Gov’t to Hike 2024 Energy Subsidy
The House of Representative Budget Committee has increased the 2024 budget for energy subsidy and compensation allocation to Rp 339.26 trillion, Rp 13.3 trillion higher than the amount previously proposed in August.
The budget hike will be used to increase subsidies for 3-kilogram canisters of liquefied petroleum gas (LPG) and keep fuel and electricity prices low. This is part of the government’s efforts to anticipate the rising price of crude oil.
Related Link:
- https://www.thejakartapost.com/business/2023/09/20/govt-lawmakers-agree-to-hike-energy-subsidy-spending-in-2024.html
- https://databoks.katadata.co.id/datapublish/2023/09/20/pemerintah-dan-dpr-sepakati-anggaran-subsidi-energi-2024-berikut-rinciannya
AmCham Meeting With US Customs and Border Protection Agency
Transshipment, digitization, green trade policy, forced labor, and customs on intangible goods were the main topics of discussion during a joint AmCham Indonesia-US ASEAN Business Council meeting with the US Customs and Border Protection (CBP) Agency on Sep 20.
The meeting featured an open discussion with the CBP delegation led by Deputy Executive Assistant Commissioner John Leonard, who spoke of current issues and challenges the agency faces. The emergence of the digital economy and e-commerce has triggered more small packages to enter the US, and the CBP must update its IT system to process the high-volume of these small parcels more efficiently, said John. CBP supports the implementation of the ASEAN Single Window, where interoperability of customs systems among countries is crucial for seamless cross-border trade.
Companies discussed the issuance and ramifications of Ministry of Finance Regulation 190/2022, specifically surrounding customs duty on intangible goods, as one of the examples of digital protectionism implemented by the Indonesian government. John and his team graciously offered to convey our message to their Indonesian counterpart, the Directorate General of Customs and Excise (DGCE).
Reprint Needed for Jakarta Resident ID Card
All Jakarta residents with electronic ID cards (e-KTP) registered in the current capital will need to reprint their e-KTP next year after the change of Jakarta’s status from Special Capital Region (DKI) to Special Jakarta Region (DKJ), following the issuance of Law 33/2022 on the New Capital City Nusantara (IKN).
The Jakarta government is preparing the technicalities and budget to execute the plan, which will formally start once the DKJ bill is issued. With a big budget needed, the Jakarta government hopes for Commission A of the Jakarta Regional House of Representatives (DPRD) to accept the budget proposal for the e-KTP printing process.
However, member of Commission A William A Sarana rejected the proposal, deeming it a waste of taxpayer money, saying the change can be done simply in the database.
Related Links:
- https://www.cnnindonesia.com/nasional/20230918065230-20-1000223/warga-jakarta-harus-cetak-ulang-e-ktp-setelah-dki-berubah-jadi-dkj
- https://metro.tempo.co/read/1774104/cetak-ulang-ktp-warga-jakarta-sekda-dki-butuh-anggaran-besar
KPU Reschedules Presidential Registration Deadline
The General Elections Commission (KPU) has rescheduled the presidential and vice-presidential candidate registration window from Oct 19–Nov 25, to Oct 19–25 after a discussion with the House of Representatives (DPR) Commission II and the Ministry of Home Affairs, on Sep 20. The rescheduled dates are to prevent discord from candidate nominations by political parties, Coordinating Minister for Political, Legal, and Security Affairs Mahfud MD said.
Changes to the registration date are in line with Regulation in Lieu of Law (Perppu) 1/2022, as a revision to Law 7/2017 concerning General Elections which introduces a delay to the presidential campaign start date. The KPU will focus its efforts to inform the public of the new registration dates, KPU Commissioner Idham Kholik said.
Related Links:
- https://www.thejakartapost.com/indonesia/2023/09/20/registration-deadline-for-presidential-candidates-moved-earlier-to-late-october.html
- https://www.cnbcindonesia.com/research/20230921202641-128-474580/pendaftaran-mepet-8-cawapres-ini-bisa-dilirik-prabowo-ganjar
US Fed Holds Benchmark Interest Rates
The US Federal Reserve (Fed) has maintained its benchmark interest rate in the 5.25 percent to 5.50 percent range, although it may still be raised one more time this year to the 5.50 percent to 5.75 percent range, according to its updated quarterly projections.
While the Fed is in a position to proceed carefully with future policy decisions, it will still focus on containing the high inflation rate and return to the Fed’s 2 percent target, Federal Reserve Chairman Jerome Powell said.
The rupiah exchange rate weakened against the US dollar by 0.01 percent at Rp 15.381 per dollar on Sep 20, in response to the possibility of a Fed increase. Other Asian currencies also experienced weakened exchange rates against the US dollar, as the Hong Kong dollar (0.03 percent), Singapore dollar (0.13 percent), Philippine peso (0.22 percent), Chinese renminbi (0.11 percent), Malaysian ringgit (0.13 percent), and Thai baht (0.19 percent) all dipped as a result of the Fed’s hawkish monetary policy.
Any increase in the Fed rate in the coming months is likely to affect markets in developing countries, and a stronger policy response is needed to mitigate the negative effects, Bank Indonesia Governor Perry Warjiyo said.
Related Links:
- https://katadata.co.id/tiakomalasari/finansial/650bada15f654/rupiah-melemah-didorong-sinyal-the-fed-pertahankan-suku-bunga-tinggi
- https://www.reuters.com/markets/rates-bonds/fed-projections-show-if-soft-landing-is-new-baseline-or-baseless-2023-09-20/
- https://www.federalreserve.gov/newsevents/pressreleases/monetary20230920a.htm
- https://nasional.kontan.co.id/news/prediksi-bi-the-fed-kemungkinan-naikkan-bunga-pada-november-2023
Member Announcement: Bain & Company
Bain & Company, a leading global management consulting firm, announced on Sept 6 the opening of its first office in Vietnam, in Ho Chi Minh City.
The new office marks the establishment of its physical presence by a tenured group of partners and team members. The group has a long track record of serving global and local corporates as well as financial investors in Vietnam over the last 20 years.
“We are excited to expand our global footprint in Vietnam, one of the most vibrant and fastest growing economies in Southeast Asia,” said Wade Cruse, Managing Partner for Southeast Asia at Bain & Company. “This investment underscores Bain’s ongoing efforts to expand its footprint to support clients across the region. We are committed to put people on the ground and we look forward to creating success stories against the backdrop of a dynamic Vietnamese economy spurred by an exceptional talent pool and innovation ecosystems.”
The strategic move underscores Bain’s commitment to serve the dynamic and rapidly growing Vietnamese market, further strengthening its presence in Southeast Asia. The new office will facilitate closer collaboration with local businesses and multinational corporations and provide them access to Bain’s extensive global expertise, particularly in the areas of technology, digital innovation and sustainability.
Globally, Bain is renowned as one of the world's leading consulting firms. The firm serves more than 60 percent of the Fortune 500, operating in 40 countries and 65 cities, with a global team exceeding 18,000 professionals.
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AmCham Update is AmCham's regular newsletter on developments related to the pandemic crisis and other issues in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard.
