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November 2012
OFFICE OF CHIEF ECONOMIST
IInnddoonneessiiaa UUppddaattee
CCoonntteennttss
Is Indonesia Ready to be a BigCountry? p.02
Minor Impacts Seen From LaborWage Increase p.08
Basis Sector Analysis and LoanDistribution of ManufacturingIndustry Sector
p.14
Reviewing Differences inAutomotive Market Trends p.26
Mandiri Leading Economic Indicator p.32Indonesia Current Data (Table) p.34
CChhiieef f EEccoonnoommiisstt
Destry Damayanti
destry.damayanti@bankmandiri.co.id
AAnnaallyysstt
Faisal Rino BernandoAndry Asmoro
M. Ajie Maulendra
Nadia Kusuma Dewi
Nurul Yuniataqwa Karunia
Sindi Paramita
Reny Eka Putri
Andrian Bagus Santoso
Adjie Harisandi
Mamay Sukaesih
PPuubblliiccaattiioonn AAddddrreessss::
Bank Mandiri Head Office
Office of Chief Economist18
thFloor, Plaza Mandiri
Jalan Jend. Gatot Subroto Kav.36-38
Jakarta 12190, Indonesia
Phone: (62-21) 524 5516 / 5272
Fax: (62-21) 5210430
EEmmaaiill::
rino.bernando@bankmandiri.co.id
andry.asmoro@bankmandiri.co.id
ajie.maulendra@bankmandiri.co.id
nadia.dewi@bankmandiri.co.id
nurul.karunia@bankmandiri.co.id
sindi.paramita@bankmandiri.co.id
reny.putri@bankmandiri.co.id
andrian.bagus@bankmandiri.co.id
adjie.harisandi@bankmandiri.co.id
mamay.sukaesih@bankmandiri.co.id
SSeeee i i mm p poor r t t aannt t d d i i ssccl l aai i mmeer r aat t t t hhee eennd d oo f f
t t hhi i ss mmaat t eer r i i aal l
Is Indonesia Ready to be a Big Country?
McKinsey Global Institute in their report said that Indonesia will be the seventh
largest country in the world in 2030. The fact is our economy in 2011 is still at the
16th rank (base on IMF calculation). Indonesia’s large population (the fourth largest
in the world), the growth of the middle class people who have better purchasing
power and the rapid growth of urban areas are the major sources of economic
growth driver of Indonesia for the next 18 years.
Minor Impacts Seen From Labor Wage Increase
The recent plan of minimum wage increase for 2013 has sparked concerns about the
economic momentum ahead. Among the provinces which have approved minimum
wage increase is Jakarta. The provincial government of the nation’s capital agreed to
increase it by 44% to IDR 2.2 mn/month from the current IDR 1.5 mn/month and will
be followed by other regions. We believe the plan on minimum wage increase will
impact manufacturing sector the most, especially on labor intensive industries.
Basis Sector Analysis and Loan Distribution of Manufacturing Industry Sector
The manufacturing industry is one of the important factors in determining the
quality of economy, especially in employment. Nationally, the manufacturing
sector’s contribution to GDP was the largest compared with other sectors. But the
contribution of the manufacturing industry continued to decline. In the third quarter
of 2012, the manufacturing industry’s contribution to GDP was 23.87%, lower than
in 2005 by 27.4%. Unlike the contribution, the manufacturing industry growth
increased.Reviewing Differences in Automotive Market Trends
Throughout the year, the automotive market in Indonesia showed unusual
development. The growth of the car and motorcycle markets always has a consistent
trend and is only distinguished by its magnitude, but this year it has a highly contrary
trend. Up to October 2012, the automotive market still showed impressive
performance and would certainly record the highest annual sales record in history.
After a decrease in the monthly sales seasonally due to reduced working days during
Eid al-Fitr, monthly auto sales rebounded at over 100 thousand units from
September 2012, and again reached the highest monthly sales record in October
2012, which reached 106.8 thousand units. Differently, for the motorcycle market,
negative monthly sales growth has been felt since the first quarter of 2012.
