Indonesia Economic Policies
and Prospect 2015
Luncheon Meeting of Dutch Business Community
Gran Melia
February 26th, 2015
Economic Condition
*Macroeconomic vulnerability
*Economic growth is lowering
*Low international competitiveness
*Twin deficit
*Uncertainty of international
economic conditions
Inflation Rate, 2014 – 2015* (YoY, %)
30
9
8
25
6.96
20
7
(%)
5
15
4
10
3
2
5
1
0
0
Core Inflation
* = January 2015
Source : BPS;CEIC (2015)
Administered Inflation
Volatile Inflation
Energy Inflation
Inflation (RHS)
Inflation (%)
6
Indonesia Exchange Rate and Indonesia Composite Index
October 2014 – February 2015*
13000
5500
12800
5400
5300
5200
12400
5100
12200
5000
12000
4900
11800
4800
11600
4700
11400
4600
IDR PER USD (LHS)
* = 20 February 2015
IDX (RHS)
IDX (RHS)
IDR PER USD (LHS)
12600
International Reserve, 2011 – 2015*
(in USD Million)
140000
114,249.520
120000
(USD million)
100000
80000
60000
40000
20000
0
International Reserve
* = January 2015
Source : BI;CEIC (2015)
Growth Rate of GDP by Expenditure, 2011 – 2014
Base Year 2010 (YoY, %)
30
7
25
6
20
15
(%)
4
10
3
5
2
0
1
-5
-10
Consumption Expenditure: Household
Consumption Expenditure: Non-Profit Institutions Servings Households
Consumption Expenditure: Government
Gross Fixed Capital Formation
Export of Goods and Services
Imports of Goods and Services
GDP Growth (RHS)
Source : BPS; CEIC (2015)
0
GDP GROWTH RATE (%)
5
Growth Rate of GDP by Industrial Origin, 2011-2014
Base Year 2010 (YoY, %)
20
15
(%)
10
5
0
Agriculture, Forestry and Fisheries
Mining & Quarrying
Manufacturing Industry
Electricity & Gas Supply
Water Supply, Sewerage, Waste & Recycling Management
Construction
Wholesales and Retail Trade, Repair of Motor Vehicles and Motorcycles
Transportation & Storage
Accommodation & Food Beverages Activity
Information & Communication
Financial & Insurance Activity
Real Estate
Business Services
Public Administration, Defense & Compulsory Social Security
Education Services
Human Health & Social Work Activity
Other Services
-5
Source : BPS;CEIC (2015)
No
Economy
Ease of Doing Business Rank*
Global Competitiveness Index Rank**
1
Singapore
1
2
2
Malaysia
18
20
3
Thailand
26
31
4
Brunei Darussalam
101
N/A
5
Vietnam
78
68
6
The Philippines
95
52
7
Indonesia
114
34
8
Cambodia
135
95
9
Lao PDR
148
93
10
Myanmar
177
134
Notes:
* rank out of 189 countries
** rank out of 144 countries
Source: Doing Business Report 2015; World Competitiveness Index, 2014 -2015 (2015); World Economic
Forum 2015
Investment Realization, 2011 - 2014
YEAR
03/2011
06/2011
09/2011
12/2011
03/2012
06/2012
09/2012
12/2012
03/2013
06/2013
09/2013
12/2013
03/2014
06/2014
09/2014
12/2014
Unit
250
511
318
397
363
416
303
706
434
641
439
615
437
477
507
971
DOMESTIC
Value (IDR billion)
14,066.16
18,947.38
18,964.77
24,022.39
19,701.94
20,772.45
25,208.33
26,499.30
27,497.55
33,127.95
33,487.07
34,037.99
34,621.10
38,182.79
41,574.35
41,748.03
Unit
902
1,456
1,236
1,300
1,454
1,499
1,233
2,286
2,013
2,834
2,175
2,590
2,642
3,267
2,374
4,349
FOREIGN
Value (USD Million)
4,395.71
4,784.33
5,164.58
5,129.90
5,727.08
6,238.84
6,286.08
6,312.67
7,048.22
7,172.52
6,981.99
7,414.79
6,856.15
7,431.59
7,457.36
6,784.55
Source : Indonesia Investment Coordinating Board;CEIC (2015)
20000
15000
15000
10000
5000
5000
0
0
-5000
-5000
-10000
-15000
-10000
CURRENT ACCOUT (LHS)
CAPITAL AND FINANCIAL ACCOUNT (LHS)
NET ERROR AND OMISSIONS (LHS)
Source: Bank Indonesia;CEIC (2015)
