Agreement reached on Indonesia 2025 budget assumptions, set for parliament vote

An Indonesian parliamentary committee and the government have reached agreement on key economic assumptions for 2025 for the new administration led by Prabowo Subianto, who takes office next month, the budget committee's chair said on Wednesday. 

Most of the budget assumptions in the original 2025 proposal by outgoing President Joko Widodo were approved, except for the rupiah exchange rate against the dollar, 10-year bond yield and oil-lifting target, committee chair Said Abdullah told Reuters. 

A wider parliamentary vote is needed to approve the 2025 budget, likely later this month or in October, but the committee's endorsement is usually passed. 

The assumption for the rupiah in 2025 was slightly strengthened to 16,000 per dollar from 16,100. The target for oil lifting was raised from to 605,000 barrels per day (bpd) from 600,000 bpd. 

The government and committee also agreed to lower the 10-year bond yield target to 7% from 7.1%. The changes were made to better reflect current economic conditions and future prospects, the government explained. 

The remaining key budget assumptions were unchanged, with the GDP growth target kept at 5.2% and inflation at 2.5%. 

The forecast for average Indonesian crude price is $82 per barrel, and natural gas lifting was seen at 1.005 million barrels of oil equivalents per day (BOEPD). 

Revenues were tentatively agreed at 3,005.13 trillion rupiah (US$194 billion) while spending was seen at 3,621.31 trillion rupiah. The 2025 budget deficit forecast was maintained at 2.53% of GDP, a narrowing from an expected 2.7% gap in 2024. 

Source: Reuters 

Indonesia-EU CEPA negotiations 90% complete: minister

Negotiations on the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) are nearly 90 percent complete, with the agreement expected to be finalized this month, according to Trade Minister Zulkifli Hasan. 

"Hopefully, the IEU-CEPA will be finalized this September (2024)," he reiterated after attending a meeting with Commission VI of the House of Representatives (DPR) at the Parliamentary Complex, Jakarta, on Wednesday. 

The minister made a similar statement on August 29, saying that negotiations on trade agreements, including IEU-CEPA, must be concluded before the new government led by President-elect Prabowo Subianto comes into office in October. 

He noted that Indonesia's trade balance has posted a surplus for 51 successive months, while stressing the need to continually strengthen it by tackling trade barriers through diplomatic agreements. 

Hence, Indonesia has been seeking to wrap up the nine years of negotiations on IEU-CEPA, an agreement that is expected to help both parties tackle various obstacles impeding bilateral trade, he said. 

Once the agreement takes effect, he added, Indonesia can expect to have its products exempt from import duties when entering European markets. 

Meanwhile, the Trade Minister's expert staff for international trade, Bara Krishna Hasibuan, said that the European Union, with its huge market, has been a crucial trading partner of Indonesia and vice versa. Therefore, the two parties have stated their commitment to finishing the negotiations soon. 

In addition to making an import duty exemption possible, the IEU-CEPA is also expected to help Indonesia and the EU bridge differing views on the EU Deforestation Regulation (EUDR) and Carbon Border Adjustment Mechanism (CBAM), he added. 

Source: Antaranews 

Chinese tourist arrivals in Indonesia surge to post-pandemic high

Data released by Statistics Indonesia (BPS) on Monday shows that 126,100 Chinese tourists visited Indonesia in July, marking the highest figure since the border opened for Chinese outbound travel in 2023. 

Indonesia is witnessing a surge in arrivals of Chinese tourists, with July marking the highest number since the lifting of travel restrictions following the COVID-19 pandemic.  

According to data released by Statistics Indonesia (BPS) on Monday, 126,100 Chinese tourists visited Indonesia in July, bringing the total number of Chinese tourists to visit Indonesia in the first seven months of this year to 695,000.  

That figure represents a 79% increase from the equivalent period in 2023.  

Despite the recent boom, the number of Chinese tourist arrivals is still well below pre-pandemic levels, with the January-to-July figure representing about 60% of what it was in 2019. 

Rajeev Menon, president for the Asia-Pacific excluding China at Marriott International, said the number of Chinese travelers in Indonesia from his company’s perspective had already returned to pre-pandemic levels, despite a slower recovery in the region’s other markets. 

