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Tag: Indonesia

  • Indonesia Firms Face $34b in Losses Due to Cyber-Attacks

    Indonesia Firms Face $34b in Losses Due to Cyber-Attacks

    Cyber-attacks on Indonesian companies in 2017 will eventually cost domestic businesses $34 billion due to direct financial losses and long-term reputation damage, according to a recent study commissioned by global technology giant Microsoft.

    The study — which was carried out by research consultancy firm Frost & Sullivan by surveying 1,300 businesses and IT companies in the Asia-Pacific region — also put total potential losses to the region from cyber-attacks at $1.745 trillion, or 7 percent of the region’s current GDP.

    Almost half of Indonesia’s companies could have already been affected by cyber-attacks last year. The study found 22 percent of companies surveyed in Indonesia reported they had a security breach, while 27 percent were unsure if they had had one, due to a lack of data forensics assessments.

    Sixty-one percent of organizations either do not think about cybersecurity at all, or only after starting a new project. Almost seven out of 10 companies which had cyber attacks saw job losses in the last 12 months.

    “Companies face the risk of significant financial loss, damage to customer satisfaction and market reputation — as has been made all too clear by recent high-profile breaches,” said Haris Izmee, president director of Microsoft Indonesia, in a statement last week.

    Last year, Indonesia saw over 205 million cyber-attacks, including the ransomware WannaCry that attacked the country’s major hospitals, according to the Ministry of Communication and Information Technology.

    In calculating the potential losses, the study took into account direct financial losses from the attacks themselves, the opportunity cost to the organization caused by the incident, such as loss of customers because of reputation loss. The study also estimated cyber-attacks induced costs on the broader economy, such as a decrease in consumer and business spending.

    A large organization — one that has more than 500 employees — can possibly incur an economic cost of $16.3 million due to cyber-attacks.

    Of this, only $1 million is likely to be a direct cost to the company itself. Around $5.7 million is predicted to come from indirect costs, and $9.6 million to come from the induced costs.

    Over 90 percent of cyber-attacks can be prevented with maintaining most basic best practices, such as strong passwords, use of multi-factor authentications for suspicious log-in attempts and keeping all software up to date, Microsoft said.

     

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  • Levi’s Indonesia Presents Special Collections for Ramadan and Idul Fitri

    Levi’s Indonesia Presents Special Collections for Ramadan and Idul Fitri

    Denim jeans might not be the first thing that pops into our minds when we prepare our wardrobes for Ramadan and Idul Fitri. But let’s admit it, these are among the most versatile clothing items, which we can easily mix and match and wear to almost every occasion.

    Pioneering jeans brand Levi’s presented its special collections for Ramadan and Idul Fitri in Jakarta on Tuesday (22/05).

    “Ramadan and Idul Fitri are among the most important moments for Indonesia’s fashion industry,” said Adita Idris, head of marketing at Levi’s Indonesia. “And that’s why we’re now launching new collections specially for this season.”

    The collections are named after three main activities usually associated with Ramadan and Idul Fitri, which are Buka Puasa (Iftar), Mudik (Homecoming) and Lebaran (Idul Fitri).

    In the Buka Puasa collection, Levi’s features casual looks that combine regular and slim-fit denim pants with button-up shirts for men and women in a variety of indigo hues.

    Classic plaid patterns enhance some of the shirts in the collection.

    “People usually go straight from their campuses or offices to restaurants for iftar, so [in this collection], we’re presenting something that they can easily wear from day to night.”

    Levi’s presented more relaxed looks in its Mudik collection.

    Presenting this collection, the female models wore light cotton tank-tops and loose-fitted blouses with floral prints, matched with Levi’s 710 skinny cropped jeans that extended to just above their ankles.

    The male models on the other hand, wore a combination of regular-fit denim pants, T-shirts with simple graphics and trucker jackets. A scarf tied around the neck added a macho touch to the overall look.

    “All denim pants in this collection are made with our latest Performance Cool technology, which makes the jeans lightweight and breathable,” Adita said. “The fabric also moves perspiration away from the skin, keeping it cool and comfortable all day.”

    In the Lebaran collection, female models sported elongated and oversized tie-cuff shirts in hues of white and gray, which were matched with black and dark-blue skinny denim pants.One of the outfits in the Lebaran collection.

    “Simple dark-wash denim pants are more suitable to wear during respectful occasions, such as silaturahmi [visiting relatives’ homes] on Lebaran day,” Adita said.

    In the Lebaran collection, the male models presented long-sleeved shirts with Mandarin collars in plain white and denim hues, which were paired with Levi’s 505 regular-fit jeans.

    “As you can see, with our rich variety of clothing items, we can surely accommodate your every need for this festive season,” the head of marketing said.

    These special Ramadan and Idul Fitri collections are available in Indonesia and Malaysia.

    “In Indonesia, these items are available at all original Levi’s stores, as well as Sogo and Matahari Department Stores,” Adita said.

    ‘Hidup Positif’ Campaign

    Levi’s also used the occasion to launch a video campaign titled “Hidup Positif” (Positive Lifestyle).

    “Ramadan is a moment for introspection,” Adita said. “Therefore, in this special moment, we would like to encourage our customers to see things from a positive point of view and to always choose love, rather than hate.”

    The video campaign features a song with the same title by Yogyakarta-based band Batiga, which won last year’s Levi’s Band Hunt, and Malaysian actress-singer Daiyan Trisha.

