April 26, 2016 edition

Central banks are impotent and out of ammunition. There is much talk about this ridicule among economists, seeing central bankers' futile efforts to recover optimism and economic growth. No less than Mervyn King, former Bank of England governor, had to admit that sense of powerlessness in his new book The End of Alchemy.
King's confession carries some truth. Various central banks, like those in Europe and Japan, have deployed a myriad of policies-from quantitative easing, which is basically printing money to buy government bonds, to squeezing the interest rates to a negative level. And still, the economy refuses to rise from its stupor.

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More Economy articles in other editions

April 19, 2016 edition

Early this year, after the lowering of Bank Indonesia's interest rate to 6.75 percent, the rupiah surprisingly strengthened to Rp13,100 per US dollar level from Rp14,000 in December last year. Incoming foreign portfolio funds have helped this trend as it bought our government bonds. This is not surprising, given the 7 percent interest on our government bonds, compared to near zero rates in advanced market bonds. Inflation at home has also been kept at 4.45 percent and the current account deficit at 2 percent of GDP. Still, market players have doubts whether this positive trend will last.
This is because business activity remains weak. For the first few months this year, auto and motorcycle sales have not shown any significant improvement. With exports still sluggish and consumer spending low, the sole driver of economic growth now is government spending. But with tax revenue still below target, there are doubts whether this can be relied on.

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April 12, 2016 edition

Eleven ships owned by Arabikatama Khatulistiwa Fishing Industry (AKFI) sat tied to a dock in Ambon City, Maluku, on Saturday two weeks ago. For more than a year, those ships have sat idle, unable to return to sea. A shortage in raw materials has caused the nearby fish processing factory to discontinue operation as well.
According to Deki and Poli, two security guards working for AKFI, the ships stopped operating following a ban by Marine Affairs and Fisheries Minister Susi Pudjiastuti on cargo transshipment. In response, companies' integrated work system went haywire. The system includes the capture, cold storage, processing and transportation of fish.

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April 5, 2016 edition

The heated debate pitting two powerful ministries on whether the LNG (liquified natural gas) plant of the US$15 billion Masela offshore gas project should be built offshore as a floating LNG facility or built onshore several hundred kilometers away on either Aru or Tanimbar island has finally subsided. Recently, President Jokowi finally decided to side with Coordinating Maritime Minister Rizal Ramli, who argued for an onshore LNG plant as it would have a broader 'multiplier' impact on the region's local economy.
In contrast, the mines and energy ministry agreed with the two project sponsors, INPEX from Japan (with 65 percent interest) and Shell from the Netherlands (with 35 percent), an offshore, floating LNG plant built right next to the gas field would be more cost- and time-efficient. They argued that an offshore option would not require building either a 600- or a 200-kilometer-long pipeline across Indonesia's eastern Arafura sea, depending on which island is chosen. Also, it does not require costly and time consuming land clearings and permits to build an onshore facility.

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March 29, 2016 edition

A verification meeting at the Central Jakarta Commercial Court last Tuesday morning did not provide the relief Said Reza Pahlevy was hoping for.
Said, Pertamina Patra Niaga's director of administration and finance, said he was feeling dejected as negotiations on the postponement of debt payments by Asmin Koalindo Tuhup were not going according to plan.

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March 22, 2016 edition

In June, the United Kingdom (UK) will hold a referendum on whether to stay in or leave the European Union (EU). A few years ago, it was Greece that faced the same dilemma. Although there are different reasons behind these two countries wanting to leave the EU, one underlying similarity is the loss of a degree of sovereignty.
Some 10,000 kilometers away, the Association of Southeast Asian Nations (ASEAN) has just launched its ASEAN Economic Community (AEC) and, in its early inception, is already struggling to make itself relevant, both internally to its member states as well as to the external world.

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March 15, 2016 edition

DWIMAWAN Heru Santoso had hardly a moment to breathe last week. As Jasa Marga's assistant vice president of corporate communication, he was put in charge of preparing meetings ahead of the the rollout of a new e-toll card. "The last of these meetings will be held tomorrow," he told Tempo last week.
Located at the entrance to the Jatiasih Toll Road in Bekasi, Jalantol Lingkarluar Jakarta, a subsidiary of Jasa Marga, is set to launch its Combined State Banks E-Toll (Himbara) card this Monday. The card is the result of a memorandum of understanding (MoU) signed between Jasa Marga and four state-owned banks on August 31 last year: Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), and Bank Tabungan Negara.

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