Envisioning a green industrial park
On several occasions, especially during the G20 meeting in Rome, as well as the recent COP 26 meeting in Glasgow, Indonesian President Joko Widodo stated that the Indonesian government envisions a green industrial park to be located in Northern Kalimantan Province. In fact, to show that the statement was serious, the president officiated at the ground breaking of the new industrial park on December 21, 2021.
The green industrial park will enjoy renewable energy from the hydropower dam on the Kayan River, around 200 kilometers from the industrial park. The Kayan River and the surrounding rivers have the potential capacity to produce energy of over 9 gigawatts from five hydropower dams currently planned for that area. In fact, the capacity can be expanded further from the nearby Mentarang River, which may produce 1.5 gigawatts of electrical power. This green energy will boost smelting industries so that aside from being cheaper, the activities will comply with the new global norms. The completion of the hydropower dam will also significantly help the country achieve its targeted energy mix.
In this environment, it was encouraging to see that Indonesia's exports have remained high over the past few months. The Central Board of Statistics reported that the trade balance in December 2021 continued with a large surplus, albeit significantly lower than in the previous months. Exports for December 2021 reached $22,377.8 million while imports reached $21,358.6 million. The trade surplus for December 2021 was $1,019.2 million, below that of November, and far below the $5,736.1 million surplus reached in October 2021. Cumulative exports from January to December 2021 reached $231,540.8 million, a record yearly level. The prior record achieved was in 2011, at $203 billion. Cumulative imports for the same period reached $196,196.6 million, also a record level. The cumulative surplus for full-year 2021 was $35,344.2 million, again, a record level.
The Central Board of Statistics also reported that the Consumer Price Index for December 2021 registered inflation of 0.57%. This rate of inflation can be considered low because the month of December usually produces relatively higher inflation. With that monthly deflation, Y/Y inflation in December 2021 reached 1.87%, a level below the target inflation corridor of the Central Bank. Given that level of Y/Y inflation, Bank Indonesia decided to keep the benchmark interest rate constant at 3.5% at its Monetary Policy Meeting on January 20, 2022. However, in light of the imminent global tightening, Bank Indonesia introduced the increase of the reserve requirement from 3.5% of the third-party funds to 5%, to be effective in March 2022 and will increase it further, to 6.5%, in June 2022.
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