Tag: investment landing

Indonesia has embarked on an ambitious initiative under President Prabowo Subianto to significantly expand its dairy industry by importing one million Holstein-Friesian cows over five years at an estimated cost of nearly US$3 billion. The program is intended to support the government’s flagship free meals scheme for 83 million children and expectant mothers, while also reducing reliance on imported milk powder from Australia, New Zealand, and the United States. Currently, Indonesia’s dairy herd stands at around 220,000, and the plan aims to more than quadruple that number.

Unlike conventional state-funded programs, this initiative relies heavily on private sector participation. The Ministry of Agriculture has pressed over 200 businesses, including multinational corporations, to commit to importing at least 20 cows per year from 2025 to 2029. By May, 196 businesses had pledged participation, though many had no prior experience in dairy farming. Reports suggest companies felt compelled to comply, fearing potential obstacles in securing import licenses for their core operations, such as frozen meats and milk powder, if they refused. In one case, government approval of an import license was expedited only after a company increased its cattle commitment to the ministry’s “minimum” threshold.

Progress has been slower than anticipated. Since the scheme’s December launch, only 11,375 dairy cows had been imported by July—well short of the 200,000 targets for 2024. Most imports so far have come from Australia. The sluggish pace has raised concerns about the feasibility of scaling up both the cattle program and the promised free meals initiative, which was central to Prabowo’s election campaign.

Cooperatives such as Laras Ati in West Java are at the forefront of implementation, managing cattle purchased by private investors with limited livestock experience. For example, members of the Indonesian Association of Animal Protein Entrepreneurs (APPHI), primarily engaged in cold chain distribution, collectively purchased hundreds of cows now housed in cooperatives. Businesses are expected to invest around IDR 45 million (US$2,800) per cow, covering purchase, transport, feed, and vaccines, with returns projected in approximately three and a half years through shared revenue with cooperatives.

While the government has presented this approach as an opportunity for investment and self-sufficiency, critics question its design and sustainability. Industry experts have expressed doubts about the capacity of inexperienced firms to manage livestock effectively, as well as the adequacy of Indonesia’s infrastructure to handle large-scale imports. Animal welfare and disease management are also pressing concerns, particularly after a devastating foot and mouth disease outbreak in 2022 reduced cattle populations in some regions by half.

Analysts warn that without stronger oversight and more realistic planning, the program risks failing to deliver the promised results. Rochadi Tawaf of the Cattle and Buffalo Breeders Association emphasized that success requires proven expertise in dairy management, not inexperienced firms compelled by government pressure. Similarly, foreign exporters, such as Dairy Livestock Exports in Australia, have highlighted deficiencies in Indonesia’s facilities to ensure animal welfare on such a scale.

Overall, the initiative reflects Indonesia’s broader push for food security and self-sufficiency. However, its heavy reliance on reluctant, inexperienced private investors, slow progress, and structural weaknesses in infrastructure and management cast uncertainty over its long-term viability and the government’s ability to meet both nutritional and economic goals.

September 9, 2025, The Jakarta Post

(https://www.thejakartapost.com/business/2025/09/09/dairy-duty-indonesia-presses-businesses-to-find-a-million-cows.html)

The rapid adoption of digital payment systems in Indonesia reflects not only technological advancement but also a profound cultural transformation in how society interacts with money. From purchasing daily necessities via QRIS (Quick Response Indonesia Standard) to executing instant interbank transfers through BI-FAST, digital payments have increasingly become part of everyday life. This evolution highlights a broader shift in behavior, where convenience, incentives, and habit often outweigh rational cost-benefit considerations, as explained through Behavioral Economics theories. Cashback rewards, transaction speed, and accessibility have made digital payments the default option for many Indonesians.

