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Indonesia Economy Forum

Revenge spending has batik, beauty products flying off shelves in Indonesia​


While higher consumer prices are forcing households to plan fewer shopping trips, they are still spending on special items that they held off from buying during the pandemic. - Reuters

  • Thursday, 15 Dec 2022
    3:03 PM MYT

JAKARTA (Bloomberg): Revenge spending is trumping inflation as Indonesians snap up batik clothes, footwear, and cosmetics post-pandemic, according to one of the nation’s biggest department store operators.

Office and party wear - including the nation’s traditional batik attire typically used for formal occasions - are flying off the shelves as more Indonesians go out again, said PT Matahari Department Store Chief Executive Officer Terry O’Connor. Suitcases are also a hot item as travel restrictions ease.

While higher consumer prices are forcing households to plan fewer shopping trips and prioritise basics, they are still willing to spend extra on special items that they held off from buying during the pandemic.

"It gives you a sense of the mood of the public,” O’Connor said in an interview. "It’s a little bit tight in terms of spending power but when I do spend, I’m gonna make sure it’s something that I feel good about.”

That makes it a handy barometer for the health of South-East Asia’s biggest economy, where consumption accounts for over half of domestic output. Private spending in the nation with the world’s fourth-largest population proved resilient despite fuel price hikes, powering third-quarter growth to its fastest pace in more than a year.

The 10% minimum wage increase in January should help offset inflationary pressures that are likely to persist through early 2023. It will be a timely "shot in the arm” for consumers ahead of the Eid holiday season, which accounts for roughly a third of Matahari’s annual trading, O’Connor said.

"The key will be to open as many of our new stores before the holidays” in April.

"Once inflationary pressures subside - and I seriously think it will in 2023 - Indonesia will have its post-Covid time in the sun,” O’Connor said.



Indonesia's 2022 unaudited budget deficit at 2.38% of GDP -Finance Minister​

Economy 2 hours ago (Jan 03, 2023 04:50AM ET)


By Stefanno Sulaiman and Gayatri Suroyo

JAKARTA (Reuters) - Indonesia recorded a 464.3 trillion rupiah ($29.77 billion)fiscal deficit in 2022, or 2.38% of gross domestic product, based on unaudited data, Finance Minister Sri Mulyani Indrawati said on Tuesday, much smaller than originally forecast.

The government had initially planned for a budget deficit of 4.85% of GDP. Revenue collection, however, got a boost from higher commodity prices and the easing of COVID restrictions last year, prompting the government to revise down the deficit forecast several times.

The latest figure was below a forecast on Dec. 21, when President Joko Widodo said he expected a 2.49% deficit, and means fiscal consolidation has been faster than planned.

By law, the government has room to spend more, with a legal budget deficit ceiling of 3% of GDP waived for three years from 2020 to allow for a pandemic response.

Southeast Asia's largest economy likely grew 5.2% last year, Sri Mulyani told an online news conference. Economic growth in 2021 was 3.7% and the government is targetting a 5.3% GDP expansion this year.

Indonesia recorded 2,626.4 trillion rupiah of revenue last year, up 30.6% from 2021 and about 16% bigger than the target, the minister said.

The government spent 3,090.8 trillion rupiah, slightly below the planned amount and representing 11% growth from the previous year.

Of that, 551.2 trillion rupiah was spent to subsidise fuel prices and power tariffs. This was also below previous official estimate.

The government raised subsidised fuel prices by about 30% in September due to budget pressures stemming from high global energy prices. At the time, authorities said the fuel price hike would cut the energy subsidy budget by some 48 trillion rupiah, bringing the total estimated budget to 650 trillion rupiah.

Given the strong 2022 financial position, Sri Mulyani has said she would carry over any excess cash to reduce borrowing in 2023.

She did not disclose the amount of excess cash by the end of 2022, but reiterated a commitment to "optimise" the fund "to anticipate financing needs amid global economic uncertainties".

Indonesia expects a fiscal deficit of 2.84% of GDP in 2023.


Finance Minister Sri Mulyani takes a selfie with Chief Economic Minister Airlangga Hartarto, third left, Health Minister Budi Gunadi Sadikin, fourth left, Foreign Minister Retno Marsudi, center, and Industry Minister Agus Gumiwang, fourth left, in Jakarta on December 20, 2022. (Antara photo)

Indonesia Reports Much Smaller Deficit in 2022 Budget​


JANUARY 03, 2023

Jakarta. Indonesia’s 2022 budget has recorded a deficit of 2.38 percent of the gross domestic product against the projected 4.5 percent, Finance Minister Sri Mulyani Indrawati said on Tuesday.

