Indonesian Economic Outlook
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Transcript of Indonesian Economic Outlook
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Indonesian
Economic Outlook
2015FADHIL HASAN
INSTITUTE FOR DEVELOPMENT OF ECONOMICS AND FINANCE (INDEF)
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New government, new initiative: Nawa Cita
Theme is "Strong Development, Inclusive and Sustainable"
ECONOMICS DEVELOPMENT
AGENDA
NATURAL RESOURCES/ ENVIRONTMENTAL
Strengthening food security, energy and water
Accelerating the marine development
Improvement of environmental quality
Addressing climate change (Mitigation and adaptation)
ECONOMY
Development and technological innovation system
Increased investment and financial sectors
Increase workforce competitiveness and State-Owned Enterprises
Increase the contribution of small and medium enterprises in the economy
Preparation of natural resources for industrial sector
Development of processing industry
Efficiency of national logistics and distributionIncrease in non-oil exports and high value-added services
FACILITIES AND INFRASTRUCTURE
Improving connectivity and synergy between sectors
Meeting the needs of basic infrastructure
Creating mass transportation
Source:RPJMN 2015-2019
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Four main priorities of economic
agendas
Baseline 2014 Target 2019
Construction of reservoirs (unit) 21 49
Construction of new roads (km) 1202 2650
Construction of highways (km) 807 1000
Railway track (km) 5434 8692
Number of airports (unit) 237 252
Development of infrastructures
Baseline 2014 Target 2019
Rice (million tonnes) 70.6 82
Corn (million tonnes) 19.13 24.1
Soybean (million tonnes) 0.92 2.6
Sugar (million tonnes) 2.6 3.8
Beef (thousand tonnes) 452.7 755.1
Fish production (million tonnes) 12.4 18.8
Achieving food self-sufficiency
Baseline 2014 Target 2019
Generating capacity (GW) 50.7 86.6
Electrification ratio (%) 81.5 96.6
Crude oil (thousand barrels oil/day equal to oil) 818 700
Natural gas (thousand barrels oil/day equal to oil) 1224 1295
DMO (Domestic Market Obligation) of natural gas (%) 53 64
Gas pipelines (km) 11960 18322
Construction of refinery (unit) 1
Achieving energy security
Baseline 2014 Target 2019
Construction of ports to support the marine highway (unit) 24
The development of ferry ports (unit) 210 270
The development of of fishing ports (unit) 21 24
Pioneer ships (unit) 50 104
Fishery production (million tonnes) 22.4 40-50
Increasing the area of marine conservation (million Ha) 15.7 20
Development maritime sectors
Source:RPJMN 2015-2019
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"Nine Priority Agenda (Nawa Cita) Jokowi-JK Improvement Action Program to economic self-
reliance
Build food sovereignty based on agribusiness
Control policy on food imports through the eradication of the
"import mafia"
Agriculture poverty alleviation and support the re-generation of farmers through:
100 villages sovereign seed
To enhance the capacity of farmers, the active involvement of women
Build irrigation, dams, roads, transportation and markets
Increased development and rural economic attractivities
Agrarian Reform
Land reform by delivery 9 million hectares of land
Ownership of agricultural land into 2 acres per family farmer and the opening of the 1 million dry land outside Java and Bali
Creating a special bank for agriculture, Small
and Medium Enterprises and Cooperatives
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SBY & Jokowi
2010 2011 2012 2013 2014* 2015* 2016* 2017* 2018* 2019*
GDP growth (%) 6.2 6.5 6.3 5.8 5.02 5.7 6.6 7.1 7.5 8
Income per capita (thousand Rp) 27,029 30,659 33,531 36,508 43,403 47,804 52,686 58,489 64,721 72,217
Inflation (%) 5.1 5.4 4.3 8.4 8.4 5 4 4 3.5 3.5
Rupiah exchange rate (Rp/USD) 8,991 9,068 9,670 12,189 11,878 12,500 12,150 12,100 12,050 12,000
Primary balance of budget/GDP (%) 0.6 0.1 -0.6 -1.1 -0.7 -0.6 -0.5 -0.4 -0.3 0
Surplus/Deficit budget/GDP (%) -0.7 -1.1 -1.9 -2.3 -2 -1.9 -1.8 -1.6 -1.4 -1
Tax/GDP (%) 11.3 11.8 11.9 11.9 11.5 13.2 14.2 14.6 15.2 16
Stock of government debt/GDP (%) 26.2 24.4 24 26.1 23.9 26.7 23.3 22.3 21.1 19.3
Foreign debt (%) 9.6 8.4 7.5 7.8 6.2 5.3 4.8 4.2 3.8 3.3
Domestic debt (%) 16.6 16 16.5 18.3 17.7 18.7 18.6 18.2 17.7 16.7
Unemployment rate (%) 7.4 6.8 6.2 5.8 5.9 5.5-5.8 5.2-5.5 5.0-5.3 4.6-5.1 4.0-5.0
Poverty rate (%) 13.33 12.49 11.46 11.37 10.96 9.5-10.5 9.0-10.0 8.5-9.5 7.5-8.5 7.0-8.0
IndicatorsSBY JOKOWI
Source:RPJMN 2015-2019
Need goverment intervention
Need huge budgetfiscal expansion
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The investment needs (trillion rupiah)
493 673 763 937 1,158
3,452 3,827
4,425 5,041
5,789 3,945
4,500 5,188
5,978
6,947
2015 2016 2017 2018 2019
Public
Government
4,023.8
15%
22,534.1
85%
Government
Public
Total 2015-2019
Rp26,557.9 T
Source:RPJMN 2015-2019
