This Week's Headlines (10 - 16 June 2023)

16 Jun 2023

Digital Economy
This Week's Headlines


  TikTok to invest billions of dollars in Southeast Asia to boost
 e-commerce business


  Short video app TikTok, owned by China's ByteDance, said on Thursday it would invest billions of
  dollars in Southeast Asia over the next few years, as it doubles down on the region amid
  intensifying global scrutiny over its data security. 


  Southeast Asia, a region with a collective population of 630 million - half of them under 30 - is one
  of TikTok's biggest markets in terms of user numbers, generating more than 325 million visitors to
  the app every month. 


  But the platform has yet to translate the large user base into a major e-commerce revenue source
  in the region as it faces fierce competition from bigger rivals of Sea's Shopee, Alibaba's Lazada
  and GoTo's Tokopedia. 


  "We're going to invest billions of dollars in Indonesia and Southeast Asia over the next few years,"
  TikTok CEO Shou Zi Chew said at a forum it organized in Jakarta to highlight the social and
  economic impact of the app in the region. 


  TikTok did not provide a detailed breakdown of the spending plan, but said it would invest in
  training, advertising and supporting small vendors looking to join its e-commerce platform TikTok


  Chew said content on its platform was becoming more diversified as it adds more users and
  expands beyond advertising into e-commerce, allowing consumers to purchase goods through
  links on the app during livestreaming. 


  TikTok has 8,000 employees in Southeast Asia, and 2 million small vendors selling their wares on
  its platform in Indonesia, the region's biggest economy, he added. 


  E-commerce transactions across the region reached nearly US$100 billion last year, with
  Indonesia accounting for $52 billion, according to data from consultancy Momentum Works. 


  TikTok facilitated $4.4 billion of transactions across Southeast Asia last year, up from $600 million
  in 2021, but it still trailed far behind Shopee's $48 billion of regional merchandise sales in 2022,
  Momentum Works said. 


  TikTok's investment plan comes as the Chinese-owned company faces scrutiny from some
  governments and regulators because of concerns that Beijing could use the app to harvest user
  data or advance its interests. 


  Countries including Britain and New Zealand have banned the app on government phones,
  moves TikTok said it believed were based on "fundamental misconceptions" and driven by
  wider geopolitics. 


  TikTok has repeatedly denied that it has ever shared data with the Chinese government and has
  said the company would not do so if asked. 


  The app has not faced major bans on government devices in Southeast Asia, but it has been
  under scrutiny over its content. 


  Indonesia presented one of its first major global policy challenges in 2018, after authorities
  briefly banned TikTok for posts they said contained "pornography, inappropriate content and


  In Vietnam, regulators said it would probe TikTok's operations in the country because "toxic"
  content on the platform poses a threat to its "youth, culture and tradition." 


  Source: Reuters




  Consumer confidence hits one-year high 


  Consumer confidence has reached its highest level in a year, and the upbeat mood is buoying
  retail sales, according to two new data reports from Bank Indonesia (BI). 


  The consumer confidence index (CCI) published by the central bank on Monday showed a reading
  of 128.3 for May, the highest level seen since May last year. 


  “Rising consumer confidence in May 2023 was boosted by the current economic conditions
  [subindex] and the consumer expectations [subindex],” wrote BI spokesperson Erwin Haryono in
  a press statement released on Monday. 


  Consumer confidence is partly based on people’s assessments about inflation and economic
  activity, both of which have been improving in the country. 


  As revealed last week, headline inflation, as measured by the consumer price index (CPI),
  dropped to 4 percent year-on-year (yoy) in May, the lowest level in 12 months, and down from
  4.33 percent logged in April. 


  CPI growth now sits exactly at the upper limit of BI's target range of 2 to 4 percent, beating the
  central bank’s own initial expectation of reaching that milestone only in the third quarter of this


  Indonesia’s economic activity, meanwhile, also outshone market estimates, as the country booked
  gross domestic product (GDP) growth of 5.03 percent yoy in the first quarter. That marked a
  marginal improvement over the preceding quarter and beat most other economies in the world. 


  Consumer confidence increased steadily over the past four months. While consumer confidence
  is generally correlated with retail sales, other factors can distort it. 


  Preliminary BI data released on Tuesday show that the retail sales index (RSI) contracted by 3.6
  percent to 234.2 points in May from April’s reading of 242.9, but that drop could be largely
  attributed to Ramadan, which led to a spike in retail spending in April. 


  At 234.2 points, the data for May still marks a marginal improvement over the past year and far
  surpasses the score of 215.3 retailers had registered in March, before the Islamic festive season. 


  “A sales performance decline occurred in all retail groups, […] in line with the normalization of
  consumer spending after the Ramadan and Idul Fitri period,” wrote Erwin in a statement released
  on Tuesday. 


  The April spike in retail sales, when turnover rose 12.8 percent month-to-month, had been
  pushed by increased spending on clothing and information and communication devices, as well
  as food, beverages and tobacco. 


  Spending in those same groups of goods contracted in May, according to the latest preliminary


  The respondents involved in the May retail survey predicted that inflation would ease in June and
  become “relatively stable” in October this year. Edwin attributed the drop in consumer price
  pressure to “the availability of supplies and the smooth distribution of goods”. 

  Source: The Jakarta Post 




  Indonesia's trade balance recorded slight surplus in May 2023: BPS 


  Indonesia experienced a slight trade surplus of US$0.44 billion (around Rp6.59 trillion) in May
  2023, indicating a surplus for 37 consecutive months since May 2020, according to Statistics
  Indonesia (BPS). 


  Mohamad Edy Mahmud, Deputy for Statistical Analysis at BPS, noted in a virtual press
  conference on Thursday that the surplus in May 2023 was lower compared to the achievement
  in April 2023, which reached US$3.94 billion. 


  The amount is also lower than the surplus of US$2.9 billion recorded in May 2022. 


  The trade of non-oil and gas commodities registered a surplus of US$2.26 billion. The biggest
  contributors to the surplus were mineral fuels, animal and vegetable fats and oils, as well as iron
  and steel. 


  Meanwhile, the trade of oil and gas commodities recorded a deficit of US$1.82 billion, with crude
  oil and oil derivative products contributing the most to the deficit. 


  During the period from January to May 2023, the oil and gas sector experienced a deficit of
  US$7.83 billion, while the non-oil and gas sector had a surplus of US$24.31 billion. 


  Hence, Indonesia’s trade balance experienced a surplus of US$16.48 billion in total during the
  first five months of 2023. 


  BPS also noted that Indonesia's export value in May 2023 had reached US$21.72 billion,
  increasing by 12.61 percent month-to-month. It also rose by 0.96 percent compared to
  May 2022. 


  Furthermore, Indonesia's import value had reached US$21.28 billion in May 2023, up by 38.65
  percent compared to the imports recorded in April 2023. Additionally, it increased by 14.35
  percent year-on-year. 


  "The value of the surplus in May 2023 is the lowest since May 2020 or in the last 37 months,"
  Mahmud stated. 


  The agency also noted that the top destinations for Indonesia’s non-oil and gas commodity
  exports were China, the United States, Japan, and India. 


  Meanwhile, Indonesia’s imports of non-oil and gas commodities mainly came from China, Japan,
  Thailand, and the United States. 


  Source: Antaranews