Going Independent

INDONESIA - Report 31 Mar 2016 by Cyrillus Harinowo and Maria Kartika Purisari

Indonesians politics has entered into a very interesting territory in the form of the Jakarta’s election. Jakarta, as the capital city of Indonesia, has become new bell weather for the Indonesian politics since the ascent of the former Jakarta’s Governor to become the Indonesian President. Therefore, people around the country have increasingly watched whatever happened in Jakarta. In the upcoming regional election due in February 2017, the commotion has started early by the decision of the incumbent to go through the independent route even though the formal registration for the candidates will only be opened in July this year.
The current Governor of Jakarta, Mr. Basuki Tjahaja Purnama or commonly called by his Chinese nickname, Ahok, was elected as a Vice Governor in 2012 together with Joko Widodo as the elected Governor. Since Jokowi became the Indonesian President in 2014, Ahok was elevated to become the new Governor. The last few years under his administration have seen so many changes that improve significantly the public service, the flood control and the management of the public transportation. Jakarta has become greener and friendlier with the completion of many parks around the city, while various slums have been removed and replaced by inspection roads and the people were relocated into decent apartments. Such stellar performance made him very popular which can gather support for his candidacy.
From the economic side, the acceleration of the infrastructure development has enabled the economy to move faster. At the same time commodity prices, especially palm oil, has nudged up that greatly help increase the purchasing power of the people. In effect, the monthly sales of cars have seen an uptick in the last two months and there is a new optimism from the car producers that the market this year will be brighter. The retail sales have also shown some level of stability, which helped the factories to start humming again.
From the external front, the February 2016 trade balance reported a big surplus for the first time in this year. Exports of that month reached $11.30 Billion while imports reached $10.16 Billion, leaving a trade surplus of around $1,140 Million. From that amount, the non-oil exports reached $10.18 Billion, an increase of 7.80% from January 2016. Meanwhile, non-oil imports reached $9.05 Billion, declined by 2.13% from the amount in January 2016. With that surplus, the first two months of this year the trade balance recorded a surplus of $1.142 Billion.
In the domestic front, the CPI in February 2016 reported 0.09 a deflation, which leaves the Y/Y inflation to reach 4.42% while inflation year to date to reach 0.42%. With that level of inflation, the Central Bank remained confident that the inflation for the year would be in the target corridor, which would be in between of 3% to 5%. In order to stimulate the economy, Bank Indonesia decided to reduce further the benchmark interest rate by 25 basis points to reach 6.75%.

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