Statistical data underscores this momentum. As of July 2025, QRIS transactions rose 163 percent year-on-year, while BI-FAST recorded 414.6 million transactions, up 38 percent, with a total value of IDR 1 quadrillion—nearly half of Indonesia’s annual card transactions. Overall digital payments, including internet and mobile banking, reached 4.44 billion transactions, reflecting a 45 percent annual increase. Adoption is also expanding beyond urban centers, driven by initiatives like QRIS Tuntas, which enables withdrawals, transfers, and deposits, along with expanding financial infrastructure. Merchant participation has surpassed 38 million nationwide, with notable growth in regions outside Java, including Kalimantan (24 percent), Sulawesi-Maluku-Papua (24 percent), Sumatra (19 percent), and Bali-Nusa Tenggara (16 percent).

Indonesian consumers now demonstrate increasingly sophisticated payment behavior, selecting methods based on context. E-wallets are favored for small purchases, QRIS for face-to-face vendor transactions, and BI-FAST or virtual accounts for large-scale transfers. Despite this progress, challenges persist. Cybersecurity threats, data breaches, scams, misleading promotions, and limited digital literacy among the elderly and rural populations remain significant risks. By May 2025, the Financial Services Authority (OJK) received 18,339 consumer complaints, of which 38 percent were linked to fintech platforms and 37 percent to banking services. Strengthening trust will require robust regulation, improved cybersecurity, transparent fee disclosures, and comprehensive literacy programs.

Indonesia’s long-term digital finance agenda is framed by initiatives such as the Payment System Blueprint 2025 and ASEAN QRIS Cross-Border Payments. These programs aim to ensure secure, transparent, and inclusive adoption. Emerging innovations like biometric authentication, voice payments, and embedded finance are anticipated to shape the future, but policymakers emphasize that inclusivity must remain central. Efforts such as subsidized smartphones, affordable internet in rural areas, and community training programs are seen as necessary to bridge the digital divide.

At the international level, Indonesia is advancing QRIS expansion through cross-border partnerships. Following its launch in Japan in August 2025—coinciding with Indonesia’s 80th Independence Day—Bank Indonesia is preparing to pilot QRIS in China next month. This initiative, conducted in collaboration with China’s UnionPay International and the People’s Bank of China, will begin with an interconnection trial aimed at facilitating bilateral trade, especially for micro, small, and medium enterprises (MSMEs), while also supporting tourism.

QRIS already operates in Thailand, Malaysia, and Singapore, with Malaysia recording the highest number of transactions outside Indonesia—4.31 million valued at IDR 1.15 trillion since May 2023. Thailand and Singapore follow with nearly 1 million and 238,000 transactions, respectively. Future expansion targets include India and Saudi Arabia. These partnerships also complement Indonesia’s Local Currency Settlement (LCS) framework with trading partners such as Japan, which seeks to reduce reliance on third-party currencies and strengthen regional financial stability.

Overall, Indonesia’s digital payment ecosystem is evolving rapidly, symbolizing a cultural shift from cash to cashless and from traditional banking to digital-first solutions. The domestic adoption surge and cross-border expansion of QRIS underscore Indonesia’s ambition to position itself as a leader in digital finance. The challenge ahead lies not in whether people will adopt digital payments, but in ensuring that the system remains secure, transparent, and inclusive so that no community or demographic is left behind.

August 26, 2025, The Jakarta Post

(https://www.thejakartapost.com/business/2025/08/27/digital-payments-in-indonesia-a-cultural-shift.html) (https://www.thejakartapost.com/business/2025/08/26/qris-to-pilot-in-china-next-month-as-expansion-continues.html)

The annual Pacu Jalur boat race in Riau, Sumatra, has experienced an unprecedented surge in global attention and tourism, largely driven by the viral fame of 11-year-old Rayyan Arkan Dikha. Known for his distinctive dance performed on the prow of traditional longboats, Rayyan’s movements have captivated millions on social media, transforming a centuries-old cultural festival into an international spectacle.

This year’s competition, which culminated on Sunday, saw significantly larger crowds compared to previous editions. Authorities estimate that an additional 100,000 spectators attended, bringing the total audience to around 1.5 million people, including an increasing number of foreign visitors. The economic impact has also been substantial, with projected revenue reaching up to US$4.6 million, a considerable rise from last year’s US$2.5 million.