The deficit amounts to Rp 464.3 trillion ($29.7 billion), representing a significant decline from the minus Rp 775.1 trillion in the 2021 budget.

"It’s a very significant decline of 40.1 percent when compared to the budget a year earlier, demonstrating our extraordinary consolidating measures,” Sri Mulyani told a news conference in Jakarta.

“Moreover, during the early stage of the [Covid-19] pandemic in 2020, we suffered a ballooning deficit of close to Rp 950 trillion," she added.

Overall state revenue jumped by 30.6 percent year-on-year to Rp 2,626 trillion ($168 billion), including Rp 2,034 trillion in tax, excise, and import duty revenues.
State spending totaled Rp 3,090.8 trillion in 2022, an increase of 10.9 percent from the figures the previous year.

Sri Mulyani said the country’s fiscal condition has greatly recovered from the suffering in 2020 when the deficit topped 6 percent of the GDP.

“The 2022 budget was initially designed to suffer a deficit of 4.85 percent before being revised down to 4.5 percent under a presidential decree. In reality, we managed to keep it even smaller,” she said.

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Moody's assigns Baa2 ratings to Indonesia's USD-denominated bonds​

04 Jan 2023


Singapore, January 04, 2023 -- Moody's Investors Service ("Moody's") has assigned Baa2 senior unsecured ratings to the USD-denominated bonds issued by the Government of Indonesia (Baa2 stable). The issuances have maturities of up to 30 years.

The proceeds of the notes will be used for general budgetary purposes.

According to the terms and conditions available to Moody's, the notes issued will constitute direct, unconditional and unsubordinated obligations of the Government of Indonesia (the issuer). The notes rank pari passu with all of the Government of Indonesia's current and future senior unsecured external debt.

The rating mirrors the Government of Indonesia's long-term issuer rating of Baa2 with a stable outlook.


Indonesia's Baa2 rating is underpinned by policy emphasis on macroeconomic stability that increases its resilience to shocks. The sovereign's credit profile is supported by its large economy, low fiscal deficit and debt burden relative to similarly-rated peers. Credit challenges include low revenue mobilization and consequently weak debt affordability, as well as a reliance on external funding.

Following the dent in economic growth on the back of the coronavirus pandemic, Moody's expects that GDP growth in Indonesia will return to a 5.0% average over the next few years, similar to pre-pandemic GDP rates. As with emerging markets globally, potential growth rates in Indonesia have steadily declined over the last decade, and now face additional pressures from economic scarring following the pandemic. Nevertheless, growth will be slightly above potential in the next 2-3 years and above the median for Baa-rated sovereigns, particularly given that the economy will be in a recovery phase with output gaps still prevalent, and buoyed by low base effects. In addition, Indonesia has benefited from the positive terms of trade shock on account of the higher prices for its commodity exports resulting from the Russia-Ukraine military conflict.

Sizeable non-resident investment in Indonesia exposes the country to swings in capital flows, which are amplified during episodes of global financial market stress. This has economy-wide effects, particularly for the fiscal and external accounts, but also for local businesses. Weaker corporate credit profiles due to higher debt servicing and roll-over costs may hurt banks' asset quality once pandemic-related forbearance measures are rolled back, although strong capitalization continues to provide ample buffers against unexpected losses.

The stable outlook reflects the expectation that reform implementation will continue at a steady, gradual pace. A key assumption behind the stable outlook is the restoration of pre-pandemic fiscal and monetary policies, particularly a cessation in the role of the central bank in financing fiscal spending, enabled by a recovery in growth and a consolidation in fiscal deficits, which appears to be underway. This predicates our underlying assessment of Indonesia's monetary and fiscal policy effectiveness. A delayed or a disorderly exit would weigh on overall policy credibility.


Indonesia's ESG Credit Impact Score is moderately negative (CIS-3), reflecting high exposure to environmental risks and moderate exposure to social risks, contained by institutional and economic resilience.

Indonesia's overall environmental issuer profile score is moderately negative (E-3 issuer profile score), driven by physical climate stresses. Coastal flooding and rising sea levels are a particular source of risk, with widespread implications, including for agricultural production, infrastructure and property, and food security. Waste and pollution are also a source of environmental risk. Demand for arable land and intensive commercial logging have led to soil erosion and deforestation. As a palm-oil and coal exporter, Indonesia is also modestly exposed to carbon transition risk.