    “I think the song is especially good and necessary, especially in the light of recent incidents in Indonesia,” said Riosa Oktaf, the band’s vocalist. “And it’s also in line with our vision as a band, which is to touch the hearts of our listeners and encourage positive values among them.”

    The video campaign is currently aired on Levi’s social media accounts, as well as by various TV channels and in cinemas.

    As winner of last year’s Levi’s Band Hunt, Batiga is also entitled to a record deal with Universal Music Indonesia.

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  • Net1 Ready to Support Broadband Internetin Rural Area of Indonesia

    Net1 Ready to Support Broadband Internetin Rural Area of Indonesia

    Net1 Indonesia is ready to support the government in accelerating the provision of internet connections in rural areas, especially in frontier, outermost and least (3T) developed regions of the country. Net1 Indonesia’s mission to spread the internet access in the rural area is in line with the government nine agenda priorities or often referred to Nawa Cita, which mentions developing Indonesia’s rural area within the framework of Republic of Indonesia.

    One of the pillars of those points is realizing the availability of telecommunication infrastructure and network connectivity in the regions. Currently, the Government, through the Ministry of Communications and Informatics, is spurring the availability of internet network for rural areas. According to data from the ministry, currently 73% of villages/sub-lower districts already have internet connection based on 3G technology.

    Meanwhile, the LTE 4G network only 55%. By 2019, the government is targeting to provide 3G-based internet for more than 83,000 villages. Another target for the upcoming year is covering total of 514 districts/cities by 4G LTE network. So far, only 64% of them have access to 4G LTE.

    “The advantage of Net1 4G LTE network is running at 450 Mhz frequency, which is perfect for rural area geographic character, with large area but low density. The characteristic of low-frequency is not pursuing the access speed, but covering the larger area,” said Larry Ridwan, CEO of Net1 Indonesia, in a discussion forum on Universal Service Obligation (USO), held by Indonesia LTE Community (ILC), at Balai Kartini Exhibition and Convention Center, Jakarta (24/05).

    Net1 Indonesia can serve the markets or areas that geographically are difficult to reach and economically are very costly by other operators. Most of 450 Mhz 4G LTE operators in other countries also operate in special areas, such as suburban and rural areas or targeting a very segmented market, such as corporations (mining, plantation, fishery), Machine-to-Machine (M2M) and others.

    Larry added that the biggest challenge in deploying internet networks in rural areas is the varying of geographical conditions, ranging from mountains to coastal areas, with scattered populations. This kind of conditions is requiring a large investment for operators. Meanwhile, observed from the business side, developing telecommunication infrastructure in rural area with less population is less profitable.

    However, this condition will not break Net1 Indonesia’s spirit to continuously supporting the government’s program in rolling out the Internet network for rural areas. “Net1 4G LTE Network at 450MHz is able to reach 50-60 Km, even up to 100 Km, from a base transceiver station (BTS), so it is suitable for archipelago country like Indonesia which has 16,056 islands. In terms of infrastructure investment in developing the site, it is certainly more efficient,” revealed Larry.

    Therefore, Net1 Indonesia can reduce the investment of building 4G LTE network for rural areas more efficiently and effectively. Investment can be pushed much lower. So far, Net1 has deployed 4G LTE service in 19 Provinces spread across Indonesia. A total of 306 districts/cities have accessed Net1 4G LTE network, consisting of 25,279 villages. Overall, 126,299,415 populations have been reached by Net1 Indonesia.

    Net1 Indonesia has also cooperated with a number of local governments in district and province level throughout Indonesia. The local governments cooperate with Net1 Indonesia to provide data broadband access for societies in sub urban and remote areas in their domain. Among others, Musi Banyuasin Regency, West Halmahera Regency, Talaud Islands Regency, Tual City, Siau Tagulandang Biaro (Sitaro) Islands Regency, Sangihe Islands Regency, Teluk Bintuni Regency and Kaimana Regency, have signed a Memorandum of Understanding (MoU) to working together building 4G based communications infrastructure with Net1 Indonesia.

    The cooperation with a number of local governments that have been started since 2017 is a first step for Net1 Indonesia to be able to meet the needs of data access for up to 260 million Indonesian populations who lives in more than 14.000 islands.

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  • Indonesia Drops in IMD World Competitiveness Ranking

    Indonesia Drops in IMD World Competitiveness Ranking

    Indonesia’s competitiveness has dropped this year due to external pressures arising from trade, fluctuating exchange rates, and insufficient efforts to eradicate corruption, Switzerland-based International Institute for Management and Development, or IMD, revealed on Thursday (24/05).

    Indonesia now ranks 43rd among 63 countries assessed for the World Competitiveness Yearbook ranking, down one place from the previous year.

    Other countries showing signs of declining performance include Taiwan, Thailand, New Zealand and the Philippines, which fell seven places.

    Singapore remained on the third position, Malaysia on 22nd, while Thailand dropped to the 30th position, three ranking points lower than last year.

    Beside the problems with currency fluctuations, trade and corruption, IMD’s report also mentions other challenges faced by Indonesia, including low contribution of its industries in the global value chain, gaps in infrastructure funding, and stagnant economic growth.

    On the bright side, IMD noted several several improvements: expanded access to higher education, increased health care spending, business expenditure on R&D, value-added knowledge-and-technology intensive industries, lower youth unemployment, and a number of patents in force.

