IMF revises up Indonesia's economic growth amid global decline

  The International Monetary Fund has revised up its outlook on Indonesia’s economic growth
  despite the fund projecting much lower figures for the global economy amid prolonged economic
  uncertainty and geopolitical strains. 

  The IMF’s latest forecast put Indonesia’s GDP growth on a 5 percent path in 2023, according to
  the fund’s World Economic Outlook report in April, 0.2 percentage points higher than the fund’s
  January report. 

  The figure also puts Indonesia almost on a par with China’s growth projection at 5.2 percent this
  year, which the IMF decided to keep unchanged compared with its January report. 

  By contrast, the IMF lowered its outlook for the global economy to 2.8 percent, 0.1 percentage
  point lower than its January forecast. 

  Faisal Rachman, economist at state-owned lender Bank Mandiri, said the fund’s more optimistic
  outlook for Indonesia was due to the country’s solid domestic economy. This would allow the
  economy to remain resilient in 2023 despite flagging global growth. 

  “Domestic activities, especially consumer spending, have normalized and even increased, thanks
  to improving mobility and a declining inflation rate,” Faisal said in a statement on Wednesday. 

  Indonesian inflation dropped below 5 percent for the first time since the government’s decision to
  hike subsidized fuel prices back in September with the figure now sitting at 4.97 percent. Bank
  Indonesia has projected the figure will drop further to between 2 and 4 percent starting in
  September this year. 

  Meanwhile, the IMF’s projection on 2023’s global inflation has been revised up to 7 percent, from
  the previous 6 percent, signaling stubbornly high and sticky global inflation. 

  In line with lower inflation, Indonesia’s retail sales, as well as its manufacturing, are reportedly
  expanding as producers anticipate more demand. 

  Faisal expects the source of Indonesia’s economic growth in 2023 will most likely shift more to the
  domestic sector, as the country’s export activities are expected to weaken along with the global
  economic slowdown, particularly in the United States and the eurozone. 

  “Commodity prices are prone to continue weakening, but in a more gradual manner,” Faisal said,
  and this would also reduce Indonesian exports. 

  Other sources of growth will also come from investment, reflected in gross fixed capital formation
  (PMTB), which Faisal expects will shift to construction investment from previously being
  concentrated on commodity-related investment, driven by higher state spending on infrastructure. 

  Despite the stellar outlook, Faisal expects that Indonesia’s GDP growth this year will be lower than
  last year with the figure sliding to 5.04 percent from the previous 5.31 percent. 

  The projection is far lower than the government’s 5.3 percent target this year, which the Finance
  Ministry has decided to hold on to despite many analysts forecasting weaker growth. 

  Irman Faiz, economist at publicly listed Danamon, told The Jakarta Post on Wednesday that he
  expects China’s economic reopening to have positive results for Indonesia, as it is the country’s
  number one trading partner in both imports and exports. 

  Statistics Indonesia data show that China contributes 24.93 and 29.89 percent of Indonesia’s
  exports and imports, respectively. The figures for other major trading partners like the US and
  Europe, which have been heavily impacted by the current global turmoil, are far smaller by
  comparison. 

  Furthermore, Indonesia’s faster than expected fiscal consolidation has also played a significant
  role in convincing the IMF that the country has a resilient financial condition alongside the
  country’s strong banking industry. 

  Source: The Jakarta Post 

  Indonesia court overturns order to delay 2024 elections 

  An Indonesian court on Tuesday overturned a lower court's controversial order to delay the 2024
  national elections by two years, arguing it had overstepped its jurisdiction and had no authority to
  make the decision. 

  The ruling by the Jakarta High Court will ease political uncertainty in the world's third-largest
  democracy and means the February 2024 presidential and general elections should be able to go
  ahead as scheduled. 

  The March 2 decision by the Central Jakarta district court stunned many politicians and voters in
  Indonesia, after it ordered a halt of more than two years on all election activities over a complaint
  from an obscure party whose application to run had been denied. 

  The elections will decide among many posts who will be Indonesia's next president, with
  incumbent Joko Widodo now in the final year of his second term, the maximum allowed by the
  constitution. 

  Ruling on an appeal filed by the election commission, or KPU, deciding chief judge Sugeng
  Riyono on Tuesday said the lower court had no authority or competence to deliberate on the
  matter. 

  The recently formed Prima Party, which filed the initial complaint, had argued there were flaws in
  the KPU's registration process and software. The district court has said it accepted the case
  because other courts would not take it on. 

  Afifuddin, a KPU commissioner, said the latest verdict made clear which bodies had the power to
  decide on election disputes. 

  "The court ruling has affirmed that general court has no authority or absolute competence to settle
  this case," he told Reuters. 

  Mahfud MD, a senior cabinet minister responsible for legal, political and security affairs, said
  Indonesians must now turn their attention back to the election. 

  "Everybody must now concentrate on elections being held in February," he told a news
  conference. "Election matters cannot be presided over by district courts." 

  The Prima Party had yet to decide if it would appeal to the Supreme Court, said its chairman Agus
  Jabo Priyono. 

  Titi Anggraini of the Association for Elections and Democracy said filing an appeal to the Supreme
  Court would not impact election proceedings or the schedule for the vote. 

  Tuesday's outcome could take the heat out of speculation that Jokowi, as the president is
  popularly known, could seek to stay in office beyond his second term, an idea floated by some of
  his allies that he himself has rejected. 

  Jaleswari Pramodhawardhani, an adviser to the president's chief of staff, said: "By this court ruling,
  all unnecessary noise can be silenced". 

  Source: Reuters 

  Indonesia expects to clinch US$560 million Chinese loan for
 high-speed train soon 

  Indonesia expects to conclude negotiations with China in the coming weeks on an additional
  US$560 million loan for a high-speed rail project being built in the Southeast Asian country, a
  senior minister said on Monday (Apr. 10). 

  The cost of the line linking the capital Jakarta with the textile hub of Bandung has overshot,
  pushing Indonesia to seek a new loan from the China Development Bank to help cover a US$1.2
  billion cost overrun. 

  The total cost of the most high-profile Belt and Road Initiative (BRI) in Indonesia has now risen to
  more than $7 billion, Indonesian officials have said. 

  Senior Indonesian minister Luhut Pandjaitan said during a trip to Beijing last week China had cut
  the interest rate on a proposed additional loan to 3.4 per cent, from 4 per cent previously. The
  figure was, however, still above the 2 per cent rate Indonesia wanted, he said. 

  "We are finalizing the interest rate. They've agreed below 4 per cent, but we want lower," Luhut
  told a news conference. The China Development Bank in 2017 had given a consortium of
  Indonesian and Chinese companies building the railway a $4.55 billion loan with a 40-year tenure
  and a 2 per cent interest rate. 

  Negotiations would also continue on the loan's maturity, deputy minister Septian Hario Seto said,
  adding Indonesia wanted it to be similar to the 2017 loan with a 10 to 15-year grace period. 

 
  Furthermore, China wanted the Indonesian government to guarantee the loan and pass it on to PT
  KAI, one of the state-owned companies behind the project, while Jakarta preferred to appoint a
  company as a guarantor, Seto said. 

  China Development Bank could not immediately be reached for comment. 

  Jakarta has insisted that Chinese finance for such projects be delivered on a business-to-
  business basis, amid accusations that some other countries hosting BRI projects have fallen into
  a debt trap. 

  Still, due to the cost overrun, Indonesia had to inject 3.2 trillion rupiah ($214.77 million) of capital
  into PT KAI in January to help plug ballooning costs. 

  The railway is expected to operate commercially by August, Luhut said. 

  Source: CNA