Exposure to social risks is moderately negative (S-3 issuer profile score). Population growth and a declining dependency ratio are supportive of growth. However, wealth is concentrated and Indonesia's rankings on wealth and income inequality indices are weak. Spending on both health and education services are just below emerging market standards.

Governance is in line with other similarly-rated sovereigns and does not pose specific risks (G-2 issuer profile score). Our assessment of institutional framework includes issues related to rule of law and control of corruption. The government maintains a strong track record of effective fiscal and monetary policymaking.

This credit rating and any associated review or outlook has been assigned on an anticipated/subsequent basis. Please see the most recent credit rating announcement posted on the issuer's page on https://ratings.moodys.com, under the reports tab, for related economic statistics included in rating announcements published after June 3, 2013.

This credit rating and any associated review or outlook has been assigned on an anticipated/subsequent basis. Please see the most recent credit rating announcement posted on the issuer's page on https://ratings.moodys.com, under the reports tab, for related summary rating committee minutes included in rating announcements published after June 3, 2013.


Over time, indications that fiscal policy measures can durably and significantly raise government revenue would put upward pressure on the rating. Higher revenue would enhance fiscal flexibility and provide more direct financial means for the government to address large social and physical infrastructure spending needs. An upgrade would also likely result from indications that Indonesia's growth potential was strengthening toward rates commensurate with the country's population growth and income levels, including through a deepening of financial markets and improved competitiveness.

Downward pressure would likely arise from 1) weaker policy effectiveness or signs of diminishing policy credibility, potentially reflected in prolonged delays or backtracking on reforms that resulted in a persistent erosion in the revenue base and debt affordability, or which translated into a gradual loss of economic strength; 2) a significant deterioration in the external position, such as from prolonged currency depreciation or capital outflows, with ramifications for debt affordability and reserve adequacy; and 3) a prolonged, entrenched slowdown in growth that had economy-wide impacts and fiscal repercussions, including difficulty reverting to a declining fiscal deficit trajectory following one-time stimulus packages.

The principal methodology used in these ratings was Sovereigns published in November 2022 and available at https://ratings.moodys.com/api/rmc-documents/395819. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.


For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.

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Indonesia raises $3 bln in U.S. dollar bonds - term sheet​

SYDNEY, Jan 5 (Reuters) - Indonesia has raised $3 billion in a U.S. dollar bond issuance, according to a term sheet seen by Reuters on Thursday.

The government issued the bonds in five, 10 and 30 year tranches which raised $1 billion, $1.25 billion and $750 million respectively, the term sheet showed.

Indonesia's finance ministry debt department did not respond to a request for comment from Reuters.

There were final orders worth $3.6 billion for the five year bond, $4.7 billion for the 10 year and $6.15 billion for the longest dated tranche, details from one of the banks working on the deal showed.

Final yields were set at 4.8% for the five year, 5.1% for 10 years and 5.75% for the 30 year bond.

(Reporting by Scott Murdoch in Sydney and Gayatri Suroyo in Jakarta; Editing by Christopher Cushing)



Indonesia raises US$3bil in U.S. dollar bonds​


  • Thursday, 05 Jan 2023
    8:36 PM MYT

SYDNEY/JAKARTA: Indonesia has raised $3 billion in a U.S. dollar bond issuance, its first for the year in a transaction that drew in a total of $14.4 billion worth of orders, the government said on Thursday.

The Southeast Asian government issued the bonds in five-, 10- and 30-year tranches which raised $1 billion, $1.25 billion and $750 million respectively, the term sheet showed.

There were final orders worth $3.6 billion for the five-year bond, $4.7 billion for the 10 year and $6.15 billion for the longest dated tranche, details from one of the banks working on the deal showed.

The size of the order book showed "large investors' interest", which allowed Indonesia to tighten prices from its initial price guidance, it said in a statement.

Final yields were set at 4.8% for the five year, 5.1% for 10 year and 5.75% for the 30-year bond.

The proceeds will be used for general financing of the state budget.

Throughout the year, the government usually offers foreign investors bonds denominated in U.S. dollar, euro and Japanese yen. It is also a regular issuer of Islamic bonds. - Reuters


RCEP Agreement enters into force for Indonesia​

JAKARTA, 4 January 2023 – The Regional Comprehensive Economic Partnership (RCEP) Agreement entered into force for Indonesia on 2 January. The preferential tariffs under the agreement can now be utilised by the private sector who are exporting to and/or importing from Indonesia.

Additionally, the private sector can take advantage of the simplified rules of origin and trade facilitation in their business activities involving Indonesia.

