• Indonesia’s economic performance showed further improvement during October 2009. Externally the latest estimates point to improvement in Indonesia’s exports, driven by strengthening global economic recovery and rising world commodity prices. Private consumption is gathering added momentum in keeping up with inflation and sustained consumer confidence in the outlook for the economy. The GDP of Indonesia is mainly driven by domestic demand, both consumption and investment spending. The contribution of consumption and investment are almost 90% of GDP. The Indonesian economy is predicted to chart more vigorous growth in Q4/2009 compared to previous quarter. In October 2009 the Consumer Price Index (CPI) was 166,68 or inflated by 0,19% compared to September 2009, so that the inflation from January – October 2009 is recorded only by 2,48% and year on year 2,57%. The decline in inflationary pressures was mainly driven by the low administered price and volatile food inflation in line with government policy to adjust the price subsidized fuel at the beginning of the year and the adequacy of supply and smooth distribution. In response to these developments, inflation in 2009 is predicted at the lower end of 4% inflation target. The central bank Bank Indonesia is keeping the bench mark interest rate at 6.5% and consistent with the achievement of the 2010 inflation target at around 5%. The exports in September 2009 declined to US$9.83 billion after reaching more than US$10 billion in August 2009 for the first time this year, or 19.9% drop from last year. In the first nine months of this year, exports reached US$80.13 billion and imports reached US$68.33 billion, resulting in a trade surplus of 11.8 billion. The foreign exchange reserve increased as per end of October 2009 to US$64.53 billion, the highest level ever in Indonesia.
• The banking industry in Indonesia maintained overall stability with continued high
levels of the CAR and NPLs contained below 5%. Banks demonstrated improved response to monetary relaxation with progressive adjustments in bank deposit and lending rates. At the aggregated level, the banking systems reports ample liquidity alongside steady reduction in the segmentation of the money market. Bank lending especially in Rupiah continues to chart increasing trend and being absorbed by sectors of trades, transportations, agricultures and energy. Furthermore bank lending in the form of micro and small credits continue to expand fast enough to potentially create new employment and support the improvement in the equality of economic growth.
• Starting 1 January 2010 all banks in Indonesia have to apply the new Financial Reporting Standard the so called PSAK 50 and 55, which is adopted from the International Financial Reporting Standard (IFRS). The transition period for the application of the new standard will take two years.
• The International Finance Corporation (IFC), a member of the World Bank Group, is planning to invest up to US$400 million per year in a five-year program to improve the quality of life of 41 million Indonesians. The investment will focus on long term financing, risk division and capital investment. As of June 2009, the IFC had committed US$968 million of investment in Indonesia, mostly in financial markets, agribusiness and manufacturing.
