Month: May 2024

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Analyst: Can Indonesia’s Manufacturing Sector Grow Rapidly?

The growth of the manufacturing sector in Indonesia after the COVID-19 pandemic in Indonesia has begun to recover and is starting to show positive developments. However, the manufacturing sector is currently still facing various challenges so that its performance is still not optimal. LPEM economist at the Faculty of Economics and Business (FEB) UI, Teuku Riefky, said that the manufacturing sector is now the largest contributor to gross domestic product (GDP) in the Indonesian economy.

“If we look at the influencing factors, there are various things, in terms of workforce competitiveness, workforce productivity, incoming investment, business competition climate, infrastructure, and various other factors,” he said, Sunday (7/4/2024 ).

According to Riefky, there are various policies issued by various ministries or state institutions that themselves have a negative impact on the performance of the manufacturing industrial sector.

“I did not mention which ministry specifically, but there are many policies in terms of regulations, investment, infrastructure improvements, ease of doing business, as well as related regulations, for example, land acquisition which have a negative impact on domestic industry,” explained Riefky.

Riefky also explained that aspects of Indonesia’s fiscal policy, such as import duties and so on, also play a role in the competitiveness of Indonesia’s manufacturing industrial sector.

“In terms of import duties, of course there is an impact on the competitiveness of national industry,” added Riefky.

In this context, according to him, the Indonesian government needs to expose the domestic industrial sector to be able to compete against foreign industry, but the government must be clear in providing incentives for industry to be able to compete well.

“Our industry needs to be exposed to competition with foreign products accompanied by incentives. However, this does not mean that it must be completely protected, so it is not exposed from a competitive perspective to global conditions,” concluded Riefky.

From data from the S&P Global Purchasing Manager’s Index (PMI) Indonesian Manufacturing in March 2024 which was at level 54.2 or an increase of 1.5 points compared to the achievement in February which touched 52.7. These figures show that Indonesia’s manufacturing industrial sector has been in an expansionary position for 31 consecutive months. This is also in line with the achievements of the Industrial Confidence Index (IKI) in March, which were both in the expansion phase at the level of 53.05.

Meanwhile, according to the General Chair of the Natural Gas Users Industry Forum, Yustinus Gunawan revealed that the HGBT policy has had a very positive impact on national industry.

“The HGBT policy makes national industry grow and survive and contributes to increasing taxes, increasing foreign exchange by increasing exports and saving foreign exchange due to reducing imports, increasing investment and increasing labor absorption,” said Yustinus.

Seven sectors receiving HGBT including fertilizer, petrochemicals, oleochemicals, steel, ceramics, glass, rubber gloves provide added value to the national economic sector reaching IDR 157.2 trillion. Therefore, the continuation of the HGBT policy which will expire in December 2024 is an inevitability or something that cannot but be implemented.

For this reason, the performance of domestic industry needs to be boosted so that it has a positive impact on national economic growth. “Because if HGBT is not continued, it will certainly have a big impact on the industry,” he explained.

April 7, 2024, detikFinance

(https://finance.detik.com/industri/d-7283961/sektor-manufaktur-ri-bisa-moncer-bagaimana-caranya)

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Bank Indonesia and ASEAN Central Banks Encourage Cross-Regional Local Currency Transactions

Central banks and finance ministries in ASEAN countries have agreed to continue the three priority agendas of Indonesia’s previous Chairmanship in ASEAN 2023. This agreement emerged at the ASEAN Finance Ministers and Central Bank Governors Meeting (AFMGM). The 11th AFMGM in Luang Prabang, Laos from April 2 to 5 is an important forum for high-level dialogue on cooperation between central banks and finance ministries in the region, in order to strengthen solidarity between ASEAN countries on the path to financial integration. The Bank of Lao PDR (BOL) and Lao PDR Ministry of Finance are the organizers of this meeting.

Representatives from 10 ASEAN member countries were present, namely Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The Indonesian delegation was led by the Deputy Governor of Bank Indonesia, Filianingsih Hendarta. Timor Leste was also present as an observer.

According to the Head of the Communications Department of Bank Indonesia (BI), Erwin Haryono, Sunday (7/4/2024), the three agendas initiated by Indonesia in ASEAN in 2023 are continuing, namely:

1. Expansion of regional payment connectivity cooperation or Regional Payment Connectivity (RPC). The RPC initiated by Bank Indonesia to facilitate smooth and safe cross-border payments continues to develop under the 2024 ASEAN Laos Chairmanship. This is indicated by the continued increase in countries interested in joining regional payment connectivity cooperation. On April 3, 2024, the MoU signing of the RPC was carried out which marked the joining of Laos as the 8th country to become a member of the RPC cooperation. Currently, the countries that have joined the RPC collaboration are Indonesia, Singapore, the Philippines, Thailand, Malaysia, Vietnam, Brunei and Laos.

