This Week’s Headlines (8 - 14 Oct 2022)

14 Oct 2022


  Retail sales slump as consumer spending hurt by raging inflation 

  Retail sales were expected to be under pressure in September, after a strong performance in
  the previous month, particularly due to sluggish automotive-parts and fuel sales, as inflation
  deepened its scourge on consumers' buying power.  


  According to a publication released by Bank Indonesia (BI) on Tuesday, preliminary results on
  the retail sales index (RSI) in September were expected to drop by 1.8 points to 200 compared
  to the previous month, or 0.8 percent month-to-month (mtm) contraction, marking a lowest
  figure in the last seven months.  


  In annual terms, the RSI in September rose by 5.3 percent, as various restriction policies from
  COVID-19 pandemic were finally lifted.  


  The RSI is a monthly survey by the central bank that has been held since September 1999 on
  around 700 retailers to measure early detection on the movement of household consumption
  in GDP.  


  The largest drop in the last month occurred in motor-vehicle part sales, which contracted by
  12.7 percent mtm to 106.3 points, while also experiencing a yearly sales decline of 0.3


  Fuel sales decreased by 8.6 percent mtm to 90.6 points, but increased by 9.2 percent
  year-on-year (yoy). Both fuel and spare-parts sales were at their lowest point in this year.  


  Food, beverages and tobacco sales were also expected to decline by 0.5 percent mtm
  to 268.1 points, although increasing by 8.2 percent yoy. Household-appliances sales,
  meanwhile, fell by 0.2 percent mtm and 1.6 percent yoy to 100.2.  


  To the contrary, information and communication technology sales were slightly up by 2.1
  percent mtm to 137.2 points, but significantly fell by 20.1 percent yoy. 
  In this report, the central bank also released overall RSI performance in the third quarter, where
  the figure was projected to increase by 5.5 percent yoy.  


  Unlike its month-based performance, automotive parts and fuel sales were up by 13.4 percent
  yoy and 39.8 percent yoy, respectively, while food, beverage and tobacco sales were up by
  7.1 percent yoy.  


  Household appliances and information- and technology-equipment sales, meanwhile, contracted
  by 4.8 percent yoy and 20 percent yoy, respectively.  


  President Joko “Jokowi” Widodo said on Tuesday that to continue strengthening consumers’
  buying power, the government is committed to continue providing fuel compensation and


  “Rupiah 502.6 trillion (US$32.74 billion) -- this is a high figure; but this is the fact -- we want     
  consumers' consumption and buying power to be maintained, and the price for that is
  Rp 502.6 trillion,” President Jokowi said.  


  Indonesian Chamber of Commerce and Industry economist David Sumual said that the
  contraction of RSI last month was due to the strong performance in July and August, in
  accordance with the Idul Fitri after-effect euphoria.  


  In non-Java regions, he continued, the weakening of commodity prices and rising fuel prices
  contributed to the lower spending by consumers on food and beverages, as rupiah
  depreciation also affected the prices of spare parts, which could delay
  consumer purchasing.  


  “Retail sales will continue to decline until the end of the year due to the fuel price hike, in
  particular to those that had revenues from the spending of those in the lower-income
  bracket,” David told The Jakarta Post on Tuesday. 


  Center of Economic and Law Studies (CELIOS) director Bhima Yudhistira said that the decline
  in household appliances sales were attributed to the consumers’ budget prioritization on
  essential goods and transportation spending.  


  “The risk of rising interest rates can have an impact on decisions to purchase goods using
  credit facilities,” Bhima told the Post on Tuesday. 
  The fall in monthly retail-sales performance was also visible in the consumer confidence in
  the domestic economy.  


  Released by the central bank a day earlier from RSI, the consumer confidence index (CCI) fell
  by 7.5 points to 117.2 in September from a month earlier, marking its lowest position in five


  The most recent statistics were significantly below the headline index's highest level seen this
  year, reaching 128.9 points in May, even though the CCI was still in positive territory over 100.  


