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INDONESIA’S PRIVATE CONSUMPTION RISES TO 5.3 PERCENT : WORLD BANK

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World Bank chief economist for Indonesia, Frederico Gil Sander.

Greatindonesia.co.id, Jakarta – Indonesia’s private consumption rose to 5.3 percent in the first quarter of 2019 from 5.2 percent in the fourth quarter of 2018, according to the World Bank.

“The moderately sufficient increase in the private consumption is projected to continue,” World Bank chief economist for Indonesia, Frederico Gil Sander, said during the launch of the June 2019 edition of the Indonesia Economic Quarterly in Jakarta on Monday (1/7/2019).

Sander said the growth was fueled by a fairly significant rise in the consumption budget of political parties, which grew 16.3 percent in the first quarter compared to 10.8 percent in the fourth quarter of 2018.

However, household consumption slowed down to 5.0 percent from 5.1 percent due to the declining consumption in the service sector, including transportation, communication, restaurants and hotels, he said.

Of the household consumption, food and beverage consumption contributed the most to the growth of the private consumption, he said.

Meanwhile, consumption in the health and education sector rose at its fastest pace.

Sander further said the growth of retail sales, which almost doubled to 8.8 percent in the first quarter of 2019, also served as a monthly indicator of strong private consumption.

The sale of motorcycles also rose significantly to 16.1 percent in the first quarter of 2019 from 7.6 percent in the previous quarter.

However, Indonesian consumer confidence, which remained flat in the first quarter of 2019 showed signs of increasing in April and May. This could be seen from the increase in private consumption, which continued in the second quarter, he said. (mhs)

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FINANCE

REI READY TO BUILD NEW CAPITAL CITY : BAPPENAS

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Minister of National Development Planning (Bappenas), Bambang Brodjonegoro.

Greatindonesia.co.id, Jakarta – Property developers who are members of the Indonesian Real Estate (REI) are ready to participate in construction activities in the new capital of the country, Minister of National Development Planning (Bappenas), Bambang Brodjonegoro has stated. “We have communicated with the REI. The point is they are ready to be included in this plan,” he said during a meeting at the Bappenas Building, Jakarta, Wednesday (10/7/2019).

REI is ready to be involved in the development of a new capital city without any funding from the State Budget (APBN).

It only needs assurances regarding the land where the new capital city will come up, REI said.

“REI needs assurances if it does get concessions for land, that the construction process will not be disrupted,” he said.

Besides REI, there are many other companies that will be involved in the development of the new capital, not only from the private sector but also from among state-owned entities.

“The point is that many business people are interested in this planning and SOEs are allowed to participate,” he stated.

Previously, the Indonesian National Development Planning had estimated the cost of transferring the state capital, through the state budget to be IDR30.6 trillion over several years.

“Of the total cost of Rp466 trillion, the required state budget is only around Rp30.6 trillion,” Bambang had said in Jakarta, Thursday, June 15.

Based on the estimates compiled by Bappenas, the Rp30.6 trillion from the state budget will be used to build state palaces and military/police strategic buildings as the principal functions, green open spaces as helping functions, and for land acquisition.

Aside from the state budget, the Government and the Business Entity Cooperation scheme worth Rp340.6 trillion and private sector funds worth Rp95 trillion will complete the total amount of Rp466 trillion required for the transfer of the state capital.

Funds from the Government and Business Entity Cooperation will be utilised for the construction of government buildings (legislative, executive, judiciary), official housing (multistory and house-to-house for State Civil and Military / Police Apparatus), educational facilities (on the elementary, middle, and high school level), health facilities, correctional institution, infrastructure such as roads, electricity, telecommunications, water supply, drainage, waste treatment, and sports facilities.

Moreover, funds from the private sector will be used to build educational facilities (at the university level) and health facilities.

“So the majority of us are cooperating with the private sector and SOEs, the state budget is only a trigger. We will also use existing assets,” he said in conclusion. (azi)

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HOUSE APPROVES 2020 ECONOMIC GROWTH TARGET OF 5.5%

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Government representatives in a meeting with the House of Representative's Budget Agency in Jakarta on Monday (8/7/2019).

Greatindonesia.co.id, Jakarta – The Budget Academy of the Indonesian House of Representatives (DPR) approved an economic growth target of between 5.2 percent and 5.5 percent for 2020, based on the macro-economic predictions of the 2020 Draft State Budget.

The approval was made during a meeting between the DPR Budget Agency, the Ministry of Finance, the Bank of Indonesia and the Ministry of National Planning and Development, which was held in Jakarta Monday (8/7/2019).

“The outcomes of this meeting are subject to further discussion and include the basic pillars of the 2020 State Budget Bill, along with relevant financial data,” the meeting’s chairman, Kahar Muzakir said.

The meeting also discussed several key issues, such as national macro-economic predictions, related macro-fiscal frameworks, such as state revenues and expenditures, and national development targets for 2020.

The parliament approved the government’s proposed economic growth target, which is estimated to range from 5.2 percent to 5.5 percent, John Kenedy Azis (Member of the House Representative’s Budget Agency) explained, adding that the government also estimates annual inflation to be two percent to four percent while the exchange rate of the Rupiah (Rp) against the US dollar is expected to be between Rp14,000 and Rp14,500 per dollar.

Regarding national development targets for 2020, the unemployment rate is estimated to be between 4.8 percent to 5.1 percent, and poverty rate from 8.5 percent to 9.5 percent, and Gini ratio from 0.375 to 0.380, and human development index at 72.51 percent.

During the meeting, Sri Mulyani Indrawati (Minister of Finance) expressed his appreciation for the key role of the DPR Budget Agency in developing the initial plan of the Draft State Budget, before it is finalized as the 2020 State Budget.

“We would like to thank all the working committees. We will take all inputs into account. If there are any changes, we will certainly declare them,” Indrawati said. (hep)

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FINANCE

FINANCE MINISTRY PROPOSES STAMP DUTY TARIFF CHANGE

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Finance Minister, Sri Mulyani Indrawati.

Greatindonesia.co.id, Jakarta – The Ministry of Finance has proposed a change in stamp duty tariffs to maintain the continuity of adequate revenue from stamp duty. “The law on stamp duty of 1985 regulated the increase in stamp duty rates to a maximum of only six times the original tariff,” Finance Minister Sri Mulyani said at a working meeting with the House of Representatives’ Commission XI here Wednesday (3/7/2019).

The increase was based on the possibility of increasing stamp duty tariffs to a maximum of six times the initial tariff in 1985 of Rp1,000 and Rp500, Minister Sri Mulyani said.

In addition, the change was also proposed considering the fact that per capita gross domestic product (GDP) in Indonesia had increased by eight times while revenue from stamp duty from 2001 to 2017 had only increased 3.6 times.

Furthermore, based on data from the Directorate General of Tax in 2001, revenue from stamp duty was recorded at Rp1.4 trillion and in 2017 it amounted to Rp5.08 trillion, the minister pointed out.

Therefore, there needed to be a correlation between an increase in revenue and per capita income so that they could be in sync, she said.

On the basis of this growth and to further simplify the designation of stamp duty tariffs, the Ministry of Finance proposed simplifying duties at a fixed tariff of Rp10,000.

The minister hoped that the proposed change could be carried out without burdening the public as there is still a potential to increase revenue from stamp duty. (kat)

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