11.7
31.9
-8.8
11.3
25.1
29.4
26.5
30.5
10.0
22.824.6
22.9
2007 2008 2009 2010 2011 Sep-12
Manufacturing Credit Growth (% yoy) Credit Growth (% yoy)
% Manufacturing to total credit
Loan Growth of Industrial Manufacturing and Total Industry
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© Office of Chief Economist Page 2 of 36
Is Indonesia Ready to be a Big Country?Destry Damayanti (destry.damayanti@bankmandiri.co.id)
Indonesia will be the seventh largest country in the world in
2030, outpacing the current developed countries, Germany
and the UK
(McKinsey Global Institute Report, September 2012)
The above statement would provide special pride to us,
Indonesian people, because based on the IMF calculation the
amount of our economy in 2011 is still at the 16th rank.
Besides Indonesia, other Asian countries included in the 2011
biggest countries in Asia of the IMF’s version are China, India
and South Korea. Large population (the fourth largest in the
world), the growth of the middle class people who have better
purchasing power and the rapid growth of urban areas are the
major sources of economic growth driver of Indonesia for the
next 18 years. In addition, the Indonesia’s healthy
demographic structure, which is concentrated in the
productive age (15 years to 60 years old), provides added
value for Indonesia, compared with developed countries that
are generally dominated by the elderly. Even the dependency
ratio of elderly to young people is continuing to decline until
reaching its lowest point in 2030. Thus, the next 18 years are
the golden years for Indonesia due to the momentum of
excellent economic growth.
As of the quarter 3-2012 Indonesia’s economy still showed
strong resilience against global economic shocks. The
economy still grew by 6.2% compared to the same period last
year. Meanwhile, the two Asian economic giants, China and
India, were experiencing a very significant economic
slowdown, becoming 7.4% and 5.4% from 9.2% and 7.1% in
2011. Global economic pressures apparently hit their export
earnings drastically, while the domestic economy is not
prepared to cover the negative growth in the external sector.
Moreover, the high inflationary pressures and budget deficits
in India, limited the space for the Government and the
Reserve Bank of India to provide stimulus into their economy.
This condition is different from Indonesia, where inflation is
relatively low, with the under-controlled budget deficit, which
is estimated to be 1.65% of GDP in 2013, so that Indonesia still
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© Office of Chief Economist Page 3 of 36
had a greater space if the economy shows a significant
slowdown. Moreover, the ratio of government debt to GDP
has declined to 23% in 2012 from 39% in 2006, which also
allows the Government to optimize its debt funding sources to
support its economic development.
Meanwhile, Indonesia’s domestic economy, which is
supported by public consumption and investments, is
continuing to show its strength in sustaining Indonesia’s
economy amid slowdown in the contribution of the external
sector (exports). Growth in private consumption remains
stable even reaching 5.7% in the quarter 3-2012 supported by
the growth of the middle class people. Moreover, investments
are continuing to record double-digit growth of 10%.
Confidence of foreign investors to Indonesia also continues to
increase, even foreign direct investment (FDI) in the quarter 3-2012 reached its highest value of IDR 57 trillion, with an
uneven spread of investments in industry, mining, commerce
and transport. Expansion of business done by the Japanese
global company of Toyota and L’Oreal in Indonesia proves the
potential of Indonesia is not only as a market base but also
their production base. Indonesia’s economic growth on the
basis of the domestic economy is expected to continue in
2013, where the economy is still expected to grow to 6.5%
with a controlled inflation rate at 5% level. The BI rate is
expected to be maintained at the level of 5.75% and the
average Rupiah exchange rate is around 9,500 to 9,600.
The question is how long this condition can be maintained.
Can McKinsey’s predictions for Indonesia in 2030 be achieved?
We get lessons from four countries joining in the BRICs (Brazil,
Russia, India and China), which in 2001 by its founder, Jim
O’Neill, was expected to be super power countries, but their
economies are in fact in pretty tough conditions with high
inflation rates. One inadvertence they made is the ill-prepared
anticipation of rapid economic growth, resulting in less
balancing by growth in other sectors, such as infrastructure
and human resources, so that the economic supply side is lesscapable of balancing the growth in the demand side.
