Indonesia's Feb Trade Surplus Smallest in 9 Months

Indonesia booked its smallest trade surplus in nine months in February as imports came in stronger than expected, while exports slumped, data from the statistics bureau showed on Friday.  

Its trade surplus last month was around US$870 million, below the $2.32 billion expected by economists polled by Reuters and January's $2 billion surplus.  

The February surplus was the smallest since May 2023.  

Resource-rich Indonesia is the world's biggest exporter of coal, palm oil and nickel.  

A drop in commodity prices last year pressured its external balance. This year, exports may also have been affected by delays in the government's issuance of mining permits, which have disrupted activities in coal, nickel and tin mines, among others.  

In February, exports dropped 9.45% from a year earlier to $19.31 billion, more than the 6.5% predicted in the poll.  

Shipments of Indonesia's biggest export products, coal and palm oil, were each down 18.7% and nearly 40%, respectively, year-on-year by value.  

Imports were worth $18.44 billion in February, up 15.84% from a year earlier, against market expectations for a 9.3% increase, with the biggest rise recorded for imports of machinery, plastic, and electrical equipment. 

Source: Kontan 

Car sales continue to decline in February  

Domestic car sales were down 18.8 percent year-on-year in February despite a prominent car exhibition held in Jakarta last month.  

Domestic car sales continue to be in a downtrend with another annual decline logged in February that automotive industry representatives attribute to a sluggish economy but also to waning consumer interest.  

Wholesalers sold 70,657 cars nationwide last month, marking an 18.8 percent decline year-on-year (yoy), according to data from the Indonesian Automotive Manufacturers Association (Gaikindo).  

Retail sales also declined strongly in February, falling 16.3 percent yoy.  

Gaikindo co-chairman Jongkie D. Sugiarto pointed to “slower economic growth” as a primary driver behind the lackluster domestic car sales performance.  

“The market is still weak, even though many new brands have been launched at affordable prices. We hope the market can improve in the coming months,” Jongkie said on Monday, as quoted by bisnis.com. 

Indonesia’s GDP growth stood at 5.05 percent in 2023, much lower than the 5.31 percent recorded in 2022, according to data from Statistics Indonesia (BPS).  

However, the most recent GDP release showed growth of 5.04 percent in last year’s final quarter, which is marginally higher than the rate of 5.01 percent registered one year earlier.  

In the first two months of this year combined, wholesales of 140,274 units reflected a 22.6 percent yoy decline. Retail sales were on a similar trajectory with a 15 percent yoy drop to 148,649 units over the same period.  

On a monthly basis, nationwide car wholesales exhibited a modest 1.5 percent uptick to 70,657 units in February 2024, but retail sales experienced a notable downturn, declining 10.3 percent month-to-month to 70,291 units.  

Toyota still tops the domestic car market with wholesale sales of 44,513 units and retail sales of 46,828 units in the period of January-February 2024, according to Gaikindo data cited by Kontan.  

Daihatsu followed with wholesale sales of 29,451 units and retail sales of 31,795 units over the same two-month period.   

Toyota-Astra Motor (TAM) marketing director Anton Jimmi Suwandy highlighted the impact of inflation on consumer purchasing power, arguing that stagnant car sales were a consequence of the discrepancy between income growth and rising prices.  

“Many have delayed [purchases], not only retail customers, but also fleets, including entrepreneurs who have stopped making purchases since the fourth quarter of 2023,” Anton was quoted as saying by bisnis.com.  

Increased sales of used cars had further intensified competition within the market, Anton added.  

The Indonesia International Motor Show (IIMS), held in Jakarta from Feb. 15 to 25, recorded a total transaction value of Rp 6.7 trillion (US$432 million), marking a 27.7 percent increase from the previous year's exhibition.   

This figure was above the targeted Rp 5.3 trillion as transactions at the exhibition surged by 22.9 percent yoy to 19,200 vehicles.  

Notably, electric vehicles accounted for 35 percent of all car and motorcycle sales at the exhibition, Katadata reported. 

Source: The Jakarta Post 

Government to Impose 12% VAT Starting Next Year

The government is set to implement a 12 percent value-added tax (VAT) next year, marking a 1 percentage point increase from the current VAT rate. This adjustment is in accordance with the law on the harmonization of taxation regulations issued in 2022, a senior official said on Friday. 

Indonesia is gearing up for a change in leadership, with Defense Minister Prabowo Subianto projected to win the February 14 election, according to independent pollsters sampling from thousands of polling stations. The new president is expected to take office in October. 

During his campaign, Prabowo pledged to defend the legacy of President Joko Widodo and assured the continuity of his policies. The candidate has formed a partnership with the president’s son, Gibran Rakabuming Raka, as his running mate. 

"The Indonesian people have made their choice, namely the continuation of current government programs, including VAT policies,” Chief Economic Minister Airlangga Hartarto said in Jakarta. 

The 2022 law mandates the phased implementation of VAT hikes, with the 12 percent rate set to be imposed by January 1, 2025, at the latest. The VAT was previously raised from 10 percent to 11 percent on April 1, 2022. 

Airlangga said the government is currently formulating macro-economic and fiscal policies, including the new VAT rate, as the basis for drafting the 2025 state budget. 

While the new VAT rate is expected to boost state revenues, the final 2025 draft budget won’t be ready before the General Election Commission (KPU) formally announces the winner of the presidential election scheduled for March 20, Airlangga explained. 

Airlangga is also the chairman of the Golkar Party, which nominated Gibran as Prabowo’s running mate and joined the coalition supporting their candidacy. 

Source: Jakarta Globe