This Week’s Headlines (Jun. 29-Jul. 5, 2024)

05 Jul 2024


Jokowi Sets Two-Week Deadline for 200 Pct Import Duty Plan on Chinese Goods


Indonesia is considering a 200 percent import duty on goods from China, including clothing, steel, and textiles, as a response to domestic industries struggling to compete with cheaper imported products. 


President Joko "Jokowi" Widodo summoned Industry Minister Agus Gumiwang to the Presidential Palace on Tuesday to discuss the proposed import duty. 


The minister said President Jokowi has given a two-week deadline to finalize the report on this plan's progress. 


"It's part of the discussion. We will report back in another two weeks," said Agus on Tuesday. 


However, Agus did not provide details regarding discussions within his ministry and other related ministries concerning the implementation of these regulations. 


"I can't report yet. Let's wait for another two weeks," he concluded. 


The Indonesian textile industry is currently facing significant job cuts. According to the Confederation of Indonesian Trade Unions (KSPN), nearly 50,000 textile industry workers have been laid off this year as of early June. Companies are reluctant to reveal their identities for fear of alarming banks and buyers. Think tank Celios blamed the layoffs on the influx of cheaper Chinese textiles. 


China is Indonesia's biggest trade partner, but Indonesia's trade deficit with China in May 2024 nearly tripled to $1.3 billion, up from the $500 million deficit recorded in April, according to the Central Statistics Agency (BPS). The deficit was driven by imports of machinery, mechanical appliances, electrical machinery, equipment, and plastics. 


Source: Jakarta Globe 



Asian stocks extend gains, dollar dips as US data builds on rate hope


Asian equities rose and the dollar slipped further on Thursday as investors welcomed more data pointing to a softening labor market that gives the Federal Reserve room to cut interest rates, with another key jobs report due later in the day. 


The advances tracked another record on Wall Street on a holiday-shortened day, while national elections in Britain and France are also on the radar over the next few days. 


After a recent poor run for stocks, the mood on trading floors has lightened this week thanks to figures indicating the US labor market was tightening and inflation retreating. 


On Wednesday, figures showed the private sector created fewer jobs than expected last month, while first-time and continuing claims for jobless benefits also topped forecasts. 


Also, a survey showed services sector activity contracted in June at the fastest pace in four years. 


That all came after news Friday that the personal consumption expenditures (PCE) index -- the Fed's preferred gauge of prices -- had dipped further in May. 


Adding to the feel-good factor were comments this week from Fed chief Jerome Powell, who said the battle against inflation had made "progress" and "substantial" work had been done on softening the labor market. 


Markets are pricing in nearly two rate reductions this year, starting in November. 


Still, minutes from the central bank's June policy meeting showed officials remained cautious about cutting too soon and wanted to see more evidence prices were under control. 


While inflation remains sticky and is tempering expectations, softening data in May "adds to our growing confidence that price rises won't reaccelerate from here", said Henk-Jan Rikkerink, of Fidelity International. 


"The range of outcomes when it comes to the magnitude of potential rate cuts by the Fed have narrowed significantly since the start of the year. 


"We think that the bar for the cutting cycle to start remains high but recent progress on the inflation front has been encouraging." 


On Wall Street, the Dow ended slightly lower, but the S&P 500 and Nasdaq chalked up more record highs. 


And the gains filtered through to most of Asia, with Tokyo, Hong Kong, Sydney, Seoul, Taipei, Manila and Jakarta ascending. 


Shanghai, however, bucked the trend again, with traders still on edge about the state of the world's number two economy. 


Zhiwei Zhang at Pinpoint Asset Management warned "people don't have strong confidence in economic outlook. Stronger policy support would help, from both monetary and fiscal fronts. China has a high real interest rate and a conservative fiscal policy stance for now".  


And Capital Economics' Thomas Mathews said there were concerns among Chinese investors domestically and globally, and while they could ease over time "Chinese equities seem set to go their own way for a while yet". 


The dollar dipped further against its major peers after the jobs readings, with the euro getting a little help from news that more than 200 centrist and left-wing candidates had pulled out of Sunday's legislative election runoff in France in a bid to beat the far right. 


President Emmanuel Macron hopes the move will unify the vote and thus block the far-right National Rally (RN) of Marine Le Pen from gaining power after it saw massive gains in the first round Sunday. 


However, analysts warned that the country -- the second biggest economy in the European Union -- could be headed for a period of political deadlock if there is no overall winner in the polls. 


The pound was enjoying support ahead of Thursday's general election, which is expected to see the opposition Labour Party win a landslide against the ruling Conservatives after 14 years in government. 


Source: AFP / The Jakarta Post 



Norway keen to explore hydropower, carbon capture storage projects in Indonesia


Norway is seeking to form a stronger partnership with Indonesia and explore investment opportunities in renewable energy such as hydropower, and carbon capture and storage, the energy minister said. 


"A lot of opportunities are there, and there are some hurdles, but I hope we can build a stronger partnership in years to come," Energy Minister Terje Aasland told Reuters late on Thursday after meeting his counterpart Arifin Tasrif in Jakarta earlier this week. 


While Norway aims to achieve net-zero greenhouse gas emissions by 2050, it also continues to explore and develop new oil and gas fields, including in the Arctic’s Barent Sea, to maintain output that is expected to peak in 2025. 


The country became Europe's largest supplier of natural gas after a sharp reduction in Russian deliveries since the start of the war in Ukraine in 2022. 


Norwegian companies can contribute their experience in hydropower and carbon capture and storage (CCS) in Indonesia to reduce emissions in the country, Aasland said. 


Storage capacity at Norway's first CCS project Northern Lights will be ready this year, and is on track to start capturing carbon dioxide from a cement plant in Brevik next May, he said. 


Aasland met representatives from Norwegian firms in Singapore on Thursday including Equinor, DNB and Yarra, which are investing in renewables, energy storage and alternative fuels such as ammonia in Asia Pacific. 


Norway, which is western Europe's largest oil and gas producer, generates a total output of just over 4 million barrels of oil equivalents per day (boepd). 


Norwegian gas supplies to Europe is expected to reach 120 billion cubic metres (bcm) this year, Aasland said, up from 109 bcm in 2023. 


"Oil and gas will also play a crucial role in the coming decades because of the needs to energy security and affordable prices," Aasland said, adding that the country needs to secure supply chain for green transition. 


Norway aims to give exploration permits for seabed mining in the Arctic region next year, hoping to extract minerals needed for solar panels, wind turbines and electric car batteries needed to replace fossil fuel energy, although the plan faces opposition from environmental groups and some European countries. 


"Today we depend on Russia and China so we have to diversify the value chain for minerals in the coming years and we are looking into how we can develop the activity in the Norwegian Continental Shelf in a sustainable manner," Aasland added. 


Source: Reuters