The boy’s viral popularity began with a 20-second clip that rapidly circulated online, inspiring celebrities and sports figures such as Formula One driver Alex Albon and MotoGP champion Marc Márquez to imitate his now-famous moves. The trend has fueled domestic and international interest in Pacu Jalur, with tourists like Australian visitor Duncan McNaught and Indonesian spectator Yuyun Kurnia traveling long distances specifically to witness the event.

Pacu Jalur itself holds deep historical significance. Dating back to the 17th century, the traditional wooden boats, known as “jalur,” were originally used for transporting goods and people before evolving into competitive vessels. Today, the races are held annually every August, coinciding with Indonesia’s Independence Day celebrations. In 2025, more than 220 teams from local villages and districts participated, competing for prizes totaling approximately IDR 900 million (US$55,000).

The five-day event from Aug. 20 to 24 generated an estimated economic impact of IDR 100 billion (US$6.5 million). The influx of visitors led to packed hotels, high flight bookings and record sales in food and souvenirs. Local businesses, from boat rental operators to food vendors and homestay owners, reported unprecedented earnings during the century-old festival.

Local residents expressed pride that the boy’s newfound celebrity has elevated the festival to international recognition. Young spectator Naysila Ayunita Sari described Rayyan’s ability to create a personal brand through his dances as “super cool,” while veteran attendee Frima, aged 35, highlighted the courage required to perform at the tip of a racing boat. The role of the “boat dancer” is not only symbolic but also intended to motivate the rowers during the strenuous race.

Authorities have seized the opportunity to improve the event’s organization and environmental management. Efforts included enhanced riverbank facilities and measures to curb illegal gold mining near the Kuantan River to reduce pollution. According to Roni Rakhmat, head of Riau’s tourism agency, the newfound global exposure is a breakthrough, as foreign spectators had rarely attended in previous years.

For the local community, the rapid transformation of Pacu Jalur into a world-recognized event is both surprising and gratifying. Long-time resident Frima reflected, “I never would have thought that all eyes are on this small place on the western side of Riau. I’m grateful Pacu Jalur is now known worldwide.”

August 24, 2025, The Jakarta Post

(https://www.thejakartapost.com/indonesia/2025/08/24/childs-viral-fame-draws-tourists-to-boat-race-in-riau.html)

(https://www.thejakartapost.com/business/2025/08/30/local-tourism-surges-on-viral-aura-farming-pacu-jalur-video.html)

Indonesia has achieved a historic milestone in sustainable aviation by launching Pelita Air’s inaugural Jakarta–Bali flight powered by Sustainable Aviation Fuel (SAF) derived from used cooking oil (UCO), locally known as jelantah. This initiative, led by PT Pertamina (Persero) in collaboration with the Ministry of Energy and Mineral Resources, aligns with President Prabowo’s priority program Asta Cita, which emphasizes energy security, independence, and clean energy transition.

According to Dadan Kusdiana, Secretary General of the Ministry of Energy and Mineral Resources, SAF represents not only an environmentally friendly solution but also a step toward strengthening national energy self-sufficiency. Pertamina stated that UCO-based SAF can reduce carbon emissions by up to 84 percent compared to fossil aviation fuel, offering the aviation industry a concrete pathway to lower its carbon footprint without compromising safety or performance standards.

The SAF, developed at Pertamina’s Cilacap Refinery Unit IV, meets both national standards outlined in Decree No. 70/2025 and international benchmarks ASTM D1655 and Defstan 91-091. To ensure reliable feedstock, Pertamina has established 35 collection points across strategic locations, encouraging public participation in UCO recycling by offering financial incentives. This community-based model not only supports sustainability but also improves waste management practices.

Pertamina’s journey toward SAF innovation began in 2021 in collaboration with the Bandung Institute of Technology (ITB). Early trials included a test flight with a Dirgantara Indonesia CN235-200 FTB aircraft on the Bandung–Jakarta route, followed in 2023 by a Garuda Boeing 737-800 test on the Jakarta–Solo–Jakarta route. These successful trials paved the way for today’s commercial application, confirming SAF’s readiness for broader use in Indonesia’s aviation sector.