For Indonesia, the same thing could happen, if we are
complacent in anticipation of a rush of investment in our
economy. Never let the confidence of investors and the good
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© Office of Chief Economist Page 4 of 36
performance of our economy make us complacent, making
the chores and challenges to be done and faced by Indonesia
in terms of government, businesses and people of Indonesia
as a whole not addressed well. Some of potentials possessed
by Indonesia will, if not used properly, be problems for thecountry in the future.
Demographic Bonus owned by Indonesia, which is reflected by
the abundance of productive age population by 2030, if it is
not balanced with an increase in education, productivity as
well as adequate job creation will only encourage high
unemployment in Indonesia. The current Indonesia’s labor
force data, amounting to 112 million people, show that 67% of
them are in fact graduated from junior high school level and
below, thus affecting the quality of our workforce. The
currently more rampant labor issues in Indonesia should alsobe of concern to all parties. Do not get the handling of these
issues drag on and damaged the investor confidence.
The second is the slow development of downstream
industries, causing our economy is very dependent on raw
materials and imported capital goods. The implication is that
in times of economic expansion, as reflected by increased
investment, it must be balanced by an increase in imports,
which in turn suppress our balance of payments. Meanwhile,
exports continue to slow due to weaker global demand and
falling commodity prices. Therefore, not surprisingly if duringthe year 2012 the Rupiah exchange rate has depreciated
about 6% compared to the end-2011’s exchange rate, despite
fairly heavy capital inflows into Indonesia, particularly in the
form of FDI.
Tax incentives provided by the Government to some strategic
industries only affected small businesses in fact, because of
the requirements on the business scale to reach USD 1 trillion,
and employment of 500 employees. Whereas the results of
the OECD study (Sep 2012) show that 99% of the total
companies in Indonesia are Medium, Small and Micro-scaleEnterprises (MSMEs). Therefore, it should be reconsidered to
provide other forms of incentives for MSME businesses so as
to accelerate the achievement of the downstream industries
in Indonesia.
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© Office of Chief Economist Page 5 of 36
Finally, a classic problem to be the Government’s concern is
infrastructure development to improve the connectivity within
Indonesia. Rapid investment growth without equipped with
adequate infrastructure will only lead to over-heating of
economy so as to create macroeconomic instability.Bottlenecks in land acquisition for the future should be the
government’s concern that the acceleration of infrastructure
development can begin to be realized in 2013.
Regardless of the challenges mentioned above, if they can be
handled well by our country and accompanied by all potentials
possessed by Indonesia, the space for the Indonesian
economy to grow is still quite large. The predictions made by
McKinsey are not a figment. However, of course this condition
must also be supported by the behavior of people who are
ready to accept changes as a democratic Indonesian societywith mutual respect for the freedom and interests of others
and not just imposing the will of an individual or group.
Figure 1. Indonesia economy is supported by domestic economy especially public consumptions
and investments. (Source: World Bank, BPS)
2.42.9 2.9
1.0
2.1 2.6
-2
0
2
4
6
8
2002 2007 Y-3Q12
Growth contribution (ppt)
Net export
InvestmentGovernment spending
Private consumption
Domestic
Economy
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Class
Cut-Off
(USD) 2003 (%) 2010 (%)
Low< 1.25 21.9
62.214.0
43.31.25 - 2 40.3 29.3
Middle
2 - 4 32.1
37.6
38.5
56.54 - 6 3.9 11.7
6 - 10 1.3 5.0
10 - 20 0.3 1.3
High > 20 0.1 0.10 0.2 0.20
Total Population (mn) 213 234
Class
Cut-Off
(USD) 2003 (%) 2010 (%)
Low< 1.25 21.9
62.214.0
43.31.25 - 2 40.3 29.3
Middle
2 - 4 32.1
37.6
38.5
56.54 - 6 3.9 11.7
6 - 10 1.3 5.0
10 - 20 0.3 1.3
High > 20 0.1 0.10 0.2 0.20
Total Population (mn) 213 234
Figure 2. Growth in middle class will drive public consumption into hogher level. (Source: World
Bank, BPS)
Figure 3. A healthy demographic structure, which is reflected by the abundance of productive age
population, will remain until 2030. (Source: BKPM)
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© Office of Chief Economist Page 7 of 36
5 . 8
2 3 6 . 8
5 1 3 . 1 6
7 6 . 6
3 0 0 . 0
3 2 9 . 8
3 3 1 . 7
1 8 1 . 0
0 . 7
1 , 9 0 4 . 6
S i n g a p o r e
B r u n e
i
C a m
b o
d i a
L a o s
P h i l i p p
i n e
M a
l a y s
i a
V i e t n a m
T h a
i l a n
d
M y a n m a r
I n d o n e s
i a
5 . 1 1
3 . 4
8 5 . 8 1 0 1 . 8
2 7 . 6
5 8 . 8
6 6 . 7
6 . 5
0 . 4
2 3 7 . 6
B r u n e
i
S i n g a p o r e
L a o s
C a m
b o
d i a
M a
l a y s
i a
M y a n m a r
T h a
i l a n
d
V i e t n a m
P h i l i p p
i n e
I n d o n e s
i a
2 1 . 0 8
2 . 7
4 4 7 .
