This Week's Headlines (27 Aug - 2 Sep 2022)

02 Sep 2022

This Week's Headlines


  House approves membership of RCEP regional trade deal 

  Indonesia’s House of Representatives on Tuesday passed a law cementing the country's
  membership in the Regional Comprehensive Economic Partnership (RCEP), making it the latest
  Southeast Asian nation to join the world's biggest trade bloc.  


  Lawmakers also ratified a bilateral trade pact with South Korea, hoping to attract investment
  to develop the electric vehicle and batteries industry in the Southeast Asian country.  


  Trade Minister Zulkifli Hasan said the RCEP would boost trade, direct investment and increase
  the country's GDP growth by 0.07 percentage point.  


  "We describe this agreement as a toll way to enter the global market, and it is time for
  Indonesia to storm the international markets," he told lawmakers.  


  The RCEP, which is seen as an alternative to the US-led Comprehensive and Progressive
  Agreement for Trans-Pacific Partnership (CPTPP), covers nearly a third of the world's
  population and about 30 percent of its gross domestic product. It was initially agreed by
  leaders of 15 Asia-Pacific countries in November 2020.  


  The pact, which does not include the United States, entered into force on Jan. 1 this year after
  seven nations in Southeast Asia, and Australia, China, Japan, and New Zealand ratified the pact
  last year. 


  Under the agreement with South Korea, Jakarta and Seoul will eliminate more than 92 percent
  and 95 percent of tariff lines respectively. Indonesia will give preferential tariffs to support
  Korean investment in areas ranging from automobiles to apparel, Indonesia's Trade Ministry
  said in a statement following the deal signing in 2020.  


  South Korean companies such as Hyundai Motor Group and LG Energy Solution are currently
  among top investors in the electric vehicle and battery industry in Indonesia as it looks to take
  advantage of its rich nickel reserves. 

  Source: The Jakarta Post 




  Indonesia inflation eases in Aug, but pressure seen from
  fuel price hike

  Indonesia's inflation rate eased more than expected in August, official data showed on
  Thursday, but economists said the rate is set to accelerate and more interest rate increases
  are likely amid expectation of a fuel price hike. 


  President Joko Widodo has been considering raising subsidized fuel prices to curb ballooning
  energy subsidies amid high global oil prices and a depreciating rupiah. 


  A drop in some food prices saw Indonesia's inflation ease to 4.69% in August from 4.94% a
  month prior, data by Statistics Indonesia showed. A Reuters poll had expected a rate of 4.90%
  in August. 


  But the annual core inflation rate, which excludes government-controlled prices and volatile
  food prices, accelerated to 3.04% in August, the highest since Nov. 2019, from 2.86% in July. 


  The August rate was roughly in line with the 3% forecast in the poll. 


  Bank Indonesia (BI) is targeting inflation at between 2% to 4% for 2022 and 2023, a range
  Governor Perry Warjiyo has said was likely to be exceeded this and next year. 


  BI raised its benchmark policy rate by 25 basis points (bps) last month for the first time since
  2018, in a move some economists believe was taken in anticipation of a fuel price hike. 


  Statistics Indonesia head, Margo Yuwono, said a fuel price hike could substantially increase
  price pressure as it would affect prices of other goods and services too. 


  Bank Mandiri's Faisal Rachman said inflation could be heading to 6% this year assuming a 30%
  increase in the price of subsidised gasoline, compared with a forecast of 4.60% without a price


  "We see that BI still has space to hike (the benchmark rate) by up to 50 bps in the rest of 2022,"
  he said. 


  Bank Danamon economist Irman Faiz said producers were also under pressure to raise prices
  at consumer level due to rising costs. He expects a total of 75 bps rate hike by BI in the
  remainder of 2022. 


  BI's next policy meeting is on Sept. 21 and 22. 


  Authorities have not given a time frame for when a fuel price hike would happen. The president
  on Thursday told media the government was still carefully calculating the impact of any
  price hike. 


  Lawmakers told Reuters last week the government was considering a 30% to 40% increase in
  subsidized fuel prices. 


  Source: Reuters 




  G20 climate talks in Indonesia end without joint communique 


  Group of 20 climate talks in Bali ended without a joint communique Wednesday despite host
  Indonesia warning the world's leading economies they must act together to combat a warming
  planet or risk plunging into "uncharted territory". 


  The one-day meeting on the resort island concluded with Indonesia's environment chief saying
  G20 chair Jakarta would only issue a summary of the forum's aims, reflecting divisions between
  its members over how to tackle climate change. 


  The failure to agree a unified statement came at the end of a month in which more than 1,000
  people died in Pakistan from flooding blamed on climate change and after a drought
  exacerbated by a record heatwave spread across half of China. 


  At a closing press conference, Indonesian Minister of Environment and Forestry Siti Nurbaya
  Bakar said the summary would detail the forum's "shared commitment and shared steps". 


  It is a similar move to that seen in finance talks in Indonesia last month where the host -- which
  maintains a neutral foreign policy -- issued a chair statement after ministers disagreed over
  Russia's responsibility for global economic turmoil in light of its invasion of Ukraine. 


  "We cannot say that," Bakar told AFP when asked if there was no communique because of
  geopolitical disagreements. 


  "But the chair summary is something we can achieve given the geopolitical issues and (given)
  some countries cannot be flexible on certain issues. 


  "Just like in many working groups, issues on Russia and Ukraine have become geopolitical


  Another source close to the meeting said G20 members "did not manage to reach a joint
  communique" and most countries started their speeches by condemning Russia's invasion of
  Ukraine, though there were no walkouts or clashes when the Russian representative spoke. 


  "The reason that killed the communique from the start is the presence of Russia today," the
  source told AFP. 


  Moscow only sent a deputy minister for economic development to the talks, according to a list
  of attendees seen by AFP. 


  In her opening remarks Bakar had told delegates that "global environmental problems require
  global solutions" and nations "cannot solve those global environmental problems on our own". 


  Countries around the world are being increasingly hit by record heat, flash floods and droughts
  -- phenomena that scientists say will become more frequent and intense due to
  climate change. 


  'Hostile actors' 


  Research published this month showed the Arctic has warmed nearly four times faster than
  the rest of the planet over the last 40 years, suggesting climate models and governments
  are underestimating the rate of polar heating. 


  "We cannot hide from the fact that the world is facing increasingly compounding challenges,"
  Bakar said, referencing energy price spikes and global food shortages. 


  "We know that climate change could become an amplifier and multiplier of the crises." 


  She added that climate change "would not only wipe out all development progress that has
  been achieved over past decades, particularly in emerging economies, but it would also propel
  us over an environmental tipping point into uncharted territory where no future will be


  At the meeting were US Special Presidential Envoy for Climate John Kerry, Britain's climate
  minister Alok Sharma and officials from India, Australia, Italy, Brazil, Japan, South Korea and
  the European Union among others. 


  China –- the world's biggest emitter of greenhouse gases –- only sent a vice minister of
  ecology and environment, with higher-level officials staying home because of the Covid-19

  The meeting was a prelude to a November leaders' summit which Indonesian President Joko
  Widodo has said Russian counterpart Vladimir Putin will attend despite Moscow's isolation
  after invading Ukraine. 

  Britain said the Russian military assault had exacerbated energy problems, with Sharma
  arguing it showed "the vulnerability of countries relying on fossil fuels controlled by hostile

  Climate security had become synonymous with energy security, he said. 


  The United Nations' next climate change talks will take place in Sharm el-Sheikh, Egypt in


  Source: AFP