AmCham Update Vol. 5 #33

Gov’t Pushes for More Mandatory Biodiesel Usage, 3% March Inflation, Indonesia Future Network Launch, Broadband Traffic to Surge During Eid

Apr 01, 2024

Gov’t Pushes for More Mandatory Biodiesel Usage

The importance of accelerating Indonesia's adoption of sustainable fuel has been underscored by Coordinating Minister for Economic Affairs Airlangga Hartarto, highlighting the current utilization of land for crude palm oil (CPO) production at 50,000 hectares, significantly below the government's target of 180,000 hectares.

This comes as the government intensifies its efforts to promote increased usage of biodiesel, as it advances feasibility studies for implementing B-40, a biodiesel blend comprising 40 percent, building upon the existing B-35 (35 percent blend) products.

In 2023, domestic biodiesel sales surged to 12.2 million kiloliters, while palm oil exports and derivatives reached $28.45 billion, contributing 11.6 percent to total non-oil and gas exports. Hartarto said the mandatory biodiesel policy aims to bolster Indonesia's position as the world's leading palm oil producer.

Vice President-elect Gibran Rakabuming Raka said this policy would reduce Indonesia's reliance on oil imports, advocating for increased utilization of renewable energy derived from vegetables and bioethanol.

Centre of Reform on Economic (CORE) Indonesia Researcher Eliza Mardian expressed concerns that the government's prioritization of palm oil over rice fields could potentially exacerbate shortages in cooking oil supply, necessitating careful consideration of the broader implications of such policies.

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March Inflation Rises to 3%

Inflation rose to 3.05 percent year-on-year in March, and a month-on-month increase of 0.52 percent, Statistics Indonesia (BPS) has announced. This rise was primarily driven by elevated prices of staple goods such as rice, sugar, chicken, eggs and garlic, particularly during the Ramadan period. Consequently, the consumer price index rose from 105.58 in March to 106.13 in April.

Acting BPS Head Amalia Adininggar Widyasanti highlighted the significant uptick in March inflation compared to previous months and the corresponding period last year, with the food, beverages and tobacco sectors making the largest contributions.

Permata Bank Chief Economist Josua Pardede, predicted a further increase in inflation due to rising food prices and air travel costs during the Eid holiday period. He also noted interest rate projections remained aligned with targets, enabling Bank Indonesia to potentially consider reducing its benchmark BI-rate in the latter half of the year.

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AmCham Attends Indonesia Future Network Launch

The Indonesia Future Network program was launched on March 22 by the Executive Office of the President of Indonesia (KSP), in collaboration with the Ministry of Youth and Sports, Ministry of National Development Planning (Bappenas), the Pijar Foundation, Huawei, and the Indonesian Youth Association.

The program is a platform for aspiring young leaders in both public and private fields to collaborate and exchange ideas, focusing on strategies to address current challenges and advance the Golden Indonesia 2045 vision.

Discussions encompassed key areas including future health, public policy, education, food, the environment and energy, industry and information and communication technology. Minister of Youth and Sports Dito Ariotedjo said the forum, slated for monthly sessions, aims to empower potential leaders to actively contribute to the advancement of national industries.

During the inaugural forum on health transformation, Dyah Kusumaningtyas, AmCham's Director of Government Relations, underscored the importance of policies aimed at bolstering the resilience of the healthcare industry. She emphasized the need to prioritize measures ensuring an ample supply and accessibility of pharmaceuticals and medical equipment, both through domestic production and imports.

Highlighting the unavailability of many innovative and high-tech health products domestically, she advocated for a phased approach to implementing local content policies, contingent upon the readiness of domestic industry and its supporting ecosystem. She also urged the government to reassess the formulation of local content policies to maximize their effectiveness.

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Broadband Traffic to Surge During Eid Holiday

State-owned telecommunications company Telkomsel has predicted a 15.22 percent increase in broadband traffic – expected to peak at 60 petabytes (PB) – during the upcoming Eid holidays. It has prepared extensive broadband connectivity infrastructure to support the increased traffic, Telkomsel Vice President Galumbang Pasaribu said.

The traffic surge will be driven by increased digital activities, including a 40.84 percent increase in online gaming, 25.49 percent in communication, and 22.61 percent in video streaming. He highlighted Telkomsel’s focus on optimizing network technology at 444 busy locations, including 288 special areas – including town squares, shopping centers, rest areas and pilgrimage routes.

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DPR Passes New Jakarta Special City Law

The House of Representatives (DPR) passed the Special Region of Jakarta Law (UU DKJ) on March 28, laying the legal groundwork for Jakarta’s future following Nusantara’s formal transition to become the nation’s new capital. The legislation is now awaiting President Joko Widodo’s signature to come into effect, while the official transfer of national capital status awaits a presidential decree.

Despite losing its position as Indonesia’s capital, UU DKJ maintains Jakarta's special status as the nation's economic hub and a global city. The legislation also establishes the Jakarta, Bogor, Depok, Tangerang, South Tangerang and Cianjur (Jabodetabekjur) agglomeration, and will set up an oversight council to coordinate development plans among Jakarta and its satellite cities.

The law also mandates the implementation of direct regional elections for the selection of Jakarta's governor and deputy governor. Earlier iterations of the bill, which vested full authority in the president for these appointments, were canned after drawing widespread criticism.

Minister of Home Affairs Tito Karnavian emphasized the need for continued enhancement of Jakarta’s infrastructure to remain competitive among other world class cities, accelerate economic growth, and increase the city’s contribution to the nation's GDP.

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Get to Know Our Members: Cleantech Solar

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Lydia Ruddy and written by the AmCham Staff. Paul L Goddard is the Managing Editor.

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