3
6 0 2 . 1
3 0 0 . 0
3 1 4 .
9 3 9 0 .
4
3 3 . 5
1 7 . 4
1 , 1 2 4 . 6
L a o s
B r u n e i
C a m b o d i a
M y a n m a r
V i e t n a m
S i n g a p o r e
P h i l i p p i n e
M a l a y s i a
T h a i l a n d
I n d o n e s i a
Figure 4. Indonesia has largest area, largest population, and highest GDP among other Asean
countries. (Source: IMF)
In thousand SQ KmIn Million
In Billion USD
Largest Area in ASEAN Largest Population in
ASEANHighest GDP in ASEAN
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Minor Impacts Seen From Labor Wage Increase Aldian Taloputra (aldian.taloputra@mandirisek.co.id)
Leo Rinaldy (leo.rinaldy@mandirisek.co.id)
Wisnu Trihatmojo (wisnu.trihatmojo@mandirisek.co.id)
The recent plan of minimum wage increase for 2013 has
sparked concerns about the economic momentum ahead.
Among the provinces which have approved minimum wage
increase is Jakarta. The provincial government of the nation’s
capital agreed to increase it by 44% to IDR 2.2 mn/month from
the current IDR 1.5 mn/month. This will likely be followed by
other regions. Then, how is the impact against
macroeconomic indicators going forward? Below are some
thoughts:
Majority of the labor force would unlikely be impacted from
this plan. Total employment reached 110.8 mn persons in
Aug12 with informal sector share remaining dominant at 60%
of total employment and the rest is in the formal sector. As
the raise will mostly affect formal sector workers, bigger
chunk of employment (around 67 mn people) will not be fully
affected by the policy (figure 5). Part of the informal labor
works in the agriculture sector which employs 38.9 mn
persons or 35% of total employment (figure 6). Therefore, the
production cost of raw food is expected to be less impacted
which is crucial for food inflation stability (the weight of volatile food towards inflation calculation amounts to 20% -
30%).
We believe the plan on minimum wage increase will impact
manufacturing sector the most, especially on labor intensive
industries (the sector employs 15.4 mn persons or 14% of total
employment). Breaking it down, the top three industries that
employed the largest labor force are i.) food, beverage &
tobacco sector, ii.) textile sector, and iii.) wood & furniture
sector. These three sectors shares 23%, 22%, and 10% of total
medium and large manufacturing employment, respectively
(figure 7).
Thus, minimum wage increases will likely impact inflation yet
by a small degree. This is considering several factors:
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1. Looking at the overall cost structure, surprisingly labor cost
is not dominant for food, beverage & tobacco sector.
Labor cost only consists 3% of total production for this
industry (figure 8). The labor cost is higher for textile
sector especially for garment (27.1% of garment total costis labor cost) (figure 9).
2. Indonesia’s inflation is calculated using the basket of goods
consumed by consumers (Consumer Price Index) not by
the basket of inputs which are used by producers
(Production Price Index). Therefore, even if there is an
increase on cost of production for industries mentioned
above, it will not be immediately passed-through to price
increase for their products sold to consumers and it will
not be as high as the increase on their production costs.
