February 9, 2016 edition
The rupiah continues to perform better than expected, hovering steady just below Rp14,000 per US dollar. The rupiah and US dollar interest rate movements, which a month ago moved in opposite directions, has yet to adversely impact the rupiah. In fact, there is enough confidence that if inflation, at its current 4.1 percent level, can be maintained, it could lead to the possibility of a second 25 basis point cut in Bank Indonesia's benchmark interest rate.
But the stock market's Jakarta Composite Index (JCI) is underperforming, dropping to 4,500 for the last six months. The bond market, though, is doing better, attracting both local and foreign investors. The question is how sustainable is this trend? Some are pointing to the negative interest rates in Japan and the low yields of other global currencies. The argument is that the resulting interest differential, between these currencies and the rupiah, is wide enough to cover the rupiah exchange rate volatility. This is why maintaining a stable rupiah becomes critical.
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More Economy articles in other editions
February 2, 2016 edition
The sight of an empty livestock pen aboard the Camara Nusantara I caused ripples of panic in the agriculture ministry last December. Ten government agencies and state and region-owned enterprises gathered at the agriculture ministry in Ragunan, South Jakarta, early in January to discuss what to do.
Since December 11, the vessel, owned by the Indonesia National Sailing Company (Pelni), has been unable to transport cattle, with breeders and traders bristling at the government's benchmark price of Rp35,000 per kilogram of live cattle.
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January 26, 2016 edition
Friday two weeks ago was a busy day for Iswandi Said. As the head of the state-owned Hotel Indonesia Natour, he met with a number of people to discuss the company's business. One of them was the Supreme Audit Agency (BPK).
"I was summoned to their office to discuss audit results," said Iswandi in his office last Thursday. His entire team of directors and commissioners accompanied him to meet with BPK member Achsanul Qosasi and a team of auditors.
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January 19, 2016 edition
Hari Sugiandhi must pay twice for cargo loading and unloading at Soekarno-Hatta Airport in Cengkareng. The owner of Rush Cargo Nusantara freight company first has to pay when his goods are inspected by regulated agents on Line 2, a spot with no security at Soekarno-Hatta, and then once again when they are re-examined in a sterile area on Line 1.
"This ruling has caused unloading costs to go up four times. Twice with the official rates, and twice more in tips," he said Friday. For each loading and unloading activity, he is charged Rp125-250 per kilogram. He delivers 1-2 tons of goods per day.
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January 5, 2016 edition
Happy 2016. We all need a moment of prayer when facing tough challenges. Indonesia, especially, a country whose economic health depends very much on commodity prices, continues to remain soft.
One key factor determining our economy's 2016 destiny is China. When its economy grows, there is hope that commodity prices will move in sync. In turn, the trickle effects from rising commodity exports should help lift Indonesia up.
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December 29, 2015 edition
A few hours after President Joko Widodo stated his support for app-based transportation services on Friday two weeks ago, Cabinet Secretary Pramono Anung immediately distributed meeting invitations to several stakeholders. One of those invited was Agus Pambagio, a member of the Transportation Sector Balanced Public Policy Committee at the Ministry of Transportation. "I was asked to attend a focus group discussion about online motorcycle taxi services at his office," said Agus on Tuesday last week.
The meeting was held on the fourth floor of the Cabinet Secretariat building and attended by representatives from the transportation ministry, the coordinating ministry for the economy, the coordinating ministry for maritime affairs, the National Development Planning Agency (Bappenas) and the Organization of Land Transportation Owners (Organda). Go-Jek CEO Nadiem Makarim was also present to represent app-based transportation executives.
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December 22, 2015 edition