KPI President Director Taufik Aditiyawarman emphasized that this development symbolizes a tangible step in Indonesia’s clean energy transition, proving the nation’s ability to produce future-ready aviation fuel domestically. He noted that Pertamina SAF, produced using co-processing technology with the locally developed Merah Putih Catalyst, not only meets but also exceeds global aviation safety requirements. For instance, its freezing point performs better than international standards, ensuring fuel stability even in extreme flight conditions.

Furthermore, Pertamina SAF has secured ISCC CORSIA international sustainability certification, validating it as the first Indonesian-produced sustainable bioavtur made from UCO. Plans are already underway to expand SAF production at Pertamina’s Dumai and Balongan refineries, broadening supply capacity.

Despite this milestone, challenges remain, particularly in advancing bioethanol development and strengthening inter-agency collaboration. While Indonesia has established itself as the world’s leading biodiesel producer, further innovation is required to replicate similar success in other bioenergy sectors.

Overall, the launch of SAF-powered flights demonstrates Indonesia’s leadership in sustainable aviation within Southeast Asia. It marks a significant stride toward reducing carbon emissions, enhancing energy independence, and positioning the country at the forefront of the global green energy transition.

August 23, 2025, detikFinance

(https://finance.detik.com/energi/d-8073578/pertama-di-indonesia-minyak-jelantah-jadi-bahan-bakar-pesawat)

(https://finance.detik.com/energi/d-8075020/sejarah-maskapai-ri-terbang-pakai-bahan-bakar-olahan-minyak-jelantah)

Lake Toba has reaffirmed its position as a premier destination for international water sports with the successful hosting of two world-class events in August 2025. Following the Aquabike Grand Prix of Indonesia, which concluded with a victory by West Papua’s Boanerges Ratag in the Endurance category, the spotlight shifted to the F1 Powerboat Championship held from August 22 to 24 in Balige, North Sumatra. Ratag’s achievement not only demonstrated Indonesia’s athletic potential but also motivated organizers to enhance preparations for upcoming global competitions.

The F1 Powerboat 2025 was organized by InJourney through its subsidiary, the InJourney Tourism Development Corporation (ITDC), with operational support from InJourney Aviation Services (IAS). IAS played a central role in managing cargo logistics, hospitality, and facility services for international racers and teams. Seventeen containers, totaling more than 91,000 kilograms, were transported from Belawan Port to Balige by land and carefully processed through customs inspections. Beyond technical support, IAS incorporated “local heroes” from nearby communities to deliver services infused with Indonesian warmth and hospitality, ensuring a memorable experience for participants and spectators.

IAS Commissioner Danang Parikesit emphasized that this involvement reflects a broader mission to support sustainable tourism development in Lake Toba. By combining international-standard services with community participation, the event sought to enhance both visitor experience and local economic impact. This initiative aligns with the government’s vision of strengthening Lake Toba’s role as a Super Priority Tourism Destination (DPSP).

The event also showcased the synergy between global achievement and national identity. The influx of tourists and international attention highlighted Lake Toba’s natural beauty, cultural richness, and potential as a hub for sports tourism. Organizers stressed that hosting such large-scale events not only promotes tourism but also contributes to local economic growth, providing direct benefits to communities around the lake.

International racers expressed admiration for the event and its setting. Defending champion Rusty Wyatt described Lake Toba as a special venue, noting that he enjoyed exploring the area beyond the competition itself. Similarly, 24-year-old racer Alberto Comparato praised the extraordinary hospitality of North Sumatra’s people, underscoring that the event’s appeal extends beyond the race to include cultural and scenic experiences.

Chairman of the Lake Toba GP Aquabike & F1 Powerboat 2025, Troy Warokka, highlighted notable improvements in preparation, organization, and public engagement compared to previous years. According to him, positive feedback from racers and teams serves as valuable capital for enhancing future editions of the event.

