Indonesian Bankers Say Growth, Inflows Could be Hit by Trump's Policies 

 

Indonesia's growth and portfolio investment could be hit if planned policies of U.S. President-elect Donald Trump disrupt global trade and make it harder to cut interest rates, bankers at state-run lenders told a parliamentary hearing on Wednesday. 

 

A U.S.-China trade war could take around 0.2 percentage points off Indonesia's economic growth next year, and even more if other countries followed suit, said Sunarso, the president director of Bank Rakyat Indonesia (BRI). 

 

"That's why we must be careful if the U.S. becomes protective and China also responds with a trade war like the last one, the impact will be quite significant on us," Sunarso, who uses a single name, told the parliamentary hearing. 

 

Both China and the United States are major trade markets for Indonesia. 

 

BRI, the country's second-largest by assets, had forecast economic growth of 4.9%-5.2% next year, but Sunarso said that could drop to 4.6%-4.9% if a wider trade war developed. 

 

Darmawan Junaidi, the chief executive of top lender Bank Mandiri, said a trade war could affect global commodity prices, which often move according to demand from China. Indonesia is a major exporter of palm oil, coal, nickel, tin and rubber. 

 

Trump has proposed a 10% tariff on all U.S. imports and 60% on Chinese-made products, which along with other planned fiscally expansive policies have raised some concerns for markets and analysts about inflation and future rate cuts. 

 

Bank Negara Indonesia said the incoming U.S. administration's policies could see the Federal Reserve cut rates less than previously expected. "The situation ahead is not easy with Trump winning, as reduced taxes (and) tariffs will push inflation up, making it difficult for the Fed to lower interest rates," President Director Royke Tumilaar told the hearing. 

 

"This liquidity pressure is a significant burden for our expansion plan," Tumilaar added. 

 

Indonesia typically sees capital inflows when the Federal Reserve eases monetary policy, as investors look for better returns. Times of uncertainty generally trigger outflows from emerging markets, such as Indonesia, as investors reduce risk. 

 

Bank Indonesia (BI) cut interest rates in September, just ahead of the Fed kicking off its rate-cutting cycle. Last week, the Fed delivered a second rate cut. BI has said the Fed's future easings and movements in U.S. Treasury yields could affect its room to cut Indonesian rates. 

 

Indonesian President Prabowo Subianto is currently in the United States. He met President Joe Biden on Tuesday, and has spoken with Trump on the phone. 

 

Source: Reuters 

Indonesia's Exports, Imports Beat Forecasts, Trade Surplus Less than Expected 

 

Indonesia reported stronger-than-expected export and import growth in October, amid strong agriculture shipments, official data showed on Friday. 

 

However, its trade surplus shrank to a three-month low of $2.47 billion. A Reuters poll of analysts had expected a surplus of $3.05 billion versus a revised $3.23 billion in September. 

 

The October trade data will be among a host of economic indicators the central bank will review to determine its monetary policy stance at a meeting next week. 

 

Exports from resource-rich Indonesia have recently recovered from a period when export values fell sharply due to declining global commodity prices. 

 

Statistics Indonesia, which provided the trade data, said global prices for some of the country's commodities have since recovered, such as prices of agricultural, metal and mineral products, but energy prices were still below last year's. 

 

Indonesia is a major exporter of palm oil, coal, nickel, tin and natural gas, among other resources. 

 

In October, exports rose 10.25 per cent from a year earlier to $24.41 billion, far above a forecast rise of 3.84 per cent in the Reuters poll. The pace of growth was the fastest since January, 2023. 

 

Palm oil shipments rose an annual 25.35 per cent in October to $2.37 billion, as export volumes and prices both increased. Palm oil prices have been propped by Indonesia's ambitious biofuel plan for 2025. 

 

There have also been a jump in the value of cocoa shipments so far this year amid an increase in international cocoa prices. 

 

Meanwhile, imports surged 17.49 per cent on a yearly basis to $21.94 billion, the fastest pace since September 2022. The poll had predicted 7.10 per cent growth. 

 

Imports of raw materials for industries rose 18.48 per cent last month from a year earlier. 

 

Source: CNA 

Indonesia Plans to Make Dairy Cow Imports Easier 

 

Indonesia is planning to make the import process for dairy cows easier to accommodate President Prabowo Subianto’s free school meal plan, according to Agriculture Minister Andi Amran Sulaiman. 

 

Indonesia is gearing up to start distributing free nutritious meals to school-age children across the country in January.  The government is also currently making sure that Indonesia has enough food and milk to distribute to the kids. To this end, the populous country is mulling bringing in dairy cows from overseas so local farmers can produce higher quality milk.  

 

“We will not make it difficult for dairy farmers to import cows. This is all to produce higher quality milk,” Amran said on Thursday during a business trip in the East Javan regency of Pasuruan. 

 

The ministry will also discuss with regional banks and cooperatives for any possible funding scheme for the dairy cow imports, according to Amran.  

 

His statement came not long after Amran revealed Indonesia would import around 1 million dairy cows in 2025-2029. 

 

Indonesia will purchase these dairy cows from Australia, Brazil, New Zealand, the US, and Mexico. 

 

The government forecasts that the national fresh milk demand will reach 8.5 million tons by 2029. About 4.9 million tons will come from regular milk demand, while the remaining 3.6 million tons will supply Prabowo’s free meal program. 

 

During the election, Prabowo promised to feed all Indonesian school-children as a means to cut the national stunting rate. 

 

The government has ran some trial runs for the ambitious free meal drive at some schools. The menu typically comprises of the Indonesian staple food rice, chicken, vegetables, fruit, and milk. 

 

Source: Jakarta Globe