Slowing Inflation Expected From Monday?s Data Drop
Jakarta. Inflation appears to have slowed further in February from a month earlier, with commodity prices remaining steady, taming the impact of rising rice prices and presenting an opportunity to the central bank to cut interest rates further.
The consumer price index is likely to ease to 6.7 percent in February since the same period a year ago, according to the median estimate of 12 economists polled. January inflation eased to 7 percent on-year from a pace of 8.4 percent a month earlier.
The Central Statistics Agency (BPS) is scheduled to announce Indonesia?s official inflation and trade data on Monday.
Economists noted that raw food prices such as chili, onions and meat declined thanks to ample supply.
?From our observation, food prices eased in February but rice prices increased,? Aldian Taloputra, an economist at Bank Mandiri Sekuritas told Globe Asia on Friday.
Rice prices increased 30 percent to average Rp 12,000 per kilogram in February, compared with the same period last year.
Still, David Sumual, chief economist at Bank Central Asia, said the increase in rice prices were enough to catapult February?s inflation to 7.4 percent.
?In addition, the rupiah weakened, affecting inflation through more expensive imported products,? David said.
Lower inflation should give Bank Indonesia, the central bank, room to cut its rate further, Mandiri?s Aldian said, adding that Bank Indonesia?s benchmark rate could see another 25 basis point cut between April and June this year.
The central bank unexpectedly cut its benchmark last week rate by 25 basis points to 7.5 percent to boost growth, as it expect inflation to be lower than 4 percent at the end of this year.
Cutting the interest rate further could put more pressure on rupiah, which has fallen 4 percent so far this year against US dollar this year to levels last seen in August 1998.
Still, the central bank said the weakening rupiah was not a concern, as it would help the country exports. The bank also noted that the rupiah has actually appreciated against several currencies this year.
?There?s no need to be worried about Indonesia?s economy; the rupiah is in good condition and Bank Indonesia will always be in the market to guard it,? central bank governor Agus Martowardojo told reporters on Friday.
Standard Chartered Economist Eric Sugandi said he expected another 25 basis point cut in the benchmark rate in March due to good inflation data.
?It?s better to cut in the first quarter rather than the second because we could have the seasonal ballooning current account problem in the second quarter,? Sugandi said.
GlobeAsia; additional reporting from Reuters
Danamon Shareholders Vote In New Director
Jakarta. Bank Danamon Indonesia, the country?s sixth-largest lender by assets, welcomed its new president director on Friday, following the retirement of its former top executive, as the lender seeks to turn around its bottom line and lending growth.
Shareholders of Bank Danamon inaugurated Sng Seow Wah, previously the group chief executive of Alliance Bank Malaysia, during an extraordinary shareholders? meeting in Jakarta.
Sng takes the helm of Danamon after it reported a sharp decline in profits last year due to slower lending growth.
?The Indonesian banking industry still offers various opportunities for growth, particularly in the micro, small and medium enterprises sector,? Sng said on Friday. ?I am looking forward to expand Danamon?s presence in the industry and its contribution to this growing economy.?
Profit at Bank Danamon ? shares of which are mostly controlled by Asia Financial, a unit of Singapore?s Temasek ? declined by 36 percent to Rp 2.6 trillion ($201 million) last year, largely due to a regulatory change in accounting required the lender to book a lower premium income from its insurance units.
Bank Danamon?s total outstanding loans grew 3 percent to Rp 139 trillion last year; loans to micro, small and medium enterprises made up 28 percent of the total loans.
The lender also disbursed Rp 49.6 trillion in automotive loans last year, accounting for 36 percent of its total outstanding loans.
Still Sng has a more bullish outlook for lending growth this year on the back of stronger economic growth.
The Jakarta-based lender aims to grow total loans by 15 percent in 2015, on top of 18 percent growth in loans to micro, small and medium enterprises, Danamon?s
finance director Vera Eve Lim said.
Sng said that he will continue the lender?s focus on automotive financing and micro financing in the future, while also noting that it will still scout the market for other potential opportunities.
Papua Projects Get Needed Push
Jakarta. Indonesia?s Investment Coordinating Board, or BKPM, has vowed to accelerate land clearing and power generation permits to support nine investment projects worth a combined $1.3 billion in Papua?s Special Economic Zones.
The projects ? consisting of fishery, plantation and petrochemical developments in Merauke, Sorong, Teluk Bintuni and Raja Ampat ? have been on hold for several years, due to land clearing issues and a lack power supply, Franky Sibarani, the BKPM chairman, said on Friday.
?One of the requirements to develop the Special Economic Zones is the availability of investors who are ready to place their investment,? he said in a statement in Jakarta.
?Currently the four Special Zones in Papua and West Papua have potential investors who have planned to invest but are still hampered in realization.?
Franky said the Indonesian government had long identified Papua and West Papua provinces as a priority for development, meaning the government will direct investors to develop the area before investing in other parts of Indonesia.
Franky noted that five investors had shown serious interest in investing a total Rp 9.8 trillion ($754 million) in the plantation sector and Rp 2.4 trillion in the oleochemical sector in Papua between October 2014 and February this year.
Foreign investment in Papua and West Papua in 2014 amounted to $1.41 billion, lower than 2013?s $2.41 billion.
Investment flowed into the mining sector, agriculture, food industry, storage, telecomunications and energy.
Indonesia saw foreign direct investment across all sectors, except oil and gas and banking, rise 14 percent to Rp 307 trillion up from Rp 270.4 trillion a year earlier.
The BKPM expects FDI ? which accounts for about two-thirds of last year?s total investment ? to grow to Rp 320 trillion this year.
Pakistan to Introduce Large, Graphic Warnings on Tobacco Products
Pakistan has announced that it will require large, graphic health warnings on all tobacco products, better informing its citizens about the deadly consequences of tobacco use.
Effective March 30, tobacco products in Pakistan must bear warning labels covering 85 percent of tobacco packaging.
With this bold move for public health, Pakistan joins India, Nepal and Thailand as the fourth country to introduce warning labels of at least 85 percent, signaling a strong commitment to reducing the death and disease caused by tobacco use.
John Oliver Takes Down Big Tobacco
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WIKA expands into condotel business in Bali
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