    IMD, one of the world’s top business schools, surveyed 6,371 respondents from 63 countries, based on 258 indicators and statistical data from local and international sources, as well as information from executives and experts.

    The report used four key indicators to determine weaknesses and strengths of a country: its economic performance, infrastructure development, business efficiency and government efficiency.

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  • Indonesia Considers Stopping Palm Oil Exports to the EU

    Indonesia Considers Stopping Palm Oil Exports to the EU

    Indonesia is preparing for a worst-case scenario should the European Parliament’s draft of a ban on the use of palm oil in biofuels get approved by the European Commission and European Council.

    In January, members of the European Parliament voted in favor to phase out the use of biofuels made from palm oil by 2021 to fulfill the EU’s Renewable Energy Directive, which aims to reach a renewable energy target of 27 percent by 2030, including in transport fuels.

    A decision on whether the ban will be legally imposed in all EU country members will be made in 2019. If approved, Indonesia and Malaysia, who together produce nearly 90 percent of the world’s palm oil, will suffer a hard blow.

    “There’s an [ongoing] study about stopping exports to the European Union altogether. When it’s done, Indonesia can see that palm oil trade with them is risky. The study is to eradicate that risk once and for all,” Mahendra Siregar, executive director of the Council of Palm Oil Producing Countries, said in a discussion hosted by the Jakarta Foreign Correspondents Club (JFCC) on Friday (25/05).

    The council has commissioned several research institutions and universities to help produce its research, which is expected to be completed by the end of the year at the latest.

    Palm oil is a key source of revenue for Indonesia — the world’s biggest palm oil producer — accounting for about 14 percent of the country’s total exports.

    The EU is the second largest export market for Indonesian palm oil, importing around 5 million tons of the key Nutella ingredient each year. According to Ministry of Trade data, the EU has always been in the top two destinations for palm oil, along with India, since the 1990s.

    Purbaya Yudhi Sadewa, deputy minister of coordinating maritime sovereignty at the Coordinating Ministry of Maritime Affairs, said the EU must address trade barriers that discriminate against palm oil for the matter to be solved quickly.

    “Our goal is not to force the European Union to use palm oil, but we demand fair treatment for palm oil with other vegetable oils,” Purbaya said, adding that the EU now seems to solely target palm oil.

    “If the European Union has shown that they are not discriminatory towards palm oil, then we will gladly comply to their policy,” he said.

    The EU has insisted that it has no intention of building trade barriers against Indonesian palm oil and will address all drivers of deforestation, including soy, cocoa and coffee, but it has so far only proposed to ban palm oil imports.

    “The way I see it there is a [business] competition as they [EU country members] produce rapeseed oil which is expensive, while our palm oil is cheaper,” Trade Minister Enggartiasto Lukita said last month.

    According to a study by the Malaysia Palm Oil Council, oil palms occupy 9.2 million hectares of agricultural land and produces 31.8 percent of global oils, while soybean and rapeseed crops require 10 times this amount of land to produce similar yields.

    “This is an unhealthy competition … If it [palm oil] is disturbed, then we will also disturb the EU,” Enggartiasto said, adding that the ministry plans to ban fisheries from the EU if the draft is approved.

    Deforestation

    Vincent Guerend, EU Ambassador to Indonesia and Brunei Darussalam, however, said the union is considering to progressively replace food-based biofuels by more advanced ones, such as electricity, to prevent land-use changes affecting peatlands and tree cover.

    “The EU was the one to promote biofuel as renewable over 10 years ago. But because EU is such a big market, it has some very strong pull effects—negative effects to be exact,” Vincent said.

    According to Vincent, food prices are rising due to increasing land use for palm plantation that reduces available land for food crops. The expansion also contributes to deforestation, threatening species including elephants and orangutans.

    Data from the Central Statistics Agency (BPS) shows that land used for palm plantation rose from only 4 million hectares in 2000 to 11.9 million hectares in 2017. That figure is predicted to increase to 13 million hectares by 2020.

    A research study by the European Commission also shows that greenhouse gas emissions from biodiesel are more than three times higher than those from conventional diesel engines, when indirect effects are considered.

    New Markets

    Indonesia shipped out the highest value of palm oil ever in 2017, contributing to the year’s $12 billion trade surplus.

    According to BPS, palm oil exports and its derivative products reached $23 billion, up 26 percent from $18 billion in the previous year. The increase was in line with higher sales in non-traditional markets, according to a report by the Indonesian Palm Oil Association (Gapki) released in January.

    The export volume of palm oil to Africa countries jumped nearly 50 percent to 2.3 million tons in 2017 from 1.5 million, while exports to Middle Eastern countries also increased by 7 percent to 2.1 million tons from 1.9 million, the report showed.

    China — facing a threat of declining edible oil supply in trade wars with the United States — has also promised to increase palm oil imports from Indonesia by up to 500,000 tons per year. China bought 3.73 million tons of Indonesian CPO last year, from 3.23 million tons in 2016.

    “When we talk about the importance and significance of the EU on palm oil, this is the reality, which means the worst scenario can lead to a situation that palm oil can live without the EU. The question is of course whether the EU can live without palm oil,” Mahendra said.

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  • Indonesia, Peru to Enter a Free Trade Agreement

    Indonesia, Peru to Enter a Free Trade Agreement

    Indonesia and Peru agreed to step up economic cooperation during a meeting between their foreign ministers in Lima, Peru, on Wednesday (23/05).