Specifically, the pass-through effect of production cost forfood & beverage sector will be harder considering the tight
competition in this sector.
3. The direct impact on consumer price inflation may come
through higher salary paid to housemaid and other
household related labor such as babysitter and housing
construction workers. The weight of housemaid salary and
the household-related workers are each around 1.2% and
1.8% respectively in CPI basket. Nonetheless, given the
informal job nature of these employments, we think the
direct impact to inflation will be relatively muted.
Summing it up, based on our estimate, every 1% increase in
manufacturing wage will contribute approximately 0.02ppt
towards inflation. Thereby, a national average of 10% - 20%
increase in manufacturing wage will contribute 0.2% - 0.4% to
inflation in 2013, depending on the proportion of these
workers that is still receiving minimum wage.
Impact on economic growth will likely be neutral assuming
that inflationary pressure will still be manageable. Higher
minimum wage provision will trigger transfer of income fromthe capital owners to the labor forces, which will have neutral
impact on the GDP. Yet, given the high marginal propensity to
consume of household (the labor provider), it tends to spend
the additional income and eventually could generate larger
economic activity. On the other side, higher labor cost could
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cause small setback on investment as it may lower the margin
of investing in Indonesia. Nevertheless, we think, robust
domestic demand and relatively intact competitive labor cost
will help offset lower margin caused by higher wages. As the
recent FDI comes to tap domestic market, reallocatinginvestment abroad will also trigger higher transportation cost.
Despite the increase, Indonesian labors are still relatively
competitive compared with peers. Specifically, Indonesia’s
wage is more competitive than Malaysia, Thailand, China, and
the Philippines and is only more costly than Vietnam,
Cambodia, and Myanmar (figure 10). Even if we use Jakarta’s
plan minimum wage for next year and assume China’s (Beijing)
wage is still unchanged in 2013, Indonesia remains more
competitive than China in term of labor costs. Meanwhile,
domestically, the choice for overseas players to invest outsidethe Greater Jakarta is still wide open as the increases in the
minimum wages set by 15 other areas are below Jakarta’s
standard (figure 11). Nevertheless, if labor unrests persist, it
could hurt FDI activities in the medium and long term.
Formal sector
40 % (44.2mn)Informal sector
60 % (66.7 mn)
Proportion of total employment 2012
0 5 10 15 20 25 30 35 40 45
Electricity, Gas&Water Supply
Mining
Financial sector
Transport & Communication
Construction
ManufacturingServices
Trade, Hotel & Restaurant
Agriculture
2012 employment (million person)
Figure 5. Informal sector dominated employment share (left figure). Agriculture sector absorbed
most employment (right figure). (Source: BPS)
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0%
10%
20%
30%
40%
50%
60%
C o n s t r u c t i o n
A g r i c u l t u r e a n d f i s h i n g
M i n i n g
H o t e l s
O t h e r s e r v i c e s
W R T
P r i v a t e h o u s e h o l d s
M a n u f a c t u r i n g
T S C
E G W
R e a l e s t a t e
H e a l t h
E d u c a t i o n
F i n a n c i a l
P u b l i c s e r v i c e s
O t h e r s
Prevalence of informal employment by industry, 2007
Figure 6. Big part of workers in construction and agriculture sectors are informal. (Source: "Informal
Employment in Indonesia" - Cuevas, Mina, Barcenas, and Rosario)
Note : EGW (Electricity, Gas, and Water), WRT (Wholesale and Retail Trade), TSC (Transportation, Communication,
and Storage).