Overall, the Aquabike and F1 Powerboat competitions in August 2025 demonstrated Lake Toba’s growing reputation as an international sports tourism destination. The combination of world-class event management, strong community involvement, and the lake’s unique cultural and natural appeal positions it as a stage where Indonesia can showcase its global competitiveness while strengthening local economic resilience.

August 23, 2025, detikSport and detikSumut

(https://www.detik.com/sumut/wisata/d-8075782/pebalap-f1-powerboat-puji-keindahan-danau-toba)

(https://sport.detik.com/sport-lain/d-8073165/danau-toba-gelar-event-kelas-dunia-lagi-giliran-f1-powerboat)

India and Indonesia are moving to reinforce their long-standing relationship into a comprehensive partnership reflecting shared values, economic priorities, and cultural ties. With bilateral trade currently valued at around US$30 billion—short of the original US$50 billion target for 2025—leaders and experts are stressing the need for deeper cooperation to unlock untapped potential. Both nations share parallel aspirations in digital innovation, healthcare, education, and green industrialization, while leveraging their youthful demographics to drive future growth. Analysts argue that these commonalities position the two countries as natural partners in navigating today’s uncertain global economic landscape.

A key pillar of cooperation is trade integration. The ongoing review of the ASEAN–India Trade in Goods Agreement (AITIGA) aims to streamline tariffs, address non-tariff barriers, and simplify rules of origin to boost bilateral flows. Alongside this, discussions of a potential bilateral free trade agreement have surfaced, signaling a determination to create a more flexible framework beyond regional arrangements.

The green economy is also emerging as a cornerstone of the partnership. Indonesia, rich in nickel and other critical minerals, is well positioned to complement India’s fast-growing electric vehicle (EV) manufacturing sector. Officials and industry leaders see vast potential in developing an integrated EV supply chain that combines Indonesia’s resources with India’s production expertise, strengthening Asia’s role in sustainable industry.

Healthcare and education cooperation are progressing as well. Major Indian hospital groups, such as Apollo, are pursuing joint ventures and telemedicine projects with Indonesian partners to expand affordable access to healthcare. India’s established pharmaceutical sector has also begun investing in Indonesia, adding depth to the collaboration. On the education front, Indian institutions—including the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs)—are considering opening campuses in Indonesia, while the planned Indian Tech Zone at Jababeka is expected to showcase innovation and digital partnerships.

Financial connectivity is another area of advancement. Planned interoperability between India’s Unified Payments Interface (UPI) and Indonesia’s QRIS payment system, alongside direct settlement mechanisms between the rupee and rupiah, is expected to reduce transaction costs, lessen reliance on the U.S. dollar, and better support small and medium-sized enterprises.

Opportunities are also growing in agriculture and tourism. Indian exports such as rice, spices, and pomegranates are highly demanded in Indonesia, but non-tariff barriers—like certification rules—have hindered market access. Removing these obstacles would improve food security while diversifying trade. In tourism, both countries are set to cooperate on restoring historic sites such as Prambanan Temple, highlighting centuries-old cultural links and broadening tourism beyond Bali.

Cultural bonds remain a strong foundation for bilateral ties. Generations of Indian-origin communities in Indonesia continue to celebrate both traditions, reflecting what leaders have described as “two flags, one future.”

Looking forward, policymakers emphasize the need to translate vision into concrete action. Analysts argue that for the partnership to reach its full potential, bold reforms under AITIGA, greater local-currency settlements, and reduced trade barriers will be essential. As both nations gain prominence regionally and globally, a stronger India–Indonesia partnership could serve as a stabilizing force in Asia’s shifting economic and geopolitical order.

August 15, 2025, The Jakarta Post

(https://www.thejakartapost.com/opinion/2025/08/15/indiaindonesia-partnership-two-flags-one-vision.html)

Indonesia and Peru have signed a landmark Comprehensive Economic Partnership Agreement (CEPA) aimed at enhancing trade, investment, and cooperation across multiple sectors, marking a significant milestone in the two countries’ 50 years of diplomatic relations. The agreement was finalized during Peruvian President Dina Boluarte’s two-day state visit to Jakarta, where she held talks with Indonesian President Prabowo Subianto. President Prabowo hailed the deal as “the most significant trade cooperation agreement in the history of our bilateral relations,” underlining its potential to expand market access and strengthen strategic ties.

