Note: We apologize that due to unexpected circumstances, we did not have a summary for 22-28 February.
Summarized by Agnes Samosir.
- Trade deficit reaches $171 million in January. The Central Board of Statistics (BPS) reported trade deficit in January posted $171 million as imports consistently outperformed exports. Head of BPS, Suryamin, highlighted crude oil import as the main contributor to the deficit, confirming imbalances between country’s domestic demand and production output for oil. Economist Lana Soelistyaningsih of Samuel Securities highlighted consumption driven economic growth in Indonesia as the reason behind high import while global economic slowdown led to low export performance. She added the country will still experience the deficit until global economy is recovering (source: Kontan newspaper, 7/3/2013)
- Government regulation on social security will be reviewed. The House of Representatives will task a special committee to review Government Regulation No.11/2012 on monthly premium for health insurance under the National Social Security scheme (SJSN). Lawmakers are in view the regulation failed to clearly define the criteria for low-income individuals eligible for the monthly premium provided by the Social Security Providers (BPJS). The new regulation only provides vague criteria that people whose income insufficient to pay premium are eligible for monthly premium payment by the BPJS. To the lawmakers, the criteria should be clearer such as BPJS will only cover premium for people whose income lower than the current minimum wage (source: The Jakarta Post, 5/11/2013)
- Indonesian middle class will reach 141 million by 2020. Global management consulting firm the Boston Consulting Group is projecting the Indonesian middle class — which currently stands at 74 million — may reach 141 million people in 2020. Vaishali Rastogi, BCG partner and managing director, told a press conference in Jakarta that the country’s middle class would almost double to 141 million by 2020 and added that the nation’s buying power would also rise rapidly. The consumption trends will also shift from essentials to products that offer facilities and comforts, such as longer lasting household appliances, electronics, cars and financial services. BCG as a result is projecting that in 2020, middle class spending will be much higher, with each family spending at least Rp 2 million for its monthly household needs. It is good news since the Indonesian economy is based on strong domestic consumption and a rising middle class will lead to a stronger and more stable economy (source: Jakarta Globe online, 6/3/2013). [Note: readers might be interested in how BCG defines "middle class". The following is taken from their website (registration might be required): "The Indonesian population expenditure model developed by BCG’s Center for Consumer and Customer Insight (CCCI) starts with a baseline and forecast of urban and rural population through 2020 across seven islands, 33 provinces, 99 cities (kota), and 398 regencies (kabupaten). We then break down these populations into seven segments by monthly household spending in key categories, including food, utilities, household supplies, communication, and transportation, and we exclude discretionary items such as entertainment, installments (that is, debt with structured, regular payments), and durable goods. The seven segments are as follows: poor (less than IDR 1 million in monthly spending on regular items), aspirant (IDR 1 million to less than IDR 1.5 million), emerging middle (IDR 1.5 million to less than IDR 2 million), middle (IDR 2 million to less than IDR 3 million), upper middle (IDR 3 million to less than IDR 5 million), affluent (IDR 5 million to less than IDR 7.5 million), and elite (IDR 7.5 million and more). We define MACs as those in the four highest of the seven levels: middle, upper middle, affluent, and elite."].
- BI rate maintained at 5.75%. In the Board of Governors’ Meeting convened on March 7th, Bank Indonesia decided to keep the BI-Rate at 5.75%. The current policy rate is considered consistent with inflation target range of 3.5%-5.5% in 2013 and 2014. Going forward, Bank Indonesia will monitor the inflation, mainly inflation that comes from volatile foods. The central bank is confident that with the strengthening of monetary and macroprudential policy mix, as well as solid coordination with the Government, the inflation target will be achieved. Also, Bank Indonesia reiterated that it will maintain the stability of the rupiah, which has been under pressure since last year because of the country’s trade and current account deficits (source: Jakarta Globe online, 7/3/2013)