0
10
20
30
Employment share for medium and large manufacturing
sector
Figure 7. Manufacturing sector will likely impacted the most by minimum wage increase. (Source:BPS)
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Raw material
55
Energy
25
Labor
6
Depreciation
6
Interest rate
4
Marketing
3
Fiber Making
Raw material
58.1Energy
18.5
Labor
6.4
Depreciation
6
Interest rate
4
Marketing
3
Spinning
Raw material
56.5
Energy
14.4
Labor
13.3
Depreciation
2.1
Interest rate
6.4
Marketing
7.4
Weaving
Raw material
57.7
Energy
1.4
Labor
27.1
Depreciation
1.4
Interest rate
2.4
Marketing
10.2
Garment
Raw material
60%
Packaging
27%
Overhead
10%
Labor cost
3%
Food industry
Raw material
33%
Packaging
52%
Overhead
12%
Labor cost
3%
Beverage industry
Figure 8. Cost structure for food and beverage industry. (Source: BPS)
Figure 9. Cost structure for textile industry. (Source: various sources)
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© Office of Chief Economist Page 13 of 36
0 100 200 300 400
Myanmar
Cambodia
Vietnam
Indonesia
Philippines
China
Thailan d
Malaysia
2012 monthly minimum wage (US$)
* Indonesia = Jakarta
China = Beijing
Thailand = Bangkok
0
2
4
6
8
10
12
14
16
18
20
-20
0
20
40
60
M
a r - 0 0
D e c - 0 0
S e p - 0 1
J u n - 0 2
M
a r - 0 3
D e c - 0 3
S e p - 0 4
J u n - 0 5
M
a r - 0 6
D e c - 0 6
S e p - 0 7
J u n - 0 8
M
a r - 0 9
D e c - 0 9
S e p - 1 0
J u n - 1 1
M
a r - 1 2
YoY change (%)
man uf acturi ng wag e (yoy% ) I nf la ti on (y oy% )-RHS
Figure 10. Wage increase will likely push inflation up though minor (left figure). Indonesia’s wage
remains competitive than peer countries (right figure). (Source: various sources, Philippines
Department of Labor and Employment)
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Figure 11. List of minimum wage in various provinces for 2013. (Source: Kontan Newspaper)
No Province UMP 2012 UMP 2013 (Plan) Increase1 Aceh 1,400,000 1,550,000 10.71%
2 North Sumatera 1,200,000 1,305,000 8.75%
3 West Sumatera 1,150,000 1,350,000 17.39%
4 Riau Island 1,015,000 1,365,087 34.49%
5 Jambi 1,142,500 1,300,000 13.79%
6 Bangka Belitung 1,110,000 1,265,000 13.96%
7 Bengkulu 930,000 1,200,000 29.03%
8 West Kalimantan 900,000 1,060,000 17.78%
9 South Kalimantan 1,225,000 1,337,500 9.18%
10 Central Kalimantan 1,327,459 1,553,127 17.00%11 East Kalimantan 1,177,000 1,752,073 48.86%
12 North Sulawesi 1,032,300 1,125,207 9.00%
13 South Sulawesi 1,200,000 1,440,000 20.00%
14 Papua 1,585,000 1,710,000 7.89%
15 Jakarta * 1,529,000 2,200,000 43.88%
20.11%
2013 Minimun Wage Progress per November 20, 2012
Average
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Basis Sector Analysis and Loan Distribution of Manufacturing Industry
Sector Mamay Sukaesih (mamay.sukaesih@bankmandiri.co.id)
Development of National Manufacturing Industry
The manufacturing industry is one of the important factors in
determining the quality of economy, especially in
employment. Nationally, the manufacturing sector’s
contribution to GDP was the largest compared with other
sectors. But the contribution of the manufacturing industry
continued to decline. In the third quarter of 2012, the
manufacturing industry’s contribution to GDP was 23.87%,
lower than in 2005 by 27.4%. Unlike the contribution, the
manufacturing industry growth increased. The manufacturingindustry in the third quarter of 2012 grew by 6.36% yoy,
higher than in 2005 by 4.6% yoy, despite the slowdown in
2009 due to the global economic crisis.
Nationally, the manufacturing industry sector was dominated
by the non-oil and gas sector, amounting to 86.2% in 2011.
Food, beverages and tobacco industry provided the greatest
contribution by 35.2% of non-oil and gas industries. It was
followed by equipment, machinery and transport equipment
industry and fertilizer, chemical and rubber products industry
by 27.5% and 12.2%, respectively.
Manufacturing
industry share of the
economy declined, but
the growth rate
increased. Spatially,
the greatest
contribution of the
manufacturing
industry is West Java
province.