    The cooperation is going to start with a trade in goods agreement (TIGA) to intensify trade engagement.

    “Indonesia proposed that the establishment of a comprehensive economic partnership agreement [CEPA] should be carried out step-by-step, beginning with the TIGA,” the Ministry of Foreign Affairs said in a statement.

    Peru is Indonesia’s fourth-largest trade partner in South America. Data from the Ministry of Trade showed an increase of around 5 percent between 2016 and 2017, with total trade valued at nearly $230 million last year.

    According to the statement, Foreign Minister Retno Marsudi said during the meeting with her Peruvian counterpart, Néstor Popolizio, that Peru is an important market for Indonesia, but the economic cooperation still needs to meet its potential.

    Retno also stressed the importance of increasing business interaction between the two countries and diversification of products in bilateral trade.

    At the meeting, Retno invited Peruvian businesses to participate in Trade Expo Indonesia (TEI) in October. Indonesia is also set to take part in Peru’s Expoalimentaria and Mistura Food Festival later this year.

    The ministers also discussed efforts to increase cooperation in other fields, including agriculture and fisheries.

    Indonesia’s economic diplomacy seeks to boost bilateral trade with the country’s non-traditional markets, especially in Africa and South America.

    In December, a CEPA with Chile made it the first South American country to have a free trade agreement with Indonesia.

  • Indonesia Improves in Getting Private Money for Infrastructure

    Indonesia Improves in Getting Private Money for Infrastructure

    President Joko “Jokowi” Widodo must have felt relieved and proud when the presidential airplane touched down at Kertajati International Airport in Majalengka, West Java, to inaugurate its service last week.

    The president can now showcase the airport as a successful and punctual public-private partnership (PPP) for infrastructure development.

    Initiated by the provincial government of West Java in 2009, the $800 million airport project was initially marred by land-clearing and financing problems. In 2015, Jokowi decided to step in with a state fund for the airport’s runway, taxiway and air navigation system.

    The move allowed Bandarudara Internasional Jawa Barat (BIJB), a state-owned enterprise, to concentrate on developing the terminals.

    Since then the project has become more attractive to investors, who saw a much lower risk. A syndicate of local Islamic banks injected $68 million into the airport last year. And soon BIJB will sell multimillion-dollar asset-backed mutual funds to investors.

    “The Kertajati airport is an example of successful cooperation between the central government, provincial government and the private sector. We will replicate this business model in other regions to accelerate development,” Jokowi said at the airport’s taxiway on Thursday (24/05).

    Second Best

    Indonesia was second after China in terms of attracting private funds to infrastructure projects last year, according to the World Bank’s Private Participation in Infrastructure (PPI) report released in April.

    It showed Indonesia attracted $15.4 billion to 11 projects. Of that amount, about $6 billion alone was used to build the Jakarta-Bandung high-speed railway, which is in 60 percent funded by a consortium of Indonesian state-owned companies and in 40 percent by Chinese enterprise China Railway Construction Corp.

    Among 304 projects considered in the report, 58 percent of the world’s PPI was in China, Indonesia, Mexico, Brazil and Pakistan, amounting to $93.3 billion, a 37 percent increase from 2016.

    Indonesia’s infrastructure push started under President Jokowi, who in 2015 said that more than $400 billion will be spent to accomplish 247 national strategic projects by 2019. Since 2014, when he took office, 30 of the projects, worth Rp 94.8 trillion ($6.7 billion) have been completed.

    Stronger Mechanism

    Since its implementation in the 1990s, private participation has been limited to the sectors of transportation and energy infrastructure. Having realized that the state budget simply cannot bear the costs of its infrastructure projects, the government has broadened the scope of public-private partnerships. Health care, telecommunications and water treatment projects have also been included.

    A 2015 presidential regulation, which expanded these financing possibilities, also set up a guarantee mechanism to fix the rate of return for investors in such projects. It also established Sarana Multi Infrastruktur (SMI) to help channel private funds into ready-to-built projects, and Penjaminan Infrastruktur Indonesia to provide guarantees for investors.

    “Over the past few years, the Indonesian government has considerably strengthened the legal and institutional frameworks for PPPs,” ADB country director for Indonesia, Winfried Wicklein, said last week.

    “By improving the quality of project preparation, ensuring competitive, fair and transparent procurement processes, and complying with obligations under existing long-term PPP contracts, Indonesia can deepen private sector interest in its PPP program,”  he said.

    There are 12 ongoing PPP infrastructure projects, including the Jakarta-Cikampek II Elevated Toll Road.

    The National Development Planning Agency (Bappenas) said that in 2018 there will be at least 15 new public-private projects, including the $1 billion, 71-kilometer Yogyakarta-Bawen Toll Road.

    Of these 15, only the $34-billion West Semarang Water Supply has been tendered, the rest are still being prepared.

    Benefits, Costs

    The most common form of public-private partnership is called “build, operate, transfer.” With this model, a public facility is built and operated by a private enterprise for a longer time, after which its ownership returns to the government.

    With this scheme, the government can refrain from taking in more loans or save the money for social programs.

    “However, when a toll road is built under a PPP scheme, it means the private operator would charge higher prices [to obtain profit]. When this happens, people may have to bear the higher price, which also means lower social benefits of the projects,” said Ahmad Mikail, an economist at Samuel Sekuritas Indonesia.

    The government should take this into consideration.