In a release issued by the Indonesian Ministry of Trade, Minister of Trade Zulkifli Hasan said that the RCEP Agreement is expected to increase competitiveness and strengthen global production network, promote regional supply chain through better market access for exports of goods and services, reduce or eliminate trade barriers, and enhance transfer of technology.

“The entry into force of the RCEP Agreement on 2 January 2023 is timely to mark the beginning of Indonesia’s ASEAN Chairmanship in 2023. Indonesia has been the driving force in RCEP since the conceptualisation phase, and we hope more milestones, such as the establishment of the RCEP Support Unit, can be achieved during Indonesia’s ASEAN Chairmanship this year,” said Satvinder Singh, Deputy Secretary-General for the ASEAN Economic Community.

Indonesia is the largest economy in ASEAN and the fifth largest among the RCEP parties. Its economy grew by 3.7% in 2021 to US$1.186 trillion, making up 4% of the combined GDP of RCEP economies. The World Bank projected Indonesia’s economy to grow by 5.2% in 2022 and 4.8% in 2023.

The entry into force of the RCEP Agreement for Indonesia brings the full implementation of the RCEP Agreement one step closer to making ASEAN the hub of production networks within the region.

The RCEP Agreement was signed on 15 November 2020 by 15 countries including the 10 ASEAN Member States, Australia, China, Japan, Korea, and New Zealand.

Previously, the RCEP Agreement entered into force on 1 January 2022 for Brunei Darussalam, Cambodia, Lao PDR, Singapore, Thailand, Viet Nam, Australia, China, Japan, and New Zealand; on 1 February 2022 for Korea; and on 18 March 2022 for Malaysia.
KKSK meeting (Finance Minister, Central Bank, OJK)


Indonesia's forex reserves rise to $140.3 bln in February -c.bank​

JAKARTA, March 7 (Reuters) - Indonesia's foreign exchange reserves increased by about $900 million to $140.3 billion in February, partly due to the government's offshore loan withdrawal, the central bank said on Tuesday.

The reserves level was equal to funding needs for 6.2 months of imports, above international standards, and a level Bank Indonesia saw as adequate to support external resilience, it said in a statement.

(Reporting by Gayatri Suroyo; Editing by Martin Petty)

September 2022
1 minute read

October 7, 202210:21 AM GMT+7
Last Updated 5 months ago

Indonesia's forex reserves drop to $130.8 bln at end-September​


Indonesian President:Moving away from western payment systems is necessary

An official meeting of all ASEAN Finance Ministers and Central Bank Governors kicked off on Tuesday (March 28) in Indonesia. Top of the agenda are discussions to reduce dependence on the US Dollar, Euro, Yen, and British Pound from financial transactions and move to settlements in local currencies.

The meeting discussed efforts to reduce dependence on major currencies through the Local Currency Transaction (LCT) scheme. This is an extension of the previous Local Currency Settlement (LCS) scheme that has already begun to be implemented between ASEAN members.

This means that an ASEAN cross-border digital payment system would be expanded further and allow ASEAN states to use local currencies for trade. An agreement on such cooperation was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand in November 2022. This follows from Indonesia’s banking regulator, stating on March 27 that the Bank of Indonesia is preparing to phase out Visa and Mastercard while introducing its own domestic payment system.

Indonesian President Joko Widodo has urged regional administrations to start using credit cards issued by local banks and gradually stop using foreign payment systems. He argued that Indonesia needed to shield itself from geopolitical disruptions, citing the sanctions targeting Russia’s financial sector from the US, EU, and their allies over the conflict in Ukraine.

Moving away from Western payment systems is necessary to protect transactions from “possible geopolitical repercussions,” Widodo said.

Dodit Proboyakti, a board member of the Indonesian Credit Cards Association (AKKI), has reported in Russian media that Indonesia would apply the experience of Russia and its MIR payment system in promoting its own domestic financial network.

Of the ASEAN nations, just Singapore has enforced sanctions on Russia, while all other ASEAN nations continue to trade with the country. There has been alarm at being caught up in US-led secondary sanctions, as are short to impact Central and South Asia countries involved in cotton manufacturing, a major industry in the region employing millions of people.

A decision by ASEAN to disengage from the West’s currencies and especially the US dollar and Japanese Yen will put pressure on Tokyo especially as where its future trade alignments are – with the United States, or with Asia.

Foreign investors in Asia may wish to consider the amount of US dollars, Euros and Yen held in their accounts in light of a pending ASEAN currency trade decision. Professional discussions should be taken regarding any movement of company funds to alternative currencies.

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