Macroeconomic Dashboard | FEB UGM
BOP (RHS)
USD MILLION
USD MILLION
10000
Number and Percentage of Poor People
March 2011 – September 2014
YEAR
Number of Poor People
(million people)
(%)
Mar-11
30.12
12.49
Sep-11
30.01
12.36
Mar-12
29.25
11.96
Sep-12
28.71
11.66
Mar-13
28.17
11.36
Sep-13
28.60
11.46
Mar-14
28.28
11.25
Sept - 14
Source : BPS;CEIC (2015)
27.72
10.96
Gini Index
0.41
0.41
0.413
N/A
National Medium‐Term
Development Plan
(RPJMN) 2015 - 2019
I. Human development
II.Improving international
competitiveness and national
productivity
III.Economic self reliance
Some Important Program
 Primary students receiving benefits through Indonesia
Smart Card = 15,380,582 (2015)
 Secondary students receiving benefits through Indonesia
Smart Card = 3,856,476 (2015)
 College students receiving BIDIK-MISI scholarship =
269,905 (2015)
 Percentage of social security health membership =
minimum 95% (2019)
Source : RPJMN 2015 - 2019
II. IMPROVING INTERNATIONAL COMPETITIVENESS
AND NATIONAL PRODUCTIVITY
Some Important Policies
 Building toll road : Trans-Sumatera, Samarinda-Balikpapan,
Trans – Java, Manado-Bitung (2015-2019)
 Construction of dry port facility in a high economic growth
area (Kendal and Paciran) (2015-2019)
 Railway construction :Trans Kalimantan, Sulawesi, and
Papua, Trans Sumatra railway (2015-2019)
 Development of fixed / wire line broadband, including in
the area of the state border (2015-2019)
Source : RPJMN 2015 - 2019
II. IMPROVING INTERNATIONAL
COMPETITIVENESS AND NATIONAL
PRODUCTIVITY
Building mass transportation
 Construction
rapid mass transportation on rail based, e.g
MRT in Jabodetabek region, and monorail / Tram in
Surabaya, Bandung and Palembang (2015-2019)
 Development 10 urban rail
in the metropolis: Batam,
Medan, Palembang, Jakarta, Bandung, Semarang,
Yogyakarta, Surabaya, Denpasar, and Makassar (2015-2019)
 Development 34 bus rapid transit in major cities, such as
Medan, Pekanbaru, Batam, Padang, Palembang, Bandung,
Jakarta, Bogor, Semarang, Yogyakarta, Solo, Pontianak,
Samarinda, Balikpapan, Makassar, Gorontalo, and Ambon
(2015-2019)
Source : RPJMN 2015 - 2019
II. IMPROVING INTERNATIONAL
COMPETITIVENESS AND NATIONAL
PRODUCTIVITY
Build housing and residential areas
public houses for 900,000 households (2015-2019)
rental flats for 550,000 households (2015-2019)
providing self help mortgages for 450,000 households (2015-2019)
construction special house in the border areas, post-disaster and postconflict to 50,000 households (2015-2019)
encourage self-reliance and the business community in the provision of
adequate housing for 2.2 million households to support the decline in
housing shortages (2015-2019)
improving the quality of the house uninhabitable for 1.5 million
households, including in the framework of the handling of a slum area
(2015-2019)
Source : RPJMN 2015 - 2019
II. IMPROVING INTERNATIONAL
COMPETITIVENESS AND NATIONAL
PRODUCTIVITY
Strengthening Investment
 Indonesia investment coordinating board officially launched the One Stop
Service (OSS) Center, building online monitoring service (2015)
 investment licenses process = 15 days (2019)
 Starting a business procedure = 7 days and 5 procedures (2019)
 Increased investment growth/gross fixed capital formation = 12.1% (2019)
 Increased domestic and foreign investment to IDR 933 trillion in 2019
with the contribution of domestic investment, which increased to 38.9%.
