Indonesia Q1 GDP beats forecasts on consumer, govt spending

  Indonesia's economic growth held steady in the first quarter, as improving consumption and
  government spending offset a slowdown in exports and investment in Southeast Asia's largest
  economy. 

  Gross domestic product (GDP) expanded 5.03% in the January to March quarter from a year
  earlier, data from Statistics Indonesia showed on Friday. That was quicker than the 4.95% median
  forecast in a Reuters poll and compared with 5.01% growth in the fourth quarter. 

  Indonesia's post-pandemic recovery has been helped by a commodities-led export boom, though
  analysts expect economic momentum to cool as commodity prices ease and monetary policy
  tightening around the world hits global demand. 

  Bank Indonesia's (BI) monetary tightening, including interest rate hikes totaling 225 basis points
  between August and January to fight inflation, could also hit domestic demand. 

  The central bank has paused tightening since and some economists expect it to keep interest
  rates unchanged for the rest of the year, although others argued concerns over growth may push
  BI to ease later this year. 

  In January to March, growth in household consumption, which accounts for more than half of GDP,
  picked up slightly to 4.54%, compared with 4.48% in the previous three months, while government
  spending rose 4% against a contraction previously. 

  Meanwhile, export growth softened to 11.68% from nearly 15% in the fourth quarter. The statistics
  bureau said exports of Indonesia's main products such as coal, palm oil and metals had remained
  strong. 

  Investment also slowed. 

  "We think the economy is set to struggle over the coming quarters," Capital Economics' analyst
  Gareth Leather said in a note on the data, underlining weakening exports and the impact of BI's
  tightening on demand. 

  The central bank estimates Indonesia's economic growth will be at the upper end of a 4.5% to
  5.3% range, down from 5.3% in 2022. 

  Transportation, warehousing and hospitality sectors recorded the fastest year-on-year growth in
  the first quarter. 

  Source: Reuters 

  Govt allows foreign entities to buy carbon credits from Indonesia 

  The government has decided to allow foreign entities to purchase credits in the Indonesian carbon
  market, paving the way for multinational companies and institutions to tap into the country’s large
  carbon trading potential.  

  Businesses involved in carbon-trading schemes lauded the decision, adding that it was aligned
  with the 2016 Paris Agreement on climate change. However, environmental analysts fear that the
  trade will not result in any real environmental improvement.  

  The announcement came after Investment Minister Bahlil Lahadalia said on Wednesday that the
  Indonesian carbon market would be “open”, following a meeting with President Joko “Jokowi”
  Widodo in the State Palace prior to the press conference.  

  Edo Mahendra, an expert staffer on the green economy at the Office of Coordinating Minister for
  Maritime and Investment Affairs told The Jakarta Post on Thursday that by being an open market
  the Indonesian carbon market would allow foreign buyers to purchase credits to offset their
  emissions. 

  The alternative “closed” concept would mean Indonesia would only use its carbon market to
  pursue its own emission-reduction plan in its nationally determined contribution (NDC).  

  “Indonesia has great potential in the carbon market. That’s why we need to lead [with an open
  market],” Edo said.  

  Investment Minister Bahlil stressed that all entities participating in carbon-trading activities in the
  country should be registered with the national registry system (SRN) and the transaction process
  ought to be done in Indonesia through the country’s carbon exchange.  

  The Financial Services Authority (OJK) will oversee the carbon exchange in the country, while the
  registration process will be supervised by the Environment and Forestry Ministry, which operates
  the SRN database.  

  "The registration is only once. After [an entity] is registered by the environment ministry, it can
  conduct transactions in the carbon exchange, similar to activities in the stock exchange," Bahlil
  said. 

  The minister added that carbon credits from Indonesia could not be sold in any other country’s
  carbon exchange.  

  Coordinating Minister for Economic Affairs Airlangga Hartarto pointed out the importance of
  traceability, which the government will address through the use of certificates and electronic
  systems. Thus, even after being traded multiple times, the original source of the carbon credit is
  still traceable, he said.  

  The meeting in the State Palace also raised the issue of market makers for the exchange to
  prevent big institutions or foreign companies becoming hoarders, he said, adding that the
  government would establish a body to function as market maker.  

  "We feel the form [of the institution] will be similar to the Indonesia Investment Authority [INA] or a
  state-owned enterprise," he said.  

  Ahmad Zuhdi Dwi Kusuma, an industry analyst at Bank Mandiri's Office of Chief Economist, said
  the decision would increase the number of potential buyers of the country's carbon certificates and
  make the price more competitive.  

