Indonesia needs 6-7% of economic growth to become developed country: Minister 

Finance Minister Sri Mulyani said on Wednesday that the country's economy must grow between 6 and 7 percent to achieve its ambition of becoming a high-income or advanced country by 2045. 

Currently, Indonesia’s economic growth hovers around 5 percent, with Statistics Indonesia (BPS) reporting 4.94 percent year-on-year (yoy) economic growth by the end of the third quarter and projecting the country’s 2023 economic growth to remain in the range of 4.5–5.3 percent. 

This means that in order to meet the target of 6 to 7 percent growth, Indonesia will need to boost its economic growth by 1 to 2 percent. 

"Structural reforms require hard work. A growth increase of 1 to 2 percent genuinely necessitates structural reforms," Sri told a public lecture at the Australian National University (ANU) in Canberra. 

She added that there were numerous hurdles to be faced to achieve this growth target, such as the global financial crises, high inflation, geopolitical issues and climate change.  

Sri said a combination of fiscal policies is needed to achieve this level of growth, by not solely relying on government resources, as high growth with a high budget deficit is unsustainable in the long term. 

"Some infrastructure can be built by the private sector. So, it really requires a partnership between the government and the private sector,” she said.  

“Therefore, fiscal instruments are now being developed to reduce risks or provide guarantees for the private sector to participate, while also minimizing moral hazard. So, all of that is currently being developed in our fiscal policy.” 

The finance minister emphasized the importance of continuing the commitment to improving human resource quality through education funding, allocating at least 20 percent of the budget. 

She also said the state budget played a crucial role in protecting vulnerable communities through social safety nets. 

Source: The Jakarta Post 

Indonesia relaxes tax rules on EV imports to attract investment 

Indonesia will grant automakers that plan to build electric vehicle plants tax incentives on their imports of completely built-up EVs until 2025, a new presidential regulation showed as Jakarta seeks to attract more investment. 

Under the new regulation signed on Dec. 8 and released this week, companies that have invested in EV plants, are planning to increase their EV investments, or planning to invest would be eligible for the incentives. 

The new rules will remove the import duties and the luxury-goods sales tax on the built-up vehicles brought into the country and gives incentives on taxes collected by provincial governments. 

Earlier rules only granted these incentives to imports of knocked-down vehicles, which are delivered in parts and assembled in the country where they are sold. Indonesia is Southeast Asia's biggest auto market. 

However, the number of vehicles companies can import would depend on the investment size and development progress of the plant, and must be approved by the investment ministry. 

Speaking at a webinar on Indonesia's economic prospects on Wednesday, Rachmat Kaimuddin, a deputy at the Coordinating Ministry of Investment and Maritime Affairs, said the new decree would help automakers build their market in the country through EV imports. 

"We try to be progressive, because once we have created an EV industry in Indonesia, the battery (industry) will also come, and we already have the (raw) material and can create the supply chain," he said. 

The new regulations also delayed a deadline requiring companies to produce at least 40% of the content of EVs in Indonesia until 2026 from 2023. 

Also the decree delays an increase in the local content threshold to 60% to 2027 from initial target of 2024. 

Indonesia's government has set an ambitious target of producing some 600,000 EVs by 2030. That would be more than 100 times the number sold in Indonesia in the first half of 2023. 

Some companies including Hyundai have invested in Indonesia followed by investment commitments by China's Neta EV brand and Mitsubishi Motors. Indonesia is also wooing Tesla and China's BYD. 

Source: Reuters 

BPS Records November Trade Balance Surplus Of 2.41 Billion US Dollars

The Central Statistics Agency (BPS) recorded Indonesia's trade balance again in the surplus in November 2023 of US$2.41 billion, down from US$1.06 billion when compared to October 2023 of US$3.48 billion. 

Meanwhile, on an annual basis, it fell 2.68 billion US dollars compared to November 2022. 

Deputy for Distribution and Services Statistics, Pudji Ismartini, revealed that Indonesia's export value in November 2023 reached 22 billion US dollars or a slight decrease of 0.67 percent compared to exports in October 2023. 

Compared to November 2022, the export value fell quite deeply by 8.56 percent. 

Meanwhile, Indonesia's import value in November 2023 reached 19.59 billion US dollars, an increase of 4.89 percent compared to October 2023 or an increase of 3.29 percent compared to November 2022. 

"Indonesia's trade balance in November 2023 experienced a surplus of 2.41 billion US dollars, mainly from the non-oil and gas sector 4.62 billion US dollars, but was induced by a deficit in the oil and gas sector worth 2.21 billion US dollars," he explained in his statement, Friday, December 15. 

According to Pudji, the trade balance surplus was supported by a surplus of non-oil and gas (non-oil and gas) commodities, which amounted to 4.62 billion US dollars. 

Meanwhile, the main surplus contributor commodities are mineral fuel (HS 27) animal fat and oil (HS 15) and iron and steel (HS 72). 

However, this non-oil and gas trade balance surplus is lower than October 2023 and November 2022. 

Pudji said that the oil and gas trade balance recorded a deficit of 2.21 billion US dollars in November 2023. 

With commodities contributing to the deficit, it is the result of crude oil and oil. 

Furthermore, Pudji said, cumulatively, the total surplus of Indonesia's trade balance throughout January 2023 to November 2023 was 33.63 billion US dollars. The surplus shrank 33.46 percent, when compared to the same period in 2022 which reached 50.54 billion US dollars. 

"Cumulatively until November 2023, the total trade balance surplus this year is lower than the same period last year," concluded Pudji. 

Source: VOI