Table : Estimated Investment, 2015 - 2019
2015 2016 2017 2018 2019
Foreign and Domestic Investment
Realization (IDR Trillion)
519.5 594.8
678.8
792.5 933.0
Domestic investment ratio against total
investment realization (%)
Source : RPJMN 2015 - 2019
33.8
36.3
37.6
35.0
38.9
II. IMPROVING INTERNATIONAL
COMPETITIVENESS AND NATIONAL
PRODUCTIVITY
Encourage SOEs to be agent development
Increased innovation capacity and technology
building 100 Techno Park in the district / city, and the
Science Park in every province
Improving the competitiveness of labor
 Improving the quality and skills of workers by increasing
the proportion of the workforce that is competent and
recognized nationally and internationally
 Increased competitiveness of labor market efficiency at
the international level;
 increasing number of formal workers from 40.5% in 2014 to
51% in 2019
Table : Target Growth Industry, 2015 - 2019
INDICATOR
2015
GDP Growth of
Manufacturing
(%)
Share (%)
2016
2017
2018 2019
6.0
6.9
7.5
8.1
8.6
20.8
21.0
21.1
21.3
21.6
Source : RPJMN 2015 - 2019
II. IMPROVING INTERNATIONAL COMPETITIVENESS AND
NATIONAL PRODUCTIVITY
Developing National Trade Capacity
reduce logistics costs to GDP ratio by
5.0% per year
Dwelling time = 3 – 4 days (2019)
Build / revitalization 5000 local
market
Increase the share of manufacturing
exports amounted to 65% (2019)
Source : RPJMN 2015 - 2019
Table : Target of Domestic Trade and Efficiency of
National Logistics Systems, 2015 - 2019
INDICATOR
2015
2016 2017 2018 2019
Average ratio of logistics
costs to GDP (%)
Average dwelling time
(days)
Real GDP growth in
subcategories of
wholesale and retail
trade
23.6
22.4
21.3
20.2
19.2
5-6
4-5
4-5
3-4
3-4
5.0
7.0
7.6
7.7
8.2
Development /
revitalization of the
local markets
1000
1000
1000
1000
1000
Source : RPJMN 2015 - 2019
Some Important Policies
 Building irrigation network services 1
million hectares (2015 - 2019)
 Rehabilitation 3 million ha of
irrigation (2015 - 2019)
 Building 49 dams (2015 - 2019)
Source : RPJMN 2015 - 2019
Increasing energy sovereignty
 Electricfication ratio 96.6% by building power
plant with capacity of 35000 watt (2019)
 Construction of an oil refinery with a total
capacity of 300 thousand barrels per day (2015 –
2019)
 Building floating storage regasification unit = 7
unit (2015 – 2019)
Source : RPJMN 2015 - 2019
Developing maritime and marine economic
Developing 24 deep sea port (2015 – 2019)
Strengthening the financial sector
 Development and implementation of the
Agricultural Insurance Program
Establishment of Agriculture and Maritime
Bank, also Bank Infrastructure
Strengthening the state’s fiscal capacity
 Reducing energy subsidies so that ratio of energy
subsidies fell from 1.3% of GDP in 2015 to 0.6% of
GDP in 2019
 Capital expenditure rose from 2.4 % of GDP in 2015
to 3.9% in 2019
 Ratio of government debt below 30% of GDP and are
expected to continue to decline to 20% of GDP in
2019
 Budget deficit below 3% of GDP and in 2019 the
budget deficit achieved 1% of GDP.