The CEPA, concluded in just 14 months of negotiations, is designed to reduce trade barriers, encourage greater flows of goods and services, and promote collaboration in sectors such as food security, fisheries, mining, energy transition, and defense. Indonesian Trade Minister Budi Santoso stated that the agreement would not only serve as a platform to increase exports but also act as a gateway for Indonesian products to reach broader markets across Central and South America.

For Peru, the agreement represents an opportunity to expand agricultural exports, particularly fresh fruit. President Boluarte emphasized Peru’s position as one of the world’s leading exporters of blueberries and noted that Indonesian consumers would soon have wider access to these products. She also stressed shared commitments between the two nations in upholding free trade, international law, South-South cooperation, and sustainable development.

Trade between Indonesia and Peru has grown steadily in recent years. In 2024, Indonesia exported goods worth US$331.2 million to Peru, with key items including vehicles, biodiesel, and footwear. Conversely, Peru exported approximately US$149.6 million worth of goods to Indonesia, primarily cocoa beans and grapes. Officials from both governments expect CEPA to accelerate these trade flows and create new opportunities for businesses in both countries.

The scope of bilateral cooperation was further widened with the signing of an anti-narcotics agreement, signaling a commitment to address transnational security challenges alongside economic ties. During her visit, President Boluarte also met with Indonesia’s House Speaker Puan Maharani and ASEAN Secretary-General Kao Kim Hourn, reaffirming Peru’s intention to deepen relations with both Indonesia and the broader Southeast Asian region.

Observers view the CEPA as a strategic step for Indonesia, aligning with its ambition to expand economic presence in Latin America and to strengthen eligibility for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact in which Peru is already a participant. By leveraging this new agreement, Indonesia aims to enhance its role as a global trading partner while ensuring economic resilience amid global uncertainties.

The Indonesia–Peru CEPA thus represents not only an economic milestone but also a diplomatic achievement, setting the stage for deeper cooperation between the two countries over the coming decades.

August 11, 2025, The Jakarta Post

(https://www.thejakartapost.com/business/2025/08/11/indonesia-peru-strike-trade-agreement-as-leaders-meet.html)

Indonesia and New Zealand have agreed to strengthen bilateral economic ties through a new cooperation roadmap, setting a trade target of NZ$6 billion (US$3.6 billion) by 2029 under the Indonesia–New Zealand Comprehensive Partnership Action Plan 2025–2029. The announcement followed a meeting between Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto and New Zealand’s Minister for Trade and Investment Todd McClay, during McClay’s official visit to Jakarta. The new target represents a significant increase from the previous goal of NZ$4 billion by 2024, reflecting the two countries’ optimism about deepening cooperation across multiple sectors.

Focus on Food Security and Dairy Sector. Food security emerged as a central theme in the discussions. Indonesia invited New Zealand to expand its investments in the country’s dairy processing industry, citing New Zealand’s international reputation in the sector. Minister McClay affirmed New Zealand’s readiness to continue supporting Indonesia’s dairy needs in a sustainable and mutually beneficial manner. In addition to dairy, cooperation will also cover agriculture, renewable energy—particularly geothermal—and small and medium-sized enterprises (SMEs). These areas are expected to create long-term benefits and contribute to inclusive economic growth in both countries.

Trade Disputes and Global Integration. Both sides acknowledged ongoing trade disputes concerning horticultural products, livestock, and animal imports that are currently being reviewed at the World Trade Organization (WTO). Resolving these disputes, they noted, is crucial to creating a stable trade environment and ensuring the success of the new partnership framework. New Zealand also expressed support for Indonesia’s ambitions to join the Organisation for Economic Co-operation and Development (OECD) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). According to Minister Airlangga, this support underscores confidence in Indonesia’s economic reforms and will help accelerate the country’s integration into global markets.