    “Whether a PPP has gone effectively is when people are satisfied with the facility built under the scheme,” Ferdinand Pecson, head of PPP Center of the Philippines, said earlier this month.

  • Indonesia Central Bank Steps Up FX Swap Auctions to Support Liquidity

    Indonesia Central Bank Steps Up FX Swap Auctions to Support Liquidity

    Bank Indonesia will conduct three foreign-exchange swap auctions this week to ensure there is enough rupiah liquidity in the market following its benchmark interest rate hike, a senior official at the central bank said on Monday.

    Bank Indonesia raised its key rate, the seven-day reverse repo rate, by 25 basis points to 4.50 percent on Thursday last week to bolster the rupiah and stem capital outflows.

    The three Bank Indonesia swap auctions this week are more than the two conducted last week and the one conducted each week in April. Analysts say the increase in frequency could be a pre-emptive move to provide rupiah liquidity to banks before customers start taking cash for spending related to Ramadan and the Idul Fitri celebration.

    The overnight contract for the Jakarta Interbank Offered Rate (Jibor) rose to 4.22528 percent on average the following day, from 4.02500 percent.

    “Even though the seven-day reverse repo rate was hiked 25 basis points, we must maintain enough rupiah liquidity in the money market,” said Nanang Hendarsah, head of monetary management at Bank Indonesia. “With more FX swaps, there will be more rupiah liquidity.”

    Andry Asmoro, an economist at Bank Mandiri, said this measure is likely a part of the central bank’s policy mix where the central bank “wants to tighten to guard against volatility in the market, but on the other hand it also wants domestic liquidity to be stable.”

    Bank Indonesia’s currency intervention has caused rupiah liquidity to tighten. While its sovereign bond buying operations could sterilize this effect, Andry said the central bank has been less active with these operations.

    Late last month, Bank Indonesia Governor Agus Martowardojo announced that the central bank would increase the auction frequency to twice a week from once a week, amid increasing open market intervention to shore up the rupiah.

    The rupiah has been under pressure in past weeks as United States Treasury yields rose and the dollar rallied. The currency continued to fall despite Bank Indonesia’s rate hike and on Monday it softened further to trade at 14,195 to the dollar, its weakest since October 2015.

    Under the auctions, the central bank swaps rupiah funds with commercial banks’ foreign-currency holdings for a period, which allows the banking system access to extra liquidity.

    Nanang said Bank Indonesia will review whether to conduct two or three FX swap auctions each week, depending on market conditions.

    So far this month, Bank Indonesia has sold swap contracts worth nearly $2.7 billion, mostly with one-month and three-month tenors.

    Prior to this, the central bank had not sold any FX swap contracts this year, either because there were no bids in the auctions or because it had refused all bids, according to its website.

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  • Lippo, Itochu Explore Expanding Cooperation in Asia

    Lippo, Itochu Explore Expanding Cooperation in Asia

    James Riady, the chief executive officer of Lippo Group, one of Indonesia’s largest property conglomerates, met with Itochu chairman and chief executive Masahiro Okafuji in Tokyo on Monday to discuss ways to boost the companies’ cooperation in the regional healthcare sector.

    Lippo and Itochu are strategic joint venture partners in Lippo’s Healthcare operations outside Indonesia, covering 106 medical clinics serving 1.4 million Singaporeans, a hospital in China and 12 elderly medical facilities in Japan.

    The two business leaders discussed how to intensify their joint healthcare exposure across Asia and Indonesia, according to a statement from Lippo Group.

    Itochu is one of Japan’s largest and most profitable “sogo shosha” general trading groups with global operations and over $43 billion annual revenue in 2017 fiscal year.

    Lippo is Indonesia’s leading integrated services groups with operations in nine countries, including in Singapore, Hong Kong, China and the United States.

    Lippo’s 115,000 staff and employees serve over sixty million customers in various asset categories, including department stores, hypermarkets, malls, housing developments, hospitals, broadband and internet, technology and digital services, media, hotels, banking and financial services and township developments.

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  • Most Southeast Asia stocks end lower; Indonesia posts 11-month closing low

    Most Southeast Asia stocks end lower; Indonesia posts 11-month closing low

    Most Southeast Asian stock markets reversed early gains to end lower on Monday with Indonesia marking its lowest close in more than 11 months while Vietnam shed 2.5 percent.

    Jakarta’s main index closed at its lowest since June 2017, with banking stocks bearing the brunt.

    Bank Rakyat Indonesia ended 6.1 percent lower, while Bank Negara Indonesia lost 3.6 percent.

    Bank Indonesia said it would conduct three foreign exchange swap auctions this week to ensure there is enough currency liquidity in the market after it hiked its benchmark interest rate last week to support the rupiah and plug capital outflows.

    “As the U.S. continuously raises interest rates, it’s impacting a lot of emerging markets, such as Indonesia. Hence, the central bank has to raise interest rates to stamp out capital outflows,” said Joel Ng, analyst at KGI Securities.

    The index of the country’s most liquid stocks shed 1.3 percent.

    Vietnam ended 2.5 percent lower, with real estate and financials leading the fall. Vingroup Joint Stock was the biggest drag on the index, closing 7 percent lower.

    “Foreign selling recently has hit Vietnam harder. We went up a lot in the first quarter, so the impact of profit-taking is greater now,” said Fiachra Mac Cana, head of research at Ho Chi Minh Securities.

    Singapore nudged up 0.54 percent to end at a one-week high, while Thai stocks gained for a third straight session.