Source : RPJMN 2015 - 2019
*Construction of railway lines including the new
double track (265 km)
*Preservation of roads (31.838 km) and bridges
(337.31 km)
*Enhance capacity/road widening (2.471 km)
*Construction of flyover/underpass (1.21km)
*Construction of new roads (240.94 km)
*Construction of new bridges (11.71 km)
*Construction of crossing pier in 59 locations
*Bus rapid transit (BRT) in 16 major cities
*Wastewater infrastructure in 764 region
*Urban drainage infrastructure in 53 districts / cities
*Integrated waste processing infrastructure in 127
regions
Source : RAPBN-P 2015, Ministry of Finance (2015)
350
300
IDR Trillion
250
200
150
290.3
100
50
86
114.2
145
159.9
2012
2013
177.9
189.7
0
2010
2011
Source : Ministry of Finance (2015)
APBN-P 2014 APBN 2015 APBN-P2015
State Capital
Participation
APBN-P
2014
APBN
2015
RAPBN-P
2015
APBN-P
2015
(in Trillion Rupiah)
SOE
3.0
5.1
72.97
64.88
Organizations/International
Financial Institutions
0.72
0.43
0.24
0.25
Other
1.53
1.77
1.77
5.23
5.03
7.31
74.93
70.37
Total
Source: APBN-P 2014, APBN 2015, RAPBN-P2015, APBN-P 2015, Ministry of
Finance (2015)
*Subsidy Expenditure (energy + non
energy) in APBN 2015 = IDR 414.68 Trillion
*Subsidy Expenditure (energy + non
energy) in APBN-P 2015 = IDR 212.10
Trillion
*Fiscal Space from saving energy and non
energy subsidy = IDR 202.58 Trillion
Source : APBN 2015 and APBN-P 2015; calculated
*Tax Revenue in APBN 2015 = IDR 1,379.99
Trillion
*Tax Revenue in APBN-P 2015 = IDR
1,489.25 Trillion
*Fiscal Space = IDR 109.26 Trillion
Source : APBN 2015 and APBN-P 2015; calculated
TOTAL FISCAL SPACE = SAVING ENERGY AND NON
ENERGY SUBSIDY + INCREASED IN TAX REVENUE
TOTAL FISCAL SPACE (2015)
= IDR 202.58 Trillion + IDR 109.26 Trillion
= IDR 311.84 Trillion
Source : APBN 2015 and APBN-P 2015; calculated
MACROECONOMIC ASSUMPTION
INDICATOR
APBN-P 2015 RAPBN-P 2015 APBN-2015 APBN-P 2014
Economic Growth (%)
5.7
5.8
5.8
5.5
Inflation (%)
5.0
5.0
4.4
5.3
Exchange Rate (IDR/USD)
12500
12200
11900
11600
3-month SBI/SPN (%)
6.2
6.2
6.0
6.0
Indonesian Crude Oil Price (USD/Barrel)
60.0
70.0
105
105
Oil Lifting (thousand Barrel/Day)
825.0
849.0
900.0
818.0
Gas Lifting (million Barrel/Day)
1,221.0
1,177.0
1,248.0
1,224.0
Source : DIRECTORATE GENERAL OF BUDGET;CEIC (2015)
• OSS combines the investment permission process of 21
ministries/institutions which delegate their authority to issue
business permits and assign their officer to serve the licensing
processes for investors
• In total, there are 134 licenses of 1.249 fields to be processed
in OSS-BKPM, covering 5 business sectors (electricity,
industry, industrial zones, tourism and agricultural sectors),
but excluding the upstream oil and gas and financial sectors.
• Investors can also carry out the licensing application process
and monitor the progress of applications by online
(https://spmdashboard.bkpm.go.id/Tracking/tracking_en.zul)
• The establishment of OSS has cut the time of investment
licensing process from about 930 days to less than 6 months
Source : BKPM, Cabinet Secretariat, Jakarta Post
Indonesian economy
will be develop
better dan growing
faster in 2015.