Regulatory and Business Climate Reforms. Airlangga reiterated Indonesia’s commitment to pursuing deregulation and business climate reforms, which are aimed at improving legal certainty, strengthening industrial competitiveness, and making the country more attractive for foreign investment. These reforms are expected to complement New Zealand’s increasing trade and investment interests in Indonesia.

Positive Trade Momentum. Data from the Coordinating Ministry for Economic Affairs show that bilateral trade between the two countries reached US$963.23 million from January to June 2025, a rise of 21.56 percent compared to the same period in 2024. Indonesia’s exports to New Zealand stood at US$374.89 million, while imports amounted to US$588.35 million. This positive momentum, officials say, reflects the potential for both sides to achieve the ambitious NZ$6 billion target by 2029.

With the signing of the Indonesia–New Zealand Comprehensive Partnership Action Plan 2025–2029, both countries have signaled a stronger commitment to expand cooperation and build resilience in their economies. Officials emphasized that by focusing on food security, renewable energy, and SME development, the partnership could serve as a model for sustainable and inclusive bilateral cooperation in the Asia-Pacific region.

August 8, 2025, CNBC Indonesia

(https://www.cnbcindonesia.com/news/20250808134710-4-656372/ri-selandia-baru-target-kerja-sama-dagang-nz-6-miliar-di-2029)

Indonesia’s economic growth in the second quarter of 2025 has significantly exceeded expectations, largely driven by accelerated infrastructure projects and state-sponsored incentives that boosted consumer spending. Statistics Indonesia (BPS) official Edy Mahmud announced on Tuesday that gross domestic product (GDP) expanded by 5.12 percent year-on-year (YoY), well above the market consensus of 4.8 percent. This marks a notable acceleration compared with 4.87 percent in the previous quarter and 5.02 percent in the same period last year. On a quarter-to-quarter basis, GDP grew 4.04 percent, signaling a strong rebound in domestic economic activity. Coordinating Economic Affairs Minister Airlangga Hartarto welcomed the development in a separate press conference, saying, “Thank God, GDP growth has bounced back to 5 percent,” while reiterating the government’s full-year target of 5.2 percent. A major driver of this expansion was gross fixed capital formation (GFCF), which reflects investment in fixed assets such as buildings, machinery, and equipment. GFCF rose 6.99 percent YoY, with machinery purchases showing the most significant growth. This represents a sharp recovery from just 2.12 percent growth in the previous quarter. Edy emphasized that government projects such as toll roads in Sumatra and Java, the next stage of the Jakarta MRT, the Bali MRT, the three million houses program, and the Jakarta sea wall were key contributors to investment growth. Spending on capital goods, a major component of GFCF, surged by 30 percent YoY, despite the fact that overall government expenditure contracted by 0.33 percent.

Supporting this trend, BPS revealed that imports of capital goods in June jumped 38 percent YoY, which Investment Minister Rosan Roeslani described as an “all-time high.” These imports are typically viewed as an indicator of business expansion, as capital goods are used to produce other goods and services. However, Economist Intelligence Unit researcher Wen Chong Cheah cautioned that the trend should not be overinterpreted, noting that imports may reflect delayed investment decisions or government-driven infrastructure procurement rather than private sector confidence.

On the consumption side, household spending, which represents the largest portion of GDP, rose 4.97 percent YoY, slightly higher than the 4.93 and 4.95 percent recorded in the two previous quarters. Consumer stimulus measures introduced during the summer holiday period, such as transportation discounts, also played a role in boosting demand. These programs helped lift the transportation and warehousing sector, which grew 8.52 percent, while the “other services” category expanded by 11.31 percent, both benefiting from a surge in tourism during school holidays and collective leave days. At the same time, manufacturing grew 5.69 percent, trade 5.37 percent, and construction 4.98 percent YoY, with these three sectors together contributing more than 40 percent of national output.

