Indonesia - Latest News/Current Events, Economic Overview & Trade Relations
Quick Facts about Indonesia
| Official Name | Republic of Indonesia |
| Capital | Jakarta |
| Location | Southeastern Asia, archipelago between the Indian Ocean and the Pacific Ocean |
| Area | total: 1,919,440 sq km land: 1,826,440 sq km water: 93,000 sq km |
| Climate | tropical; hot, humid; more moderate in highlands |
| Terrain | mostly coastal lowlands; larger islands have interior mountains |
Editor PicksBrowse Asia News Archive
Indonesian Bonds Offers the Highest Yield
Indonesia's local-currency bonds have handed investors a 10 percent gain this year, the best performance among 10 local- currency Asian debt indexes compiled by HSBC Holdings Plc. Investors snapped up the debt as a 9 percent rally in the rupiah since Jan. 1 and $5.5 billion in standby loans from multilateral lenders boosted confidence in the nation's finances. Moody's Investors Service on June 11 raised Indonesia's credit rating outlook to "positive," which may lead to an increase in credit rating in the next 18 months. Moody's rates Indonesia Ba3, the third highest non-investment-grade rating.
The central bank, which started cutting rates in December, will lower the reference rate tomorrow by a quarter-percentage point to 6.75 percent, 16 of 20 economists predicted in a Bloomberg survey. Four predicted no change. Indonesia's bonds will extend a rally that pushed yields to a 16-month low as cooling inflation allows the central bank to cut interest rates, ING Groep NV, PT Mandiri Sekuritas and Australia & New Zealand Banking Group Ltd. said. Yields on 10-year notes will drop 1.5 percentage points to 9.5 percent by the end of this year, the lowest level since November 2007, said Handy Yunianto, a Jakarta-based bond analyst at Mandiri. Five-year bond yields will drop 70 basis points to 9 percent, ING said. "Falling inflation is positive for bonds," Prakash Sakpal, an economist in Singapore at ING, the largest Dutch financial- services company, said in an interview yesterday. Sakpal said Bank Indonesia will lower borrowing costs at a meeting tomorrow.read source article
Hot Emergent Market: Indonesia
Southeast Asia's largest economy may grow 60 percent in the next five years to $800 billion due to a stable administration, lower capital costs and a government plan to spend as much as $34 billion to build roads, ports and power plants by 2017, Morgan Stanley said. Leaders of the nations known as BRIC will meet this week in the Russian city of Yekaterinburg.
Southeast Asia's largest economy may grow 60 percent in the next five years to $800 billion due to a stable administration, lower capital costs and a government plan to spend as much as $34 billion to build roads, ports and power plants by 2017, Morgan Stanley said. Leaders of the nations known as BRIC will meet this week in the Russian city of Yekaterinburg. Indonesia may expand as much as 4 percent this year, making it the fastest-growing major economy in Southeast Asia, according to the International Monetary Fund. Morgan Stanley expects 3.7 percent growth this year.Rupiah and Korean Won rose this week, leading Asian currencies
The rupiah extended this quarter's gain, the best performance in Asia. The MSCI Asia Pacific Index of stocks climbed for a fourth day as Australia's economy unexpectedly expanded in the first quarter. The Philippine peso strengthened on speculation falling borrowing costs will help revive economic growth.
The Indonesian rupiah and the Korean Won gained after data from the U.S. and Australia added to signs of a global economic recovery, giving investors the confidence to buy emerging-market assets.read source article
Indonesia cut its interest rate
The Bank Indonesia cut its benchmark rate by 25 basis points to an all-time low of 7% in June.
The rate cut came in line with expectations. This is the lowest level since July 2005, when the measure was first introduced. In May, the central bank had slashed its benchmark rate by a quarter point to 7.25%.Indonesia Casts Doubt On ASEAN Integrated Capital Market
Indonesia expressed their doubts on the viability of an integrated capital market among ASEAN member states by 2015.
Indonesia expressed their doubts on the viability of an integrated capital market among ASEAN member states by 2015. The chairman of the capital market and financial institution supervisory agency (Bapepam-LK) Fuad Rahmany said that there is a lack of a common regulatory framework shared between the countries for the region to implement an integrated capital market by 2015. He also added that the region has the problem of synchronizing the regulations that were issued by each member country particularly because most of the ASEAN member states have inherited deep-rooted legal systems from their former colonial occupiers, making it difficult to adopt a single regulation to suit all needs.read source article
Indonesia Eyes More Currency Swap Agreements
Indonesia is looking to forge more bilateral currency swap agreements with other countries to bolster confidence and ease volatility of the rupiah against the US dollar.
