Bank Indonesia Keeps BI Rate at 6.25%

Bank Indonesia announced Thursday that they would keep the benchmark interest rate, also known as the BI Rate, at 6.25%. 

The central bank also sets the deposit facility rate at 5.5%, while the lending facility rate stands at 7%. The freshly announced BI rate also aligns with analysts’ projections.  

Bank Indonesia's Governor Perry Warjiiyo said that the decision to keep the BI rate unchanged was consistent with the “pro-stability monetary policies”. And that is to take preemptive and forward-looking steps to make sure that inflation remains within the 1.5-3.5% range for 2024 and 2025. 

“These policies are supported by the strengthening of monetary operations to boost the rupiah’s exchange rate stability and foreign capital inflows,” Perry told reporters in Jakarta. 

According to Perry, Bank Indonesia will continue to make macro-prudential policies and ensure pro-growth financial systems. Flexible macro-prudential policies are necessary to boost bank’s financing for businesses and households. He added: “Policies related to payment systems will focus on strengthening its infrastructure, the structure of the payment system industry, as well as expanding access to a digital payment system.” 

Bank Permata’s chief economist Josua Pardede already expected Bank Indonesia to maintain the 6.25% BI rate. LPEM FEB UI -- the economic think-tank of the University of Indonesia -- was also expecting the same. 

“I believe Bank Indonesia will maintain the 6.25 percent BI Rate at the bank’s June board meeting. Because it is still consistent to anchor the inflation expectations and maintain the stability of the rupiah exchange rate,” Josua said. 

Source: The Jakarta Globe 

Electric vehicles buck downtrend in Indonesian car sales  

Electric vehicle (EV) sales grew by over 109% year-on-year in the first five months of this year 

Indonesia saw electric vehicle (EV) sales grow by over 109% year-on-year (yoy) in the first five months of this year, much better than the sales of its combustion engine counterparts.  

National electric car wholesales, or sales from factories to dealers, totaled 9,729 units from January to May this year, marking an increase from 4,640 units in the same period of last year, according to Indonesian Automotive Manufacturers Association (Gaikindo) data. 

Gaikindo Chairman Jongkie Sugiarto stated that he expects the positive trend in EV sales to continue throughout this year. This trend will be boosted by events held by the association, as reported by Kontan.  

Consumers, he added, are also awaiting the development of charging stations, initiated by the industry and the government.  

Indonesia is aiming for 2 million EV passenger cars and 13 million electric motorcycles to be on its roads by 2030. The country's EV market value is expected to increase to US$20 billion by 2030 with a phenomenal compound annual growth rate (CAGR) of 58.5%, according to an AC Ventures report published last year. 

An EV produced by Chinese carmaker Wuling came on top as the most popular model sold in the country with the wholesale figure reaching 5,468 units in the first five months of this year, a surge of over 278% compared to the same period last year at 1,444 units. 

Wuling Motors' Sales and Marketing Director Dian Asmahani said on Tuesday that aside from auto exhibitions, the company is also banking on a value added tax (VAT) incentive for EVs that cuts the rate to 1% from 11%, as quoted from Kontan.  

South Korean carmaker Hyundai, however, saw a decline of its sales to 526 units in the first five months of this year from 2,674 units sold in the same period last year.  

PT Hyundai Motors Indonesia's chief operating officer Franciscus Soerjopranoto said on Tuesday that he projects the company’s sales to rebound this year, arguing that its electric car battery plant in Karawang, West Java, would help strengthen their locally made models, as quoted from Kontan. 

Contrary to the EVs, Indonesian internal combustion engine vehicles saw a 21% yoy drop in sales to 334,969 units in the first five months of this year, Gaikindo data shows. 

Rizwan Alamsjah, cochairman of Gaikindo said on June 12 that automakers remain adamant that they can still achieve this year’s target of selling 1.1 million units, as quoted from Kontan. He said that as long as the country saw 5% economic growth, then household consumption would remain strong, thereby support sales in the automotive industry. 

Source: The Jakarta Post 

Indonesia prepares green hydrogen incentives, tax breaks 

The Indonesian Ministry of Energy and Mineral Resources (ESDM) is preparing regulations on the incentives and tax breaks needed by developers to step up the development of green hydrogen. 

"This policy will later be included in the EBET Bill, which is still in the evaluation stage," said Andriah Feby Misna, the ministry's Director of Various New and Renewable Energy, at the Indonesia International Hydrogen Summit 2024 in Jakarta on Thursday. 

"Apart from that, the government is also reviewing a national hydrogen strategy, which is expected to reduce the use of fossil fuels," she added. 

Misna said that later, under the hydrogen regulation, there will also be standards governing tax holidays, tax allowances, taxes, and basic carbon trading regulations. 

Based on data from the ESDM Ministry, the hydrogen production target for 2060 is 9.9 million tons per year (Mtpa). 

The figure has been calculated based on the anticipated needs of the industrial sector (3.9 Mtpa), transportation sector (1.1 Mtpa), electricity sector (4.6 Mtpa), and household gas network (0.28 Mtpa). 

"Apart from these four sectors, hydrogen also has the opportunity to become an export commodity," she added. 

On the same occasion, Pertamina Geothermal Energy (PGE) CEO Julfi Hadi said that, apart from incentives, tax breaks, price subsidies, and funding are also important points that must be prepared by the government. 

"So far, there are no standard guidelines. We hope that in the future, there will be hydrogen export regulations, production and transportation standards, as well as a scheme for distributing electricity through national transmission (power wheeling)," Hadi added. 

Meanwhile, Medco Power Indonesia CEO Eka Satria expressed hope that in the future, the government will create regulations that support sustainable industry and a low-carbon hydrogen ecosystem. 

"This can encourage the entry of foreign investment," he added. 

According to Seno Adhi Damono, a senior adviser at Hydrogen Energy Center Indonesia, investing in hydrogen development could help create a more environmentally friendly future. 

"The development of hydrogen technology can reduce dependence on the use of fossil fuels," he said. 

Deputy for Maritime Sovereignty and Energy at the Coordinating Ministry for Maritime and Investment Affairs, Jodi Mahardi, said that Indonesia is geographically close to countries that have a high demand for clean hydrogen. 

Japan, South Korea, and Singapore, for instance, together represent a hydrogen market of around 4 Mtpa. 

Indonesia has the second-largest gas reserves in the Asia-Pacific and the third-largest CO2 storage potential in the region for blue hydrogen. 

Meanwhile, in terms of green hydrogen, Indonesia has the second-largest geothermal potential in the world and a potential solar power capacity of more than 200 GW. 

"The hydrogen sector presents new opportunities for Indonesia to utilize its abundant energy resources to encourage higher economic growth," Mahardi said. 

Source: Antara News