    Petroleum explorer PTT Exploration and Production closed 3.4 percent higher, while Kasikornbank gained 2.4 percent.

    Thailand saw its fastest economic growth in five years in the first quarter, boosted by strong exports and tourism, plus a slight firming in private consumption.

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  • Lippo Urges Deeper Indonesia-Japan Business Ties

    Lippo Urges Deeper Indonesia-Japan Business Ties

    The Lippo Group, one of Indonesia’s largest conglomerates, has called for deeper ties between the Japanese and Indonesian business communities to help realize the Southeast Asian country’s high investment potential over the next decade.

    Japan has long been a major source for foreign direct investment in Indonesia, influencing a wide range of sectors, from mining and basic industries to automotive and public transportation.

    “Japan has been critical to Indonesia’s modern development. Today, as Indonesia continues to be a go-to market for textile, automotive, chemical and technology manufacturing, and more, Indonesia continues to be an attractive, high-potential business opportunity,” Lippo Group chief executive James Riady said on the sidelines of the Nikkei Asia300 Forum in Tokyo on Monday.

    “We began our relationship with the Japanese business community over 30 years ago. It began with investment projects with various reputable Japanese banks,” James said.

    “Today, we are proud to have partners in a wide range of industries, from telecommunications to data centers, property to health care, financial technology to e-commerce. We are excited about deepening and widening this range of partnerships,” he added.

    Among the Lippo Group’s Japanese partners is Itochu Corporation, which is involved in the group’s health care business outside Indonesia. Lippo has worked with Mitsui & Co. since 2014 to expand mobile broadband services in Indonesia.

    Lippo opened the way for the Toyota Tsusho Corporation, the trading arm of the Toyota Group, in the Indonesian property market for the first time in 2013 with a hotel-style apartment tower project in Bekasi, West Java.

    Mochtar Riady, Lippo Group founder and chairman, used the Nikkei Asia300 Forum as an opportunity to thank Japanese partners and friends for putting their trust in the Lippo Group and the Indonesian economy. The Lippo Group believes in growing with partners and working together to achieve long-term results, he said in a statement.

     

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  • China Tech Giants Bet on Untangling Logistics of Indonesian E-Commerce

    China Tech Giants Bet on Untangling Logistics of Indonesian E-Commerce

    In a warehouse on the outskirts of Indonesia’s capital, supervisors at e-commerce company Lazada use bikes or electric scooters to zip around a floor the size of four soccer fields, where up to 3,000 staff pack and dispatch goods around the clock.

    The warehouse is one of five that Lazada has opened across Indonesia to cut costs and expand its reach in an archipelago whose 17,000 islands are sprinkled across an area bigger than the European Union.

    Chinese tech firms, including Lazada’s top investor, Alibaba Group Holding, have poured at least $6 billion into nearly every aspect of Indonesian e-commerce.

    Lazada uses Alibaba’s inventory management systems and has tied up with ride-hailing companies, often using their motorbikes to deliver goods in a country with creaking infrastructure and traffic-clogged cities.

    The payoff could be huge. It is a market forecast to grow from about $7 billion last year to $63 billion by 2027, according to Morgan Stanley.

    “Indonesia, both in terms of the customers and behaviour, is a very unique challenge and we need to adapt,” Florian Holm, co-chief executive at Lazada Indonesia said.

    Lazada and Tokopedia, in which Alibaba is also an investor, dominate Indonesia in customer traffic, with more than 117 million monthly website visits each, according to data from e-commerce aggregator iPrice.

    Alibaba doubled its investment in loss-making Lazada to $4 billion in April, underscoring its global ambition to secure a bigger share of the e-commerce market.

    Between the investment and the rewards, however, lie enormous complexities.

    The World Bank has said logistical costs swallow up around a quarter of Indonesia’s gross domestic product, citing bottlenecks in supply chains, long dwelling times in ports and lengthy trade clearances.

    Lazada has opened warehouses in places like Balikpapan, on the coast of Borneo, to avoid hauling everything from Jakarta. Holm said that had in some cases reduced shipping costs by 90 percent. Competitive pressure is growing. Another Chinese heavyweight, JD.com, arrived in Indonesia in 2016. And the US giant Amazon, which opened a warehouse in Singapore last year, may be prepared to dip a toe into the Indonesian market soon.

    Chinese Influence

    Indonesia’s e-commerce sales are set to rise from 3 percent of retail activity now to 19 percent by 2027, Morgan Stanley estimates. The same report said there were 159 million smartphones in Indonesia at the end of 2016, a number that could rise to 275 million by 2021.

    Indonesia’s young population and room for improvement in transportation and communications add to the prospects for growth, the bank said.

    That has attracted other Chinese companies. Tencent Holdings, which owns regional e-commerce player SEA, has entered the fray.

    Tencent and JD.com have stakes in Indonesia’s ride-hailing firm Go-Jek, while JD.com has invested in online travel company Traveloka.

    But Usman Akhtar, a partner at Bain & Co in Jakarta, said Indonesian companies such as Blibli, backed by a unit of the Djarum group, remain a force.

    “I would not characterize Indonesia as turning into a replica of China’s e-commerce market, at least not yet,” said Usman, referring to how JD.com and Alibaba dominate in China. Kusumo Martanto, who heads Blibli, said that the company had seven warehouses in Indonesia with seven more planned, and said it was important for local e-commerce companies to compete against Chinese players.

