This Week's Headlines (Jan 27 – Feb 02, 2024)

02 Feb 2024


Inflation continues downward trend in January


Statistics Indonesia (BPS) announced on Thursday that the year-on-year (y-o-y) consumer price index (CPI) growth in January had been recorded at 2.57 percent, well below the 5.28 percent y-o-y figure logged in January 2023.  


Recent data released by Statistics Indonesia (BPS) shows that headline inflation remained within what the government considers safe bounds in January and continued its three-month downward trend. 


Interim BPS head Amalia Adininggar Widyasanti announced on Thursday that the year-on-year consumer price index (CPI) growth in January had been recorded at 2.57 percent, well below the 5.28 percent yoy figure logged in January 2023.  


“The inflation level in January 2024 was lower than the previous month as well as the same month last year,” said Amalia at a press briefing.  


She noted that rice, cigarettes and tomatoes contributed the most to inflation last month. Correspondingly, the volatile foods category continued to be a major source of inflation in January with yoy price growth of 7.22 percent.  


Price increases in volatile foods accounted for 1.14 percentage points of the headline inflation figure last month and have, with the exception of December 2023, been moving consistently upward since August of last year.  


Some of that food inflation is attributable to production disruptions prompted by the El Niño weather phenomenon, which brought drought and harvest delays to some parts of the country last year.  


El Niño has a particularly strong effect on rice production, and the price of the commodity has been rising since September. Protectionist export policies from rice producing nations further restricted the supply available on global markets, boosting the price.  


The retail price of rice in Indonesia rose 16.24 percent y-o-y in January, and the commodity accounted for some 0.56 percentage points of the 2.57 percent headline inflation figure.  


Chili peppers, while not officially considered a staple food, have been a top driver of headline inflation in recent months, given their widespread use in Indonesian cuisine.  


However, BPS revealed that a variety of peppers actually underwent monthly deflation in January, ranging from 11 to 25 percent, dampening the overall monthly CPI growth.  


In monthly terms, headline inflation in January was 0.04 percent, lower than the month-to-month (m-t-m) figure of 0.34 percent in January of last year.  


Notwithstanding the overall slowdown in inflation, the government has opted to step up social aid (Bansos) programs.  


Coordinating Economic Minister Airlangga Hartarto announced on Monday that the government would give some 18.8 million households cash aid (BLT) of Rp 200,000 per month from January to March.  


Finance Minister Sri Mulyani told reporters on Monday that the government had allocated Rp 11.25 trillion of the state budget for that program alone. 


The government has been providing food assistance since March of last year. The initial plan was to continue the program until December 2023, but in November of that year, the government decided to extend the aid to June 2024.  


Around 21,353 households receive 10 kilograms of rice per household per month, a total of more than 210,000 kilograms of rice per month.  


The rice comes from government reserves. The stores currently total millions of tons, after the government imported about 3 million tons in 2023. 


Source: Jakarta Post 


Indonesia's economy likely to have grown 5% in Q4 - Reuters poll


Indonesia's economy grew 5.0% in the fourth quarter from a year earlier, supported by resilient domestic consumption, despite exports shrinking and commodity prices falling, a Reuters poll of 23 economists found. 


Growth in Southeast Asia's largest economy was mostly driven by private consumption which remains strong against a cumulative 250 basis points of interest rate hikes by Bank Indonesia since August 2022. 


The poll median for 5.00% growth last quarter from the previous year was slightly faster than the 4.94% expansion in the preceding quarter. The latest data will be released on Feb. 5. 


On a quarter-on-quarter basis, the economy grew 0.41% in the October-December period, according to a smaller sample in the Jan. 25-31 Reuters poll. 


"The current policy rate is not tight enough to hinder economic growth because consumer appetite to withdraw loans remains robust and we saw good performance in terms of consumption, working capital and investment", said Irman Faiz, an economist at Bank Danamon. 


"Bank Indonesia is on the same page with us, they are seeing resilient growth last year, despite the global economic slowdown and export contraction." 


The resource-rich country recently reported a fall in its 2023 trade surplus as exports and imports dropped amid falling commodity prices. 


Furthermore, weak demand from China, Indonesia's biggest trading partner, adds more pressure on its exports. 


"Monthly exports and imports fell in year-on-year terms throughout the last quarter, the former being hit by weaker demand from China and other major export partners," said Jeemin Bang, an associate economist at Moody's Analytics. 


"Indonesia's economic expansion has been relatively stable in recent years, and we expect this to continue. Moreover, consumption growth will moderate from here, with the post-pandemic recovery largely run its course." 


The economy was forecast to have grown 5.0% in 2023 - within Bank Indonesia's estimate of 4.5% to 5.3% - and will do so at the same pace this year, a separate Reuters survey showed. 


Source: Reuters 



Gojek Tokopedia (GOTO) Announces TikTok Has Completed Its Investment in Tokopedia


Technology issuer, PT GoTo Gojek Tokopedia Tbk (GOTO) on Wednesday (31/1), announced that TikTok Pte. Ltd. has officially completed its investment agreement of US$ 1.5 billion to PT Tokopedia.  


"Today we have completed the transaction of cooperation with TikTok, which will continue to provide benefits to Indonesia and SMEs," said Patrick Walujo, CEO of GOTO Group, Wednesday (31/1).  


As known, GOTO and TikTok also signed a shareholding agreement of PT Tokopedia in connection with additional investment.  


PT Tokopedia issued new shares to be paid by TikTok worth US$ 840 million. Thus, TikTok officially holds 75.01% shares or equivalent to 38.18 million shares of Tokopedia.  


Meanwhile, GOTO will own 24.99% shares of PT Tokopedia. As a result, with this investment, TikTok will become the new controller for Tokopedia.  


TikTok also bought assets owned by Tokopedia in the form of business contracts and exclusive rights worth US$ 340 million. These assets will be used by TikTok to revive TikTok Shop in Indonesia.  


At the time of completing the investment plan, Tokopedia will also receive a promissory note from TikTok worth US$ 1 billion. This figure is equivalent to IDR 15.53 trillion.  


The promissory note can be used for Tokopedia's working capital needs in the future. However, management has not yet confirmed when the funds will be fully distributed. 


Source: Kontan