November 2016 2nd Week

11 november 2016

Categories : IR Weekly Review


  • MACRO
    • The Executive Board of the International Monetary Fund (IMF) has approved a loan for three years amounts US $ 12 billion, or around IDR 160 trillion to Egypt to support economic reform program. IMF said that the approval of the board allows to perform the initial disbursement amount US $ 2.75 billion. The rest of the loan will be given in several stages by following five rules. The first stage of disbursement are expected to increase the country's foreign exchange reserves to $ 23.3 billion. "This program will help Egypt to restore the macroeconomic stability and promotes inclusive growth," said the IMF in their official statement (12/11/2016).

    • Election of the President-Donald Trump drive the expectations of further interest rate hikes. On the economic side, US consumer sentiment rebounded or "rebound" in early November from the lowest level recorded in two years in October, as consumers increase their economic expectations. The initial numbers of consumer sentiment for November rose to 91.6 from 87.2 in October, according to the consumer sentiment index Thomson Reuters / University of Michigan on Friday. Meanwhile, investors also consider the prospects of the US economy under Trump. Analysts said the increasing possibility of tax cuts and a series of policies which generally pro-growth from Trump, aided and supported by the success of the Republican party take the seats in congress, lifting the market speculation for the rise of inflation and more interest rate hikes in the future (11/11/2016).

    • Review:

      The main function of the IMF is a worldwide organization whic has responsibility for the regulation of the international financial system and to provide loans to countries who need finance. So, IMF can fix the external disproportion and restoring competitiveness, putting the budget deficit and public debt, and increasing growth and creating job vacancies.

  • MICRO
    • Bank Indonesia (BI) believes Donald Trump victory over Hillary Clinton in the Election of the President of the United States (US), will not adversely affect the current account deficit (CAD) in the fourth quarter of 2016. During the third quarter, the US is the Indonesia's biggest export market destination by taking 12.2 percent of total non-oil exports. This number is higher than China which absorbs 10.3 percent of Indonesia's total exports. However, the value of non-oil exports to the US in the last quarter decreased by 1.8 percent (yoy) mainly driven by the decrease in the export of textiles, natural rubber, and foods which conquer 42 percent of total non-oil exports to the US. Head of the Department of Statistics BI Hendy Sulistiowati predict CAD in the fourth quarter 2016 will not be more than 2 per cent of the Gross Domestic Product (GDP) (11/11/2016).

    • The Financial Services Authority (OJK) warned banks that do not raise interest rates on deposits. "For one reason or another, fund raising is done to support the performance of credit demand which is predicted to rise at the end of the year. So, it needs liquidity. But, do not raise the deposit rates. Because now it has been coming down," said Chairman of the Board of Commissioners OJK Muliaman D Hadad, last weekend. Hadad said, raising the deposit rate will be a powerful way for banks to attract customers to deposit their money. The deposit money will be didtribute back by the bank in credit disbursement (14/11/2016).

    • Review:                                                                                                                                                                                                

      Determination of interest rates on deposits in banks depend on the circumstances of each bank's liquidity. The interest rate is basically a reflection and the forces of demand and supply of funds. When the bank’s conditions of low liquidity, they usually offer higher deposit rates to attract people to save their money to the bank. With this additional funds, banks can use these funds for its operations and face their liquidity problems.

  • BANKING
    • PT Bank Rakyat Indonesia Tbk (BRI) stated, a satellite owned by BRI (BRIsat) have just launched a few months ago as customer communication. This strategic function makes the satellite considered as an important component in business transformation through technology and digital platforms. "We use satellites for communication. If we see the technology component fundamental, one of them is satellite," said Director of Operations of Bank BRI Zulhelfi Abidin in seminars Indonesia Naik Kelas held in the Grand Ballroom, Kempinski Indonesia Hotel, Jakarta, Monday (07/11/2016). He explained that the presence of Bank BRI satellite will be positive things which can reach across Indonesia. From the big cities to the remote area.

    • PT Bank Tabungan Negara Tbk (BTN) provided construction loan facility to PT PP Property Tbk (PPRO) amount IDR 325 billion. The construction loan tenor of five years with interest at 9.5% per year. "This is not the first time BTN provide construction loans to PP Properti. The cooperation is a form of BUMN synergy that we do," said the Director of Consumer Banking BTN Handayani after signing a agreement construction loan facility letter between BTN and PP Property in a release on Thursday (10/11/2016). According to him, construction lending in the cooperation agreement amount IDR 325 billion will be used to build the project of Apartment Grand Sungkono Lagoon (GSL), Surabaya. The company expects the PP properti will always hold BTN in terms of funding support for each project to be built.

    • Review

      Capital Loans granted by BTN to Developer to assist capital financing in the construction of horizontal building (houses, shops, offices, kiosks, etc.) and vertical building as well as facilities and infrastructure.

Disclaimer : This document is for informational purposes only and obtained from a variety of reliable sources, but is not a guarantee the accuracy or completeness and should not be relied on completely. The above conditions may be changed at any time. Forbidden to rewrite anything without written permission from The East Java Regional Development Bank