The financial markets reacted positively to the upbeat data. The IDX Composite Index rose 1 percent in morning trading to 7,536.61 points before easing slightly to close at 7,515.18, up 0.68 percent overall. Even so, analysts urged caution about the outlook. Permata Bank chief economist Josua Pardede warned that global uncertainties could weigh on growth in the second half of the year, citing trade tensions and China’s export pivot toward Southeast Asia, which may increase imports into Indonesia and dampen GDP momentum. He argued that Indonesia will need to rely on accommodative fiscal and monetary policy alongside continued stimulus to maintain momentum, projecting full-year growth between 4.7 and 5.1 percent. Similarly, Bank of America economists Kai Wei Ang and Rahul Bajoria called the second quarter figures a “surprise,” noting their forecast had been 4.8 percent, based on expectations that domestic policy reforms would temporarily slow growth in the near term.

August 5, 2025, The Jakarta Post(https://www.thejakartapost.com/business/2025/08/05/gdp-growth-surprises-to-upside-thanks-to-construction-projects.html)

Indonesia’s trade performance remains resilient amid global uncertainties, recording another surplus in June driven by moderate export growth, primarily buoyed by crude palm oil (CPO). According to Statistics Indonesia (BPS) Deputy Pudji Ismartini, the country posted a US$4.1 billion surplus for June—the 62nd consecutive month of trade surplus since May 2020—reflecting sustained export strength despite weakness in the manufacturing sector. For the first half of 2025, the cumulative surplus stood at $19.5 billion, underscoring Indonesia’s continued trade resilience.

The United States emerged as Indonesia’s largest bilateral surplus partner, contributing over $8.57 billion, followed by India at $6.6 billion and the Philippines at $4.4 billion. Key export commodities driving the surplus included electrical machinery, clothing, and footwear, with notable growth in export value. In particular, CPO exports surged to $11.4 billion in the first half, up 24.8% from the previous year, driven mainly by a 22.2% increase in prices despite volume growth of just 280,000 tonnes. Conversely, coal exports declined by 21%, reflecting ongoing commodity market fluctuations.

On the import side, June figures increased 4.28% year-on-year (YoY) to $19.3 billion. While exports of raw materials and intermediate goods contracted slightly by 2.74%, imports of capital goods soared 38%, signaling strong investment activity. This uptick in capital goods imports is often viewed as an indicator of business confidence and future growth. Despite this, Indonesia’s manufacturing PMI remains in contraction territory, with S&P Global reporting a July PMI of 49.2—improving from 46.9 in June but still below the threshold of 50 that signals expansion.

Josua Pardede, chief economist at Permata Bank, interprets the rising capital goods imports as a proactive measure by firms preparing for increased production and demand in the coming months. He suggests that these investments typically result in higher output within a three-to-six-month window. Looking ahead, Pardede projects Indonesia’s current account deficit may widen but remain manageable, likely below 1% of GDP. External factors, notably the ongoing global trade tensions, could further influence the balance of payments, potentially increasing the deficit by 0.3 to 0.6 percentage points, with a full-year estimate of 0.87% of GDP.

Investment and Downstream Minister Rosan Roeslani views the increase in capital goods imports as a positive indicator of improving foreign direct investment (FDI) inflows in the latter half of 2025. While FDI accounts for over half of total investment, recent quarterly data shows a 6.95% YoY decline in FDI, which represented roughly 42.3% of total investment in Q2. Commentary from Economist Intelligence Unit (EIU) researcher Wen Chong Cheah underscores the nuance in interpreting capital goods data—they can signal expansion plans, yet are also influenced by delayed investments, government infrastructure projects, or imports driven by public procurement rather than private sector sentiment.

Overall, Indonesia’s trade landscape indicates resilience amid challenging global conditions, with robust exports, increasing investment intent, and a cautious outlook on the current account, positioning the country to navigate the evolving macroeconomic environment with a degree of agility.

July 31, 2025, The Jakarta Post(https://www.thejakartapost.com/business/2025/08/01/ri-maintains-trade-surplus-despite-spiking-capital-goods-imports.html)