Indonesia is looking to forge more bilateral currency swap agreements with other countries to bolster confidence and ease volatility of the rupiah against the US dollar. This comes after the country signed a Rp 175 trillion or 100 billion yuan ($15 billion) currency swap agreement with China to provide short-term foreign exchange liquidity and help boost bilateral trade and investment. Currency swap agreements would eventually reduce the need for US dollars because bilateral trade between the two agreeing nations could use the currency under the swap deal.Browse Asia News Archive
Trade Agreements
ASEAN - China Free Trade Area
The ASEAN - China Free Trade Agreement will apply in an area involving 1.7 billion consumers, making it the world's largest trading area. The agreement currently establishes a zero-tariff market. The agreement now contains trade in goods, services and dispute settlement. Investment is still under negotiation.
ASEAN - Korea Free Trade Area
Under the ASEAN- Korea Free Trade Agreement, Korean businesses will gain access to the ASEAN market, which contains nearly 500 million people. The agreement contains trade in goods and tariffs will be either eliminated or reduced on Korean products. http://www.aseansec.org/18063.htm
ASEAN Free Trade Area
Initiated in 1992, ASEAN Free Trade Area (AFTA) main mechanism used to reduce tariffs in ASEAN. It originally contained six members (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand) the other four members (Vietnam -1995, Laos -1997, Myanmar-1997 and Cambodia-1999) joined after the original agreement was signed. In order to join ASEAN, they had to agree to AFTA. The overall objective of AFTA is to encourage more foreign investment to ASEAN and establish ASEAN as a world competitor by eliminating both tariff and non-tariff barriers within ASEAN. Over the next 15 years, ASEAN agreed to reduce tariffs 0-5%. http://www.aseansec.org/19346.htm
Global System of Trade Preferences among Developing Countries
Algeria
Argentina
Benin
Bolivia
Brazil
Cameroon
Chile
Colombia
Cuba
Ecuador
Egypt
Ghana
Guinea
Guyana
Iran
Iraq
Libya
Mexico
Morocco
Mozambique
Nicaragua
Nigeria
Peru
Sudan
Tanzania, United Republic Of
Trinidad And Tobago
Tunisia
Venezuela
ZimbabweThe Global System of Trade Preferences arose out of the United Nations Group of 77. The Group first appeared interested in 1976 to develop a global system of trade for developing countries. Over years of negotiations, the agreement was signed by the participating members of the Group of 77. The members are currently looking to expand their economic ties to other developing countries in Asia, Latin America and Africa. http://www.unctadxi.org/templates/Page____6207.aspx
Trade and Investment Framework Arrangement between the United States of America and the Association of Southeast Asian Nations
United States of AmericaThe Enhanced partnership between ASEAN and the United States will increase cooperation and understanding in the areas of politics, economics and safety. EAI, Enterprise ASEAN Initiative, will strengthen economic cooperation and will allow and increase of trade and investment between both parties. Both sides have also vowed to work together on various projects in the development arena including, fighting infectious disease and disaster relief. http://www.ustr.gov/assets/Trade_Agreements/TIFA/asset_upload_file932_9760.pdf
Trade Organizations
ASEAN Plus 3
Forum as a coordinator of cooperation between ASEAN and China, Japan and South Korea.
Asia Cooperation Dialogue (ACD)
The Asia Cooperation Dialogue (ACD) is an International Organization to promote Asian cooperation at a continental level, helping to integrate the previously separate regional organizations of political or economical cooperation such as ASEAN, SAARC
Asia-Pacific Economic Cooperation (APEC)
Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries or regions (styled 'member economies') to discuss the regional economy, cooperation, trade and investment. The membership is claimed to account for approximately 41 percent of the world's population, approximately 56 percent of world GDP and about 49 percent of world trade. The activities, including year-round meetings of the members' ministers, are coordinated by the APEC Secretariat.
Association of Southeast Asian Nations (ASEAN)
Association of Southeast Asian Nations, commonly referred to as ASEAN, is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on August 8, 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Its aims include the acceleration of economic growth, social progress, cultural development among its members, and the promotion of regional peace.
BIMP-East ASEAN Groth Area (BIMP-EAGA)
A subregional economic cooperation initiative involving 4 Southeast Asia Nations
Centre on Intergrated Rural Development for Asia and the Pacific (CIRDAP)
The Centre for Integrated Rural Development for Asia and the Pacific (CIRDAP) is a regional intergovernmental and autonomus organization
Council for Security Cooperation in the Asia Pacific (CSCAP)
The Council for Security Cooperation in the Asia Pacific (CSCAP) is a non-governmental (second track) process for dialogue on security issues in Asia Pacific.
East Asia Summit (EAS)
The East Asia Summit (EAS) is a Pan-Asia forum of 16 countries in East Asia, with ASEAN in a leadership position.