Rupiah down, IDX Composite drops as Trump wins US election  

 

The Bank Indonesia governor said Trump’s presidency could have broad implications for emerging markets like Indonesia, impacting exchange rates and capital flows. 

 

The rupiah has dropped against a strengthening United States dollar as Donald Trump is the projected winner of the 2024 US presidential election, prompting a rise in “risk-off” sentiment among foreign investors.  

 

Bank Indonesia (BI) quoted the Jakarta Interbank Spot Dollar Rate (JISDOR) at Rp 15,840 on Wednesday, down 0.4 percent from a day earlier.  

 

The greenback was also up against most other currencies as the US dollar index surged 1.56 percent to 105, its highest level since July.  

 

Local stocks dropped, with the Indonesia Stock Exchange (IDX) Composite index closing down 1.44 percent at 7,383.87 on Wednesday. Foreigners also sold more Indonesian stocks than they bought, with $72.51 million in net sales, IDX daily trading data show. 

 

“Trump’s win has led to a 'risk-off' sentiment in the market, as seen in the current data,” Mirae Asset chief economist Rully Arya Wisnubroto told The Jakarta Post on Wednesday. 

 

“BI will likely continue intervening to prevent excessive rupiah weakening and will use tools like SRBI [Bank Indonesia Rupiah Securities] to manage outflows,” Rully said. 

 

In a meeting with House of Representatives Commission XI on Wednesday, BI Governor Perry Warjiyo acknowledged the potential impact of Trump's victory on Indonesia's economy, noting that a Trump administration could strengthen the US dollar further and reignite trade tensions.  

 

BI would monitor the situation closely, he said, reiterating the central bank’s commitment to “maintaining stability and supporting sustainable economic growth” through cooperation with the government and the Financial System Stability Committee (KSSK). 

 

“These dynamics will have broad implications, especially for emerging markets like Indonesia, impacting exchange rates, capital flows and market [certainty],” Perry said. 

 

Trump is set to return to the presidential office for a second term four years after leaving Washington, DC, in 2020, reclaiming the position from US President Joe Biden.  

 

He claimed victory over Vice President Kamala Harris after media projected he had secured the 270 electoral votes necessary to win the race.  

 

Trump has announced plans to keep corporate taxes low and raise import tariffs, particularly on goods originating from China, which analysts warn could indirectly hurt Indonesian exports by reducing Chinese demand for raw materials.  

 

Muhammad Habib Abiyan Dzakwan, a researcher with the Centre for Strategic and International Studies (CSIS) in Jakarta told the Post on Wednesday that, with Trump back in office, the government could face challenges similar to those encountered during Trump’s first term, when he pushed back on trade surpluses with Indonesia.  

 

Trump’s administration was in the process of reviewing Indonesia’s access to the US generalized system of preferences (GSP), which grants preferential tariffs to developing countries, in November 2020.  

 

However, the entire program has since ended, for all countries, and was not renewed under the Biden administration. Experts believe it is unlikely to be renewed under Trump, given his general preference for protectionist trade policies.  

 

There is also uncertainty over the Indo-Pacific Economic Framework (IPEF), which President Biden had championed to strengthen US economic ties in the region after Trump withdrew from the Trans-Pacific Partnership.   

 

“It’s doubtful Trump would continue with the IPEF,” Habib said, “which could hurt Indonesia’s economic engagement, given the high potential for growth if the US remained actively involved.” 

 

On the other hand, Trump’s “transactional" approach to foreign policy, as Habib suggested, could open opportunities if the government presented proposals strategically. 

 

For instance, a pending critical minerals agreement with the US, which the Biden administration stalled over environmental concerns, might find a more favorable path under Trump, who has historically focused more on countering Chinese influence than on environmental restrictions.  

 

“If the government hits the right note, Indonesia could achieve its goals. It’s all about how [the government] presents our case [to the US],” Habib said.  

 

Source: The Jakarta Post 

Apple to offer extra Indonesia investment to remove iPhone ban 

 

APPLE has proposed investing almost US$10 million to make additional goods in Indonesia, according to sources familiar with the matter, as it seeks to have the country’s ban on sales of its latest iPhone removed. 

 

The plan would involve Apple investing in a factory in Bandung, southeast of Jakarta, in partnership with its list of suppliers, the sources said, asking not to be identified because they are not authorised to speak publicly. The facility would make products such as accessories and components for Apple gadgets, the sources said. 

 

Apple has submitted its proposal to the nation’s Ministry of Industry, which last month blocked a permit allowing the sale of the iPhone 16 on grounds the US tech giant’s local unit has not met a 40 per cent domestic content requirement for smartphones and tablets. 

 

The ministry is deliberating on the proposal, which is not final and may be subject to change, and is expected to reach a decision shortly, the sources said. 

 

Apple did not respond to a request for comment. The Ministry of Industry also did not respond to a request for comment. 

 

Indonesia’s iPhone 16 ban is the latest example of the pressure new President Prabowo Subianto’s government is putting on international companies to boost local manufacturing as it seeks to protect domestic industries. The South-east Asian nation has also banned the sale of Alphabet’s Google Pixel phones because of a similar lack of investment. 

 

The moves are a continuation of similar tactics used under former President Joko Widodo’s administration. Last year, Indonesia blocked China’s ByteDance in a bid to shield its retail sector from cheap Chinese-made goods, prompting the hugely popular video service to ultimately invest US$1.5 billion in a joint venture with Tokopedia, the e-commerce arm of Indonesia’s GoTo Group. 

 

Apple does not have any standalone factories in Indonesia and like most multinationals, partners with locally based suppliers to make components or finished goods. An investment of close to US$10 million would be a relatively small price for Apple to pay for freer access to Indonesia’s some 278 million consumers – more than half of them under the age of 44 and tech savvy. 

 

While Indonesia may view Apple’s additional investment – should it transpire – as a win, its strong arm approach risks deterring other companies from scaling up their presence or establishing a footprint in the first place, particularly firms that are looking to pivot away from China. It may also jeopardize Prabowo’s aim of attracting overseas investments to grow the economy and fund policy spending. 

 

Source: Business Times 

Indonesia Still Upbeat on 5 Pct Growth This Year 

 

Indonesia remains positive about expanding at around 5 percent this year despite a slower economic growth in the third quarter of 2024. 

 

The Central Statistics Agency (BPS) recently reported that Indonesia's gross domestic product (GDP) growth had slowed from 5.05 percent year-on-year in Q2-2024 to 4.95 percent the following quarter. 

 

According to Chief Economic Affairs Minister Airlangga Hartarto, Q3 growth has historically been slower than that of the previous quarter. The government is now banking on the fourth quarter growth to propel the overall figures for 2024. 

 

“We hope that our economy can do better in the fourth quarter. The Indonesian economy still expanded at 5.03 percent in January-September. With that, we should be able to maintain our growth at the 5-percent level by the end of the year, as we have targeted,” Airlangga told reporters in Jakarta on Tuesday.  

 

Airlangga also attributed the slower growth in the third quarter to the lack of major events and holidays, including school breaks. Even so, other economic indicators remain stable. Indonesia managed to keep its inflation in check at 1.7 percent – far lower than its ASEAN counterpart Vietnam whose inflation rate reaches 7.4 percent. 

 

Indonesia’s debt-to-GDP ratio stood at 39.4 percent. In terms of expenditure, household consumption rose 4.91 percent yoy and remained a key driver to the GDP growth in Q3. 

 

Source: Jakarta Globe