November 17, 2015 edition
It is only a month before the closing of company books for 2015. In retrospect, it has been quite a dismal year. In January, there were high expectations, being the start of President Jokowi's first year in office. But by the year-end, the results were disappointingly far below expectations. This year's economic growth is expected to reach only 4.8-5.0 percent, in contrast to the 6.0 percent target set by the new administration. The Rupiah and the Jakarta Composite Index (JCI), which began the year, respectively at Rp12,500 per US$ and 5,200 points, dropped considerably, settling at Rp13,600 per US$ and 4,500 points by year-end. With sluggish economic growth, businesses have been forced to adjust downward this year's revenue targets. Along with the decline in sales, companies have been busy cutting costs, which at times hurt employment. Unfortunately, the cost cuts are rarely able to match the drop in revenue. As a result, profits have narrowed across the board.
The follow-up question is whether our economy has reached its lowest point and that by next year it should start to recover? In various economic seminars towards year-end, numerous experts are facing difficulty in assessing next year's outlook. Even the optimistic scenario predicts this year's sluggishness will extend till the first half of the year and the recovery to take place only after mid-year. The problem, they argue, is that the level of volatility or uncertainty remains high.
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More Economy articles in other editions
November 10, 2015 edition
It is pivotal for a hotel chain to understand the market. This is why Garth Simmons, appointed as chief operating officer (COO) for Accor Hotels in Malaysia, Indonesia and Singapore five months ago, tries hard to understand the culture and the industry of the region he is currently in charge of. This is especially the case with Indonesia, where there is more room for the company to grow.
The French company continues to expand, despite the current global economic slowdown. Last month, Accor opened its 100th hotel, the Novotel in Makassar, South Sulawesi.
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November 3, 2015 edition
President Jokowi's announcement that Indonesia will join the US-led 12-nation Trans Pacific Partnership (TPP) free trade zone is causing quite a stir. The previous administration's efforts to join the ASEAN Economic Community (AEC), which opens up trade, investment and people flow among ASEAN member states, attracted considerable stiff resistance. This time the stakes are higher, as it puts the country even further on a market-opening path. The issue is that in joining the TPP, as with the AEC, requires significant support from key political, government and business stakeholders to be effective and show results.
This support is critical when changes need to be done by member countries to fulfill TPP's tough terms and when the results will only be felt over a period of time. Not properly addressing these fears and doubts could undermine the initiative and, in a worst case scenario, could even reverse the gradual opening of Indonesia's economic doors.
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October 27, 2015 edition
Last Monday, the market sighed with relief when the latest economic data on China came to light. For the third quarter this year, the Chinese Bureau of Statistics announced an economic growth rate of 6.9 percent, slightly above analysts' prediction of 6.7 percent. The Chinese government also claimed that the 2015 growth target of 7 percent was not beyond reach.
Regrettably, this optimism didn't last long. In fact, many analysts have come to doubt China's numbers. Since this August's 1.9 percent yuan devaluation, they believed that China's weakening economy was actually worse than the official data suggested. On top of this, market anxiety was growing, after renowned investment bank Goldman Sachs declared that shockwaves from the third global crisis were upon us.
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October 20, 2015 edition
In his October 2014 inaugural speech, President Joko Widodo said, "In order to build Indonesia into a great nation, prosperous and peaceful, we need the spirit and courage to face the waves." His words were intended to jumpstart a shift in the country's political and economic agenda. The follow-through on that vision has focused on building ports and developing Indonesia's fishing industries. But what of the wealth of vegetation from the sea?
Seaweed, once dehydrated and pulverized, appears in many forms in modern life: in facial cream, as meat tenderizer, in the laboratory as agar-growing media, in medical capsules, in paper, in plywood and even as lubricant on oil drilling platforms. Furthermore, the entry price to this seaweed bonanza is not high. With just a pile of seaweed cuttings, some recycled plastic bottles and a fishing line, anyone along Indonesia's nearly 55,000-kilometer-long coastline can enter the business.
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October 13, 2015 edition
MULADNO Bashar hurriedly summoned his staff to discuss a new plan: He needed to travel to India, he told them, to find new cattle suppliers.
The sense of urgency came from having watched President Joko Widodo complain, live on TV, about the soaring price of beef. "The president seemed upset. How was it that cattle imports had been reduced and now the price of beef was rising? Wouldn't it be possible to source beef elsewhere and get lower prices?" Muladno told Tempo when contacted last Thursday.
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October 6, 2015 edition