    Alibaba founder Jack Ma is on an Indonesian government steering committee for e-commerce, advising on areas such as tax, cyber security and human resources.

    Indonesia’s communications minister, Rudiantara, said there was no conflict of interest in Ma’s role, describing him as a “guru” who could help sell the country’s potential.

    But some policies seem to be turning toward Ma’s home turf.

    Indonesia, which is trying to tackle a shortage of talent in the digital sector, dropped sponsorships for 20 students to study in places like Australia and the United States.

    Instead, 10 students will go to India and 10 to China to study this year “because the future of the digital economy is in China and India,” said the minister, who uses one name.

    Eying Amazon

    Caterine, a 30-year-old housewife who lives west of Jakarta, used to shop in conventional stores once a week, but after her baby was born six months ago, she has been shopping online two to three times a week for convenience.

    “I prefer online shopping because it is quick. I can just click and click and the goods will arrive,” she said, adding she mostly used Shopee and Tokopedia for goods such as diapers and clothing.

    Morgan Stanley said delivery times of all types across Indonesia are down to about 3 days from 10 days, while deliveries in big cities can take 24 hours or less.

    While in urban areas delivery times have greatly improved, other parts of Indonesia’s e-commerce supply chain are still inefficient, said Willson Cuaca, co-founder of East Ventures, a tech investment fund.

    “To send goods from point A to B, the logistics company needs at least two modes of transport,” he said, referring to the complications of operating across so many islands.

    Amazon, by contrast, prefers to control its own supply chains from start to finish. But entering a market like Indonesia could require it to revisit that strategy.

    Amazon Singapore did not respond to a request for comment on whether it had plans for Indonesia.

    Much of the U.S. giant’s international focus has been on developing its business in India, even though some view its entry into Singapore last year as a stepping stone for expansion in the region.

    “At this moment, I believe it is trying to test the market, by selling products through third-party sellers,” said Daniel Tumiwa of the Indonesian e-commerce Association.

    Zhang Li, who heads JD.com’s Indonesian joint venture with Provident Capital JD.ID, was not overly concerned about competition from the likes of Amazon.

    “E-commerce is a global and borderless business, so we have to prepare and do continuous improvement to make our customers happy,” Zhang said.

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  • Bank of Indonesia Hikes Key Interest Rate to Boost Fragile Rupiah

    Bank of Indonesia Hikes Key Interest Rate to Boost Fragile Rupiah

    Indonesia’s central bank on Thursday (17/05) hiked its benchmark interest rate for the first time since November 2014, as expected, in a bid to bolster the fragile rupiah.

    Bank of Indonesia (BI) raised the 7-day reverse repurchase rate by 25 basis points to 4.50 percent. In 2016 and 2017 combined, BI cut the key by 200 bps to try to spur lending and faster economic growth.

    In a Reuters poll, 13 of 21 economists had predicted a rate at Thursday’s meeting, the last for Governor Agus Martowardojo.

    The governor, who will be succeeded by Perry Warjiyo later this month, said the hike was in response to rising global financial uncertainty amid tighter US dollar liquidity.

    “BI will continue to monitor economic developments and is ready to take firmer actions to ensure macroeconomic stability,” Agus said.

    In the month since BI last met on April 19 and said it would be an “overkill or counterproductive” to be raising rates, consensus expectations swiftly turned to see a rate rise as needed to put a floor under the falling rupiah.

    Southeast Asia’s largest economy is one of the region’s worst affected by the combination of rising US yields and higher oil prices, and has seen about $4 billion leave its markets over the past month as foreign investors review their exposure to higher-yielding emerging markets.

    The rupiah has fallen more than 5 percent to past 14,000 per dollar in four months as Indonesian 10-year bond yields jumped more than a percentage point over that period, and the stock market is down 8 percent this year.

    On Thursday, BI maintained its 2018 economic growth outlook at 5.1-5.5 percent and said that annual inflation would remain within its target range of 2.5-4.5 percent.

  • Raya Online Sales Will Likely Peak inEarly June With 0% GST

    Raya Online Sales Will Likely Peak inEarly June With 0% GST

    ShopBack, the leading online Cashback platform that partners more than 500 online shops in Malaysia, foresees Raya sales will reach its peak in the first week of June, given the 0% GST implementation from June 1st onwards.

    “Our partners have started to prepare for an early June promotion as that will likely be the week when consumers rush into Raya preparation. For example, Lazada is planning for a Mega Sale from June 1st until June 4th with onsite games, flash sales, and up to 11% cashback for ShopBack users. Around 40 partners are joining our Raya campaign and we are looking to have at least 100% growth this year,” says Alvin Gill, Country General Manager of ShopBack Malaysia.

    Other online partners that are joining the campaign include Traveloka, 11street, foodpanda, FashionValet, Booking.com, Senheng, Hermo, Expedia, Sephora, ASOS, JD sports, PappaDelivery etc. and the highest Cashback on offer is 30%.

    “There was a 25% drop in sales during the 14th General Election week and it was expected. As people resume working and Ramadan begins, the number of online sales has started to recover to the previous level. According to ShopBack data, the number of sales powered by ShopBack during Ramadan 2017 VS 2016 grew by 100%. We are confident to achieve beyond this number as the market sentiment looks very positive after GE14.

    “The 0% GST may allow Malaysians to have better purchasing power when spending for their Raya needs. Based on our historical data, sales normally surge at the second week of Ramadan but for this year, it may start after the 0% GST takes effect and will prolong to the fourth week,” Alvin says.

