November 2016 4th Week

25 november 2016

Categories : IR Weekly Review


  • MACRO
    • The member of the Federal Reserve (Fed) seems confident to say that the US economy is strong enough to bear the increase in the benchmark interest rate in the short term. At least, that's what appears on the outcome of the minutes of the Fed that took place on 1st and 2nd November 2016. Result of the minutes that was released on Wednesday was to support the consensus view of Wall Street that the Fed would soon raise its benchmark interest rate in December. This month, the US central bank decides to keep its benchmark interest rate. Voting member of the Fed assesses the existence of equitable risk in the economy that would stimulate or depress their predictions related to economic growth and the labor market. "Almost all the members continue to assess that the near-term risks to the economy outlook is fairly balanced," according to minutes of the Fed. In addition, also written: "The majority of members of the Fed support the hold of the benchmark interest rate for a while." From approximately 17 members of the Fed who participated at the November meeting, 10 of them chose to hold interest rates. From the majority voting, the majority of them rate the interest rate hikes in the near future can be conducted.

    • China's Central Bank refrains from making policy announcements and just strengthens the monetary conditions, as an analyst transaction shows. The People's Bank of China cuts its seven-day open market operations and adds more funds through a contract of 14 and 28 days. This is another indication of selective PBOC tightening that has supported the view of some economists that China has turned from monetary stimulus. Policymaker seeks to limit leverage due to stable economic growth. PBOC Governor Zhou Xiaochuan has relied on market interest rates to shore up the policy and switch from the old reference standards. The central bank has started to offer a contract 14 days and 28 days as much as 30 basis points higher. The result of the cost of funding the secondary market weekend approaching 2.5 percent. Recent data from the National Interbank Funding Center have shown that the leading repurchase agreements have reached 8.9 trillion yuan in October.

    • Review:

      The rise in US interest rates in particular, and gradually is conducted to achieve and continue the labor absorption and inflation. It is also driven by the US economy expanded and continued solid growth in household consumption.

  • MICRO
    • Governor of Bank Indonesia (BI) Agus DW Martowardojo said that industrial transformation had to be implemented through a revamping of the various lines. Ranging from human resources (HR) to energy supply and other infrastructures. As known that the transformation of the manufacturing industry is one of the keys to increase the global competitiveness of Indonesia and face the world. Therefore, the industrial transformation strategy that is planned, comprehensive and coordinated is very much needed. Looking ahead, continued Agus, a coordination meeting participants agreed to continue to strengthen policy coordination and synergy. The goal was to accelerate the transformation of the manufacturing industry. "So as to encourage the industrialization of Indonesia that is globally competitive," he said.

    • The Financial Services Authority (FSA) prepares a strategy in strengthening the good governance using the approach of ethics. Authority assesses the challenges of the financial industry in the future will be more diverse and it requires the HR individual integrity of  industries. Rules that are too tight are also assessed to be disabling the development of digital-based economy. Chairman of the Board of Audit and member of the Board of Commissioners Ilya Avianti FSA says that in order to build the quality of good governance is not enough just through the formal level / legal, structural, and administrative. All together have to go back to the essence and soul (spirit) the substance of good governance, which is using a principle-based approach in its application.

    • Review:                                                                                                                                     

      The manufacturing industry in Indonesia is growing rapidly right as stated by the Governor of BI. Most products have successfully dominated the world market share. Indonesia's economic growth is predicted to be in the top three after China and India.

  • BANKING
    • President Director of PT Bank Negara Indonesia (Persero) Tbk Ahmad Baiquni argued, Indonesia's economic growth was relatively better than other countries. In fact, he claimed that the growth of gross domestic product (GDP) in the country was the third largest compared to the G20 countries. He said Indonesia's economic growth in the third quarter 2016 reached 5.02%. Compared to other G20 countries, Indonesia's economic growth was only inferior to China and India. "This condition is also relatively better than the conditions in 2015, which grew by 4.79%. Performance of macroeconomics should be appreciated, because among the countries in the G20, Indonesia was the country with the third largest GDP growth. Only just below China and India , "he said in a CEO Forum 2016 in Jakarta Convention Center, Thursday (24/11/2016). Nevertheless, he said, Indonesia could not be dozed by the economic growth performance. Because, if compared with the two countries in ASEAN, namely Vietnam and the Philippines, the economic growth in Indonesia wass still relatively underdeveloped.

    • Bank Mandiri estimates that total lending for the infrastructure sector could reach Rp100 trillion this year. This value is believed to be achieved for the achievement of infrastructure loans in the third quarter / 2016 has reached Rp96,9 trillion. Mandiri Corporate Secretary Rohan Hafas said infrastructure lending was channeled to the segment of corporate and KUR. Infrastructure loan growth this year is admittedly quite significant considering Jokowi’s Government has had many priority lists of projects and has been planned since two years ago. "The growth until the 3rd quarter of this year is 53.7%. This figure is high because it is still early, the next growth will not be as high as this again. But in the context of volume, next year would be attempted to be as the same as this year, "Rohan said when contacted in Jakarta. Until the third quarter of 2016, it has been recorded that a total of corporate credits has reached Rp212,4 trillion and there has been Rp96,9 credit financing flowing for infrastructure. The credit consists of Rp15.4 billion for highways, Rp32,1 trillion for electricity, Rp37,1 billion for transportation (airports, ports and railway), and Rp 12.4 trillion for telecommunications. "Toll road project is the most challenging sector for land acquisition, which could make the stretch the target date. Next year we expect they could boost sectors like oil palm plantations because the price has begun to improve. In addition, we are pursuing labor-intensive sectors that are positive for development, "he said.

    • Review

      Indonesia should be able to boost its economy with more ways, such as utilizing the advantages that have been possessed. As an example of the manufacturing industry as well as micro and SMEs that are already known to compete with the world.

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