“Chinese travelers are incredibly important to us, with about 40 million [Chinese] members of our loyalty program,” Menon told The Jakarta Post on Wednesday. “This year alone, Chinese travel in Indonesia for us has grown 72% year-on-year [in terms of bookings].”  

He attributed the strong growth to the higher-end nature of Chinese travelers to Indonesia and the increasing direct flight capacity to the region.  

Chinese tourists are coveted for their spending power, which boosts demand in the wider economic ecosystem, including for air travel and accommodation.  

On average, Chinese tourists stay in Indonesia between eight and 11 days and spend US$1,386.55 per visit, similar to European tourists, according to state news agency Antara. 

After three years of isolation, Indonesia was one of the first destinations to receive Chinese group tours last year. 

The delayed reopening of China's borders to international travel following COVID-19 lockdowns has partly contributed to the recent surge in demand for trips to Indonesia, Menon opined.  

As the Chinese economy continues to recover, he anticipates a further increase in Chinese outbound travel, potentially reaching pre-pandemic levels of 150 to 170 million tourists annually and significantly impacting the Asia-Pacific region.  

Agus Pahlevi, chairman of the Association of the Indonesian Tour and Travel Agencies (ASPPI), said the availability of direct flights from China to various destinations in Indonesia was crucial to attracting Chinese tourists.  

“Bali remains the favorite destination for Chinese tourists, mainly because so many direct flights are available from many cities in China to the island,” Agus said on Wednesday.  

The number of Chinese tourists visiting Bali in the January-July period surged to 270,000, up 91.3% compared to the same period of last year, BPS Bali data shows.  

Besides that, historical ties between the two countries and strong media coverage of Indonesia in China have also helped, Agus added.  

“Chinese tourists are keen to explore new destinations and often follow local influencers,” Agus added, which could rapidly boost the popularity of certain locations.  

There are now direct flights from China to Jakarta, Bali, Manado, Batam and other cities, which the Tourism and Creative Economy Ministry expects will push the number of Chinese arrivals beyond 1 million.  

Zulfikar Rakhmat, China-Indonesia desk director at Jakarta-based think tank CELIOS, noted that growing bilateral ties between Indonesia and China in trade and investment contributed to the influx of Chinese tourists.  

“There’s also a strong push within China to travel abroad, without denying there’s also a push from Indonesia,” Zulfikar told the Post. “The [Chinese] government continues to encourage people-to-people exchanges, with a focus on student exchanges, but tourism is also a highlighted aspect.”  

Chinese media frequently report on the close relationship between Indonesia and China, which has sparked enthusiasm among Chinese citizens to visit the country, Zulfikar added. 

“It’s like they are saying: ‘Oh, this is Indonesia, our close partner. We should visit Indonesia’.” 

Visa-free entry for Chinese tourists?  

Zulfikar pointed out that the visa requirement was an obstacle to boosting tourist arrivals, while reciprocal easing of entry rules could boost mutual visitor numbers.  

“We should facilitate travel with direct flights, a variety of airlines offering routes, and we need to ensure that the visa-free policy is extended to Indonesian tourists visiting China as well,” he added.  

Agus of ASPPI, however, argued that focusing on the readiness of Indonesian tourist destinations to accommodate the influx of foreign tourists was more important.  

“Despite the planned visa-free policy, we [businesses and the government] must ensure that destinations and tourism operators are prepared to handle the influx,” Agus said, stressing that tourism should be sustainable, with proper accessibility and amenities.  

In June 2023, the archipelago limited visa-free entry to tourists from ASEAN member states and a handful of other places, including Hong Kong.  

The Tourism and Creative Economy Ministry has announced an expansion of visa-free entry to travelers from 20 countries, including China, before the end of the year.  

Tourism and Creative Economy Minister Sandiaga Uno told the Post on Wednesday that the proposal had entered the final stage.  

“We are optimistic we’ll hit the target of 1.5 million Chinese tourists visiting Indonesia by the end of the year,” Sandiaga said. “China’s booming economy and business growth make it a key market for drawing tourists to our country.”  

China contributed 2 million tourist arrivals annually before the pandemic. It has also been Indonesia’s largest trade partner for 11 years and ranked among the top three sources of foreign direct investment to the archipelago for the past eight years. 

Source: The Jakarta Post