By Maarten-Jan Bakkum, ING Investment Management
Few emerging economies have been under so much pressure lately as Indonesia. Since 2011, the terms of trade of the country have deteriorated sharply. This came as a result of the Chinese slowdown and the drop in coal, palm oil and rubber prices. After having enjoyed ten years of rising commodity prices, the Indonesian economy is now suffering from price declines of its main export products.
This has pushed local incomes down, with a negative impact on consumption and bank deposit growth. And it has led to a sharp correction in fixed investment growth, because of uncertain commodity demand and tighter financial conditions, partly linked to the widening current account deficit. Read more
Japanese fast food lovers: Indonesian yakitori and chicken nuggets may be coming to a table near you soon as Southeast Asia’s biggest economy tries to take advantage of China’s latest food safety woes.
McDonald’s Japan stopped importing Chinese chicken in July, part of a broader backlash after a major Chinese supplier was accused of selling meat beyond its shelf-life. Read more
Around two-thirds of adult men smoke in Indonesia, one of the world’s largest and least regulated tobacco markets. The government in Jakarta has tried to introduce legislation to restrict advertising but the proposals have been watered down after industry lobbying. The FT’s Ben Bland talks to smokers, lobbyists and health campaigners about why smoking is still so popular.
Only 40 per cent of Indonesians have a bank account, but over 90 per cent have a mobile phone. For both entrepreneurs and multinationals, that represents a big opportunity. The FT’s Ben Bland visits rural West Java to see how mobile commerce is spreading.
Indonesia’s economy grew by an enviable 6.2 per cent in the third quarter, in line with market expectations. With benchmark rates at a record low and exports responsible for a far smaller portion of the economy than its neighbours, Indonesia appears to have cemented its place as an economy with a high resistance to global headwinds.
Though some had been expecting a little more, most analysts still seem confident that Indonesia will continue to chug along quite nicely. Read more
Promoting its recent World Tobacco Asia conference in Jakarta, UK-based organiser Quartz Business Media was unashamed, noting on its website that “Indonesia is a recognized tobacco-friendly market with no smoking bans or other restrictions and regulations in contrast to neighbouring Asean countries.”
With 61m smokers – that’s 67 per cent of all men and 5 per cent of women – and an average 20-pack costing just Rp12,700 ($1.32), Indonesia is the world’s fourth biggest cigarette market, in addition to being one of the least regulated. Read more
After restrictions on foreign banks, foreign mining companies and foreign fruit and vegetables, the latest protectionist push in Indonesia is focused on credit card payment systems.
Bank Indonesia, the central bank, and a number of major state-owned banks are trying to breathe new life into an old proposal to develop a national credit card payment system to break the dominance of MasterCard and Visa, as has been done in China with UnionPay. Read more