2. Use of local currency in cross-border transactions in ASEAN or ASEAN Local Currency Transaction (LCT). In the series of 11th AFMGM meetings, the ASEAN LCT framework, the formulation of which was initiated by Bank Indonesia, succeeded in getting full support from ASEAN countries. This is expected to encourage increased use of local currency in cross-border payment transactions so that it can be beneficial for business actors to reduce trade transaction costs, encourage financial market deepening in local currency, and reduce exposure to exchange rate risk.

3. Indonesia’s efforts to improve the mandate of the ASEAN Working Committee. This initiative aims to make the ASEAN working committee more relevant to developing economic conditions, encourage innovation, increase adaptability, strengthen regional cooperation, and achieve integration and financial stability.

At the 11th AFMGM, Ministers and the Governor of the Central Bank approved the High Level Guidelines and Terms of Reference for Adjusting the Mandate of the ASEAN Working Committee. Currently two working committees have completed adjustments to their mandate, namely the working committee that handles the development of the payment system (Working Committee-Payment and Settlement System/WC-PSS) and the development of capital account liberalization (Working Committee-Capital Account Liberalization/WC-CAL). Furthermore, other working committees related to strengthening financial inclusion, financial market development, trade liberalization and banking integration have started and will continue the process of refining their mandates.

April 7, 2024, detikFinance

(https://finance.detik.com/moneter/d-7283925/bi-dan-bank-sentral-se-asean-dorong-transaksi-mata-uang-lokal-lintas-kawasan)

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US Giant Company Nvidia Invests IDR 3 Trilion to Build Artificial Intelligence Center in Solo

The chip company from the United States, Nvidia, in collaboration with PT Indosat Tbk (ISAT) will invest in the field of artificial intelligence (AI) in Indonesia. Minister of Communication and Information, Budi Arie Setiadi, revealed that Nvidia’s investment would be worth US$ 200 million or around IDR 3 trillion. In Indonesia, Nvidia and Indosat will build the Indonesian AI Nation which is planned to be located in Solo Techno Park.

“There is a commitment from Nvidia and Indosat to invest 200 million dollars or IDR 3 trillion, to build the Indonesian AI nation,” he said when met by the media at the Communications and Information Office, Wednesday (3/4/2024).

When asked why he chose Solo, Budi said that its human resources were qualified, as was its infrastructure.

“Mr. Vikram (CEO of Indosat) has conveyed this to the mayor and Mr. Gibran that Indosat and Nvidia are committed to investing in infrastructure and improving human resources worth US$ 200 million. What will the scheme be, this will still be finalized in the near future,” said Budi.

When met on the same occasion, Deputy Minister of Communication and Information Nezar Patria said that Nvidia’s collaboration with Indonesia had been going on for several years.

“If I’m not mistaken, in 2022-2023, Nvidia is committed to educating nearly 20 thousand Indonesian students to improve their skills in the field of AI, this is part of developing digital talent in Indonesia,” said Nezar.

So, he continued, the construction of this AI center is a follow-up to Nvidia’s long-term commitment to Indonesia. According to him, this collaboration is a strategic step and Nvidia is a company that is performing well in the AI industry landscape at the global level.

“He produces GPUs as a tool as a component to process data more quickly. He is number one, I think. So, this is a very strategic collaboration, and we hope there will also be a technology transfer so that not only are users but can also be part of the AI players which is considered regionally and globally.” he concluded.

April 4, 2024, CNBC Indonesia

(https://www.cnbcindonesia.com/market/20240404090943-17-528169/gandeng-indosat-raksasa-as-guyur-rp-3-t-bangun-pusat-ai-di-solo)

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Take a Peek at Pertamina’s Largest Refinery Project in Indonesia

The progress of the Balikpapan Refinery Development Master Plan (RDMP) project has reached 89.51%. This National Strategic Project (PSN) is targeted for completion in 2025. PT Kilang Pertamina Internasional (KPI) stated that this project is one of the largest investments and with high complexity. KPI Corporate Secretary Hermansyah Y Nasroen said the Balikpapan RDMP project involved a total of 5,203 pieces of equipment. According to him, the total weight of the equipment reaches 110 thousand tons or the equivalent of 4.5 times the weight of the Statue of Liberty. For comparison, this statue, which is located in New York, United States, weighs 24,600 tons

“The total equipment for this RDMP project is 4.5 times the weight of the Statue of Liberty,” said KPI Corporate Secretary Hermansyah Y Nasroen, when met by detikcom at the Balikpapan Refinery, East Kalimantan, Wednesday (3/4/2024).

He said that one of the hardest units in the Balikpapan RDMP project was Residual Fluid Catalytic Cracking (RFCC). This 1,099 ton equipment is a unit that can increase refinery profitability by processing residue into higher value products. The weight of the RFCC itself is equivalent to 12 Boeing 737-800 aircraft. One Boeing 737-800 aircraft is equivalent to 79 tons.

“The heaviest one (RFCC), weighs up to dozens of Boeing aircraft,” he said.