  Personal income assessments saw the greatest decline since the peak in May, with the
  sub-index falling 10.8 points to 114.5 in September as inflation increased recently.  


  Despite only losing 0.6 points, the index for purchases of durable goods was the lowest of all
  indicators, barely maintaining a positive reading at 102.5 points. 


  Source: The Jakarta Post 



  Indonesia's China-funded rail project on track despite cost overrun 


  A high-speed railway project in Indonesia, part of China's Belt and Road Initiative, is on track
  for a 2023 launch despite ongoing negotiations between the two countries about the project
  being over-budget, officials said on Thursday. 


  President Joko Widodo inspected a new train station, where the consortium building the railway,
  PT KCIC, displayed a stationary China-made bullet train on the tracks. The 142-km line will
  connect the capital Jakarta with one of the country's largest cities, Bandung. 


  "This will be the first high-speed rail in ASEAN and we hope this will increase connectivity
  between countries, whether this (the railway) will be connected further to an airport or other
  high-speed railways," he said, referring to the Association of South East Asian Nations. 


  Jokowi, as the president is popularly known, said the project was 88.8% complete and its
  commercial launch is expected in June, 2023. 


  KCIC has said the project is facing a cost overrun of about $2 billion, raising the estimated
  total cost to 113 trillion rupiah ($7.36 billion). China estimates the project is less than $1 billion
  over budget, according to Koran Tempo newspaper. 


  KCIC's President Director Dwiyana Slamet Riyadi confirmed the discrepancy in cost calculations,
  saying negotiations are underway to resolve it. 


  "We hope the negotiations...regarding cost overrun and financing can be quick so this does not
  disturb the progress," said Dwiyana, who accompanied Jokowi on Thursday. 


  Indonesian state companies, including Wijaya Karya and PT KAI, control 60% of KCIC, while
  China Railway Engineering Corporation and other Chinese companies control the rest. The
  project is funded by a loan from China Development Bank. 


  The Indonesian firms have been lobbying their Chinese counterparts since last year to fund the
  rise in costs, while a capital injection from the Indonesian government is also awaiting
  authorities' approval. 


  Dwiyana said discussions were ongoing as to whether Chinese President Xi Jinping may
  witness a trial run of the rail project when he visits the Southeast Asian country next month
  for the G20 leaders' summit. 


  Source: Reuters 



  Pandemic status in Indonesia might end in February 2023: Minister 

  Coordinating Minister of Maritime and Investment Affairs Luhut Binsar Pandjaitan estimates
  that Indonesia's COVID-19 pandemic status might end by 2023. 
  "There is a huge possibility (on the end of the pandemic status), but we also have no idea
  whether there would be new (COVID-19) virus variants," the coordinating minister stated
  here, Wednesday. 
  Pandjaitan, concurrently serving as deputy head of the COVID-19 Handling and National
  Economic Recovery Committee (KPC-PEN), affirmed that Indonesia will refer to the World
  Health Organisation (WHO) regulations before declaring the end of the pandemic. 
  "We must comply with WHO (regulations), but our conditions are far improving now. As
  compared to several countries, we are among countries with better conditions," he noted. 

  He said that Indonesia fared better than other countries, especially nations entering the winter
  season, where the COVID-19 infection rate surged again. 

  "COVID-19 handling in Indonesia is good. As we can see, you are all masked and have
  received booster vaccines. I had even received my fifth vaccine dose," Pandjaitan

  Earlier, Coordinating Minister of Economic Affairs and KPC-PEN Head Airlangga Hartarto said
  the government could declare the pandemic status as having ended if COVID-19 infection
  cases continue to decline until February 2023. 
  The government will also evaluate the public activities restrictions enforcement (PPKM) until
  the end of October 2022 to consider follow-up actions. 

  "We will determine the future of PPKM implementation at the end of next month (November
  2022), provided that COVID-19 vaccination and booster vaccine administration intensified
  for November, December, and January," Hartarto expounded. 
  He remarked that if Indonesia can keep its COVID-19 infection cases low until February, the
  government can declare the pandemic over.  


  Source: Antara