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Additional State Capital Investment
(Rp73 trillion)
Food self-sufficiency
Infrastructure & maritime
Aerospace industry
Defense industry
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Major change in government budget
Source: Kata Data, 19 Nov 2014
Increase budget
allocation for
infrastructure, agriculture, energy
and maritime sectors
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Government budget: assumption
Indicators 2014 Realization 2015 Revised Budget
GDP Growth (%) 5.02 5.7
Inflation (%, yoy) 8.36 5.0
Rupiah Exchange Rate (Rp/USD) 11,878 12,500
3-Month Government T-Bills (%) 5.8 6.2
Indonesian Crude Oil Price (USD/barrel) 97 60
Oil Lifting (thousand barrels/day) 794 825
Gas Lifting (thousand barrels oil/day equal to oil) 1,224 1,221Source: Ministry of Finance RI, 2015
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Revenue
Domestic Revenue, 2006 2015 (Trillion Rp)
Source: Kementerian Keuangan, Nota Keuangan & RAPBNP 2015
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Expenditure
Expenditure, 2006 2015 (Trillion Rp & % )
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Financing
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Summary of the state budget
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Opportunities and risk
External factors:
Declining of agriculture and oil prices
Slowing down world economic growth (china, japan, EU)
Increase of the fed rate
Internal factors:
Current account deficit
Institutional capacityexecution
Policy consistency
Coordination central and regional government
Political stabilityeffectiveness of program.....
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Trend in oil price
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Trend in agricultural prices
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Economic Growth
GDP (%,yoy) 2013 2014Projection
2015 2016
World 3,3 3,3 3,5 3,7
AS 1,3 1,8 2,4 2,4
Eurozone -0,5 0,8 1,2 1,4
Japan 1,6 0,1 0,6 0,8
China 7,8 7,4 6,8 6,3
India 5 5,8 6,3 6,5
Sumber: IMF-World Economic Outlook Update, Januari 2015
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Corporate debt is very sensitive to exchange rate fluctuation
Sumber: REO, 2014 (olah)
18
Sources of corporate debt dominated by other sources (38.7%
of GDP), l debt from direct
investment (8,7% of GDP) and from
affiliates (4,7%).
Exchange rate depreciation will increase interest rate and primary
debt denominated foreign currency
that potential default is high and
corporate profit decline. Rupiah
continues to depreciate in the last
year.
Corporate foreign debt to GDP
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Result from stress test IMF if there is shock
Source: IMF, 2014
19
Indonesian companies is very vulnerable to the shock. IMF
showed that if borrowing cost increase by 250 bps or profit
decline by 25%, Indonesia
companies has high debt risk.
Level of Indonesian corporate debt is below 30% and will increase to 48% if there is a
shock.
Percentage of corporate debt if there is external shock
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Normalization scenario and declining in commodity
prices
20
US economy recovery is a trade off for emerging
economies slowing down.
Normalization cycle Normalisasi
Siklus InteraksiEkonomi yang
Saling
terintegrasi
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Current account deficit Keterangan
2014
TotalQ1* Q2* Q3**
I. Transaksi Berjalan -4,156.83 -8,688.52 -6,835.77 -19,681.12
A. Barang 3,349.64 -126.35 1,555.21 4,778.50
B. Jasa - jasa -2,230.31 -2,908.86 -2,531.09 -7,670.26
C. Pendapatan Primer -6,360.98 -7,193.27 -7,053.26 -20,607.51
D. Pendapatan Sekunder 1,084.82 1,539.96 1,193.37 3,818.15
II. Transaksi Modal 1.23 7.21 3.25 11.69
III. Transaksi Finansial 6,967.23 14,322.24 13,667.88 34,957.35
- Aset -5,895.22 -2,682.12 -3,468.04 -12,045.38
- Kewajiban 12,862.46 17,004.36 17,135.92 47,002.74
1. Investasi Langsung 2,802.68 3,695.40 5,428.58 11,926.66
2. Investasi Portofolio 8,702.84 8,316.91 7,089.52 24,109.27
3. Derivatif Finansial -140.36 45.25 -57.36 -152.47
Memorandum:
- Posisi Cadangan Devisa 102,591.87 107,678.11 111,164.46
Dalam Bulan Impor dan
Pembayaran Utang Luar Negeri
Pemerintah
5.73 6.06 6.32
- Transaksi Berjalan (% PDB) -2.05 -4.06 -3.07
Current account deficit is still large (3.07% of GDP) in third quarter 2014.
Service account deficit is USD 7.67 miliar.
Income account defisit is USD 16.78 miliar.
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Conclusion
The government should improved the quality of budget
absorption.
The government should accelerate the realization of
infrastructure projects.
Create a conducive investment climate.
Political stability.
Bureaucratic reform.
Encourage diversification of export products.
Maintaining purchasing power.
Maintaining macroeconomic stability.