Then there is the electrical cable with a length of 5,040 kilometers. If stretched, the length of the cable is equivalent to Jakarta-Soul, South Korea. The estimated distance between Jakarta and Soul is 5,000 kilometers. Meanwhile, the highest unit at the Balikpapan Refinery is the propylene splitter, which reaches 110 meters. In this way, the propylene splitter in the Balikpapan RDMP project has a height equivalent to a 30-story building.

The volume of concrete in this project reached 307,670 cubic meters, or the equivalent of twice the volume of concrete for the Petronas Tower in Malaysia. The concrete volume of the Petronas Tower is recorded at 150,000 cubic meters. Then the weight of the steel structure is 74,723 tons, or the equivalent of 7 times the weight of the Eiffel Tower’s steel which is 10,100 tons. The welding length of the pipe itself is 4,986,421 dia-inches, or 11 times the welding length of the PKT Bontang project which is 450,000 dia-inches long.

For information, the Balikpapan RDMP project will increase refinery capacity to 360,000 barrels per day from the previous 260,000 barrels per day. This capacity increase will be completed in May 2024. In this way, Refinery Unit V Balikpapan will become the largest refinery in Indonesia, displacing Refinery Unit IV Cilacap, which has a production capacity of 348,000 barrels per day. According to Hermansyah, the Balikpapan Refinery will also become one of the largest refineries in Southeast Asia.

Currently, Exxon’s refinery in Singapore is still the largest in Southeast Asia with a capacity of 592,000 per day. Then, CNA reported that the Shell refinery in Pulau Bukom, Singapore could reach its peak capacity of up to 500,000 barrels per day. Then the Balikpapan Refinery will occupy the third largest position in Southeast Asia with its new capacity of 360,000 barrels per day. After that there is the Cilacap Refinery with a capacity of 348,000 barrels per day, and the Singapore Refining Corporation Jurong Island Refinery with a capacity of 290,000 barrels per day.

April 4, 2024, detikFinance

(https://finance.detik.com/energi/d-7276838/mengintip-proyek-kilang-pertamina-terbesar-di-ri)

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Brunei Company Will Build High Speed Train, Reaching Ibu Kota Nusantara

Brunei based infrastructure company Brunergy Utama announced plans to build the first high-speed train on Kalimantan Island. This more than 1,600 km long project will connect Brunei with its two neighboring countries, Indonesia and Malaysia.

Reporting from Nikkei Asia, Tuesday (2/4/2024), the company which originally operated in the oil and gas sector launched the project at the end of last week. The Trans-Borneo Railway project will stretch 1,620 kilometers from the west to the east side of Kalimantan, crossing three Southeast Asian countries.

According to the announcement, the first phase will connect Pontianak, the capital of Indonesia’s West Kalimantan province, with Kuching and Kota Kinabalu, the capitals of the Malaysian states of Sarawak and Sabah, then on to Brunei’s Tutong district, as well as the island’s west and north coast. .

Next, the second stage will run south and connect Tutong with the provinces of North Kalimantan and East Kalimantan in Indonesia. In this case, including the cities of Samarinda and Balikpapan.

“And it will become the capital of Indonesia in the future, Nusantara (IKN),” said the company.

There will be four terminals serving as the main hubs of the high-speed rail network along with a total of 24 stations, and the bullet trains are planned to travel at speeds of up to 350 kilometers per hour, according to the proposal. This project is reportedly estimated to cost US$ 70 billion or the equivalent of IDR 1.113 trillion (exchange rate IDR 15.900). However, the prospects for this project, including the participation of Malaysia and Indonesia in it, are still unclear.

Sabah State Chief Minister Hajiji Noor praised the proposed mega railway project, saying it would be an economic catalyst for the Kalimantan region. According to him, if this project is realized, it will facilitate trade, encourage industrial growth in border areas, increase tourism in the Kalimantan region, and increase connectivity between communities.

Meanwhile, Malaysian Public Works Minister Alexander Nanta Linggi said last November that his ministry had received an initial proposal regarding the project. He said the federal government had approved a special financial allocation to carry out a feasibility study on routes in Sabah and Sarawak. This is based on the Free Malaysia Today report.

However, Sarawak Prime Minister Abang Johari Openg said that the Sarawak state government had not been officially approached by the Brunei-based company to start the project.

Nikkei Asia confirmed to local government officials in North Kalimantan that several discussions had been held regarding the project with Brunei, but Indonesia had not yet committed to anything. Ministry of Transportation spokesperson Adita Irawati also said the same thing.

“There has been no follow-up regarding this issue, especially involving the ministry,” said Adita.

Regarding this, Brunei’s Minister of Communication and Transport Shamhary Mustapha emphasized that this proposal had not been officially discussed at the government level, including with the Government of the Republic of Indonesia.

April 2, 2024, detikFinance

(https://finance.detik.com/infrastruktur/d-7273522/perusahaan-brunei-bakal-bangun-kereta-kecepatan-tinggi-tembus-ke-ikn)