    Malaysians Spent More Compared to Indonesians

    ShopBack regional’s data also hows that in a comparison with Indonesians, Malaysians’ average spending during Ramadan 2017 was USD 54.54. Indonesians instead spent USD 49.04 on average. Overall, Fashion appeared as one of the top selling categories in both countries. Malaysians spent more on Health & Beauty and Electronic items while Groceries, Toys & Games had a great demand among Indonesians.

    “Larger electronic items, for example, household appliances could be the reason of higher spending found among Malaysians,” Alvin explains.

    Both Malaysia and Indonesia experienced a dip in traffic during Iftar hour. Website and app traffic during peak hour remained unchanged except for an increase of 15% during Ramadan month.

    “This year, ShopBack has integrated its app with regional partners like Lazada, especially Lazada app users can get better cashback when they shop through our app during Ramadan. We aim to integrate with more partners’ apps in the future to enhance our user experience. It will continue to propel our growth in the next half of 2018 together with the implementation of 0% GST,” Alvin adds.

    Currently, more than 1 million Malaysians are using ShopBack for their daily purchases. ShopBack has given over RM25 million worth of cashback since 2015. The cashback savings can be transferred out to a user’s bank account upon validation. Other than Malaysia, ShopBack also operates in Singapore, Thailand, Indonesia, the Philippines, Taiwan and Australia.

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  • Net1 Indonesia Holds Digital Activity #MauAda4Gdimana?

    Net1 Indonesia Holds Digital Activity #MauAda4Gdimana?

    Net1 Indonesia, provider of 4G LTE broadband data services, holds an exciting digital activity named #MauAda4Gdimana meaning “where should 4G access exist?”, from May 7 – July 7, 2018. Basically, this is a competition to invite people playing an active role to determine certain locations in Indonesia where data broadband should be easily accessed. People from all around the country can select a number of locations in Indonesia to obtain LTE 4G network that will be realized by Net1 Indonesia.

    So far, many areas in Indonesia cannot access internet yet. Adequate 4G data access can be something priceless for people in remote area to support their activities. According to a data from the Ministry of Communication and Information Technology, Republic of Indonesia, by end of 2017 there have been 55.000 eNodeB or Long Term Evolution radio network elements (LTE) to support 4G signal coverage in Indonesia. Net1 Indonesia is committed to increase these figures. One of its effort to mapping the location is by holding #MauAda4Gdimana digital activity.

    Meanwhile, katadata.co.id mentioned that 73.53% of provinces in Indonesia or 25 provinces have been exposed with 4G network. However, only 55.05% among the villages/sub-lower districts in Indonesia (45,811 villages/sub-lower districts) can be reached by 4G signal service. Based on the data and as a data broadband service provider, Net1 Indonesia is eager to provide internet connection, especially in rural areas and remote areas in Indonesia.

    “Digital activity #MauAda4Gdimana is an initiative from Net1 Indonesia to invite the community to have an active role and participate in our big mission, which is spreading the data broadband services to regions where 4G does not exist yet, especially for society in underserved, rural and remote area. Thus, we are committed to present 4G LTE service in the most voted area,” said Larry Ridwan, CEO of Net1 Indonesia.

    Competition #MauAda4Gdimana is open to all Indonesian citizens ages 18 years old above. As a further requirement, participants who are interested in entering this competition must have an active Facebook account and Like the Fanpage Facebook of Net1 Indonesia, following Instagram @net1_id and Twitter @net1id.

    Competition Mechanism

    Participants interested to join #MauAda4Gdimana competition can open microsite www.mau4g.net1.co.id to select #MauAda4Gdimana. Then, participants can choose a location that is championed as a 4G network receiver from Net1 by selecting VOTE in the options provided.

    Before joining the campaign of #MauAda4Gdimana, participants need to register by filling some information in the provided form, then participants can login with mobile phone number. To get support for a voted location in order to win the 4G LTE access from Net1 Indonesia, participants can invite their Facebook friends and promote it through their Facebook account using hashtag #MauAda4Gdimana. Most voted location will be prioritized to obtain 4G LTE network from Net1 Indonesia.

    Net1 Indonesia will select the win voters and appreciate with 9 units of Net1 Argo mobile Wi-Fi device, 99 credits worth IDR100,000 and 999 credits worth IDR50,000. Winners will be announced on July 14, 2018 through www.mau4g.net1.co.id and all Net1 Indonesia social media accounts at the end of the competition period. #MauAda4Gdimana competition is free of charge for the participants.

    Net1 Cooperation with Local Government

    Net1 Indonesia has also cooperated with a number of local governments in district and province level throughout Indonesia. The local governments cooperate with Net1 Indonesia to provide data broadband access for societies in sub urban and remote areas in their domain. Among others, Musi Banyuasin Regency, West Halmahera Regency, Talaud Islands Regency, Tual City, Siau Tagulandang Biaro (Sitaro) Islands Regency, Sangihe Islands Regency, Teluk Bintuni Regency and Kaimana Regency, are mentioned to sign a Memorandum of Understanding (MoU) to working together building 4G based communications infrastructure with Net1 Indonesia.

    The cooperation with a number of local governments that have been started since 2017 is a first step for Net1 Indonesia to be able to meet the needs of data access for 260 million Indonesian population who lives in more than 140.000 islands.

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