the viability of Indonesian textile manufacturers, leading to increased pressure on the government to act decisively. Government's Protective Measures The Indonesian Trade Safeguards Committee is currently investigating the situation. According to Budi Santoso, Director-General of Foreign Trade, the ...