  An influx of capital from the carbon market then could also strengthen the rupiah exchange rate
  and  become an incentive for investors who want to enter the energy-transition sector.  

  "However, the negative aspect is the carbon exchange could leave our economy vulnerable to
  global economic volatility," Ahmad told the Post on Thursday. 

  Indroyono Soesilo, who chairs the Association of Indonesian Forest Concessionaires (APHI),
  lauded the move.  

  Previously, there had been talk of Indonesia focusing on achieving its NDC first before deciding on
  an open carbon exchange, but later the government made arrangements for the NDC target to be
  calculated each year, he said.  

  "The previous plan was not interesting, while the current one is more interesting," Indoroyono told
  the Post on Thursday.  

  He gave as an example a concession that could absorb a baseline of 10 million tonnes, but later it
  could absorb 12 million tonnes after implementing mitigation efforts, such as less deforestation and
  more reforestation, which would result in an excess of 2 million tonnes.  

  If the concession was obliged to contribute 1.5 million tonnes to the NDC, then it could sell the
  other half million tonnes through the carbon exchange, he said.  

  “If there is an excess, it will be prioritized for the NDC target, and the rest for the voluntary carbon
  market,” he said.  

  The voluntary market is meant for companies or institutions seeking to voluntarily offset their
  emissions by purchasing carbon credits from various sources elsewhere.  

  The new arrangement would not hinder the government’s NDC target of reducing domestic carbon
  emissions, he insisted. 

  Zakki Amali, a research manager at Jakarta-based environment watchdog Trend Asia, doubted
  claims that involving foreign entities would help the country to meet its NDC targets, adding that it
  needed to be examined carefully. 

  For instance, the Energy and Mineral Resources Ministry only targets 500,000 tonnes of carbon
  dioxide reduction from carbon trading in the power plant subsector this year, which is the country’s
  second-largest source of emissions after forest and land use.  

  However, the reduction is regarded by many as too slight, being only equivalent to 0.2 percent of
  total carbon dioxide emissions from coal power plants, which can amount to 250 million tonnes. 

  “Carbon trading may be a fake solution to the government's claim of reducing emissions. The
  negative environmental impact is likely to remain," Zakki told the Post on Thursday.  

  Furthermore, he said the government lacked transparency in verifying and calculating emissions,
  which may undermine the carbon-trading scheme.  

  “Without transparency, Indonesia’s carbon trading will only benefit carbon emitters, while the
  environmental objectives will never be met,” he said.  

  Carbon trading in Indonesia kicked off this year but is only applied to the power sector so far, while
  the carbon exchange is still under development. The government plans to expand it to other
  sectors only after 2025, according to the 2021 Tax Harmonization Law. 

  Source: The Jakarta Post 

  Foreign tourist visits reached 2.25 mln in Q1 2023: minister 

  The number of foreign tourist visits to Indonesia reached 2.25 million in January–March 2023, an
  increase of 508.87% compared to the year-ago period, a minister said in a statement released on
  Wednesday. 
 
 

  "This is in accordance with our projection, and we are thankful that the figure is beyond our target,
  fitting with the addition of flights and seats that are continually increasing," said Tourism and
  Creative Economy Minister Sandiaga Salahuddin Uno. 
 

  Earlier, the minister revised the target for foreign tourist visits in 2023 from 7.4 million to 8.5 million
  due to a stronger momentum. 

 
  According to Mr. Uno, if the results of the first quarter can be maintained, then by the end of the
  year, the number of foreign tourist arrivals can reach 9 million, exceeding the target of 8.5 million. 

 
  "It must be consistently monitored," he stated. 

 
  However, Uno also reminded of the decline in tourist visits due to the low season. 
 

  "After summer, there will be a time when visits are scarce [low season], which must be anticipated
  prior to the peak season at the end of the year," he said. 
 

  "That target is in accordance with the existing projection, and we are increasingly certain that 4.4
  million new job vacancies can be created in 2024. We are very optimistic," the minister added. 
 

  Statistics Indonesia (BPS) recorded that in March this year, 809,960 foreign tourists visited parts
  of Indonesia. The figure reflected an increase of 15.39% compared to the previous month. 
 

  Malaysians accounted for the highest percentage of tourists (15.39%), followed by Singapore
  (13.74%), Australia (11.87%), Timor Leste (7.85%) and China (6.42%). 

  Source: Antara news