Manufacturing Industry and PDB Growth Non-Oil & Gas Manufacturing Industry by
Component, 2011 (%)
Figure 12. Manufacturing sector’s contribution to GDP declined but the growth increased, with the
largest share at the food, beverages and tobacco industry. (Source: BPS)
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Spatially, share of the manufacturing industry was substantial,
generally located on the Java Island. West Java Province was a
province that had the biggest share of manufacturing industry,
amounting to 22.4% in 2011. It was followed by East Java
(16.8%), Central Java (11.6%), Jakarta (10.7%), Banten (6.4%).Provinces outside Java Island, which had a manufacturing
industry share of over 5%, were East Kalimantan (6.4%) and
Riau (5.6%).
However, a province with a sufficiently high share of the
national manufacturing industry was not necessarily that the
manufacturing sector in the province was a basis sector.
Furthermore, this analysis will address mapping of provinces
having basis sector in the manufacturing industry sector and
bank lending to the manufacturing sector.
Province Mapping Analysis Method Having ComparativeAdvantages in Manufacturing Industry Sector
To learn more about any province which has advantages in the
manufacturing sector, this analysis applies the Location
Quotient (LQ). In the LQ analysis, variables used are the GDP
The method of
analysis used is the
Location Quotient (LQ)
and Difference Shift
(DS)
Share of Manufacturing Industry Sector by Province
2011 (%)
Figure 13. West Java, East Java and Central Java have contributed most to the national
manufacturing sector. (Source: BPS)
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© Office of Chief Economist Page 17 of 36
value of the manufacturing industry sector and the total
provincial GDP compared to the GDP value of the
manufacturing industry sector and the total national GDP.
From the calculation, the value of LQ can be classified into:
a. LQ > 1 means that a particular sector is a particular region
is a basis sector and is an advantage of the region or has a
high potential to be developed.
b. LQ < 1 means that a particular sector in a particular region
is a basis sector and is not an advantage of the region.
c. LQ = 1 means that a particular sector in a particular region
is only able to meet its own territory.
In addition to the LQ method, this analysis also employs thedifference method between the provincial and national
manufacturing industry growths or Difference Shift (DS). If the
DS value is positive, the sector growth in the province is higher
than the national average. Conversely, a negative DS value
shows the sector growth in the province is lower than the
national average. The data used is GDP data based on the
constant prices 2000 of 2007-2011.
Provinces Having Comparative Advantages in Manufacturing
Industry
From the LQ calculation, provinces having basis sectors of
manufacturing industry were generally located on Java Island.
This was consistent with the economic corridor of Java in the
Master Plan for the Acceleration and Expansion of Indonesia's
Economic Development (MP3EI), which determined Java as a
driving corridor of national industries and services. Provinces
having basis sectors of manufacturing industry include Banten,
Riau, West Java, Central Java and East Kalimantan (figure 14).
The manufacturing industry was not a basis sector of DKI
Jakarta and East Java although the share of manufacturing
industry in both provinces to the national level was high(figure 13). LQ value of the manufacturing sector in East Java is
equal to 1, which meant the manufacturing sector in East Java
was only able to meet its own territory. Meanwhile, the LQ
value of the manufacturing sector in Jakarta was below 1,
Provinces with basis
sectors of
manufacturing
industry include
Banten, Riau, West
Java, Central Java and
East Kalimantan
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© Office of Chief Economist Page 18 of 36
which meant the manufacturing industry in Jakarta was not a
basis sector.
Provinces that had a basis sector of manufacturing industry, in
addition to Riau Islands and Central Java, the manufacturingsector growth rate was below the national average.
Meanwhile, a province that had the manufacturing sector
growth rate well above the national average was West Papua,
although the sector was not a basis sector.
Banten province had basis sectors of manufacturing industry,
particularly non-oil and gas industries. Industries as the basis
sectors in Banten included textile, leather products and
footwear industry, basic iron and steel metal industry,
fertilizer, chemical and rubber products industry, and paper
and printing products industry and other goods industry. An
industry with the highest basis value was the basic iron and
steel metal industry. Industrial zones in Banten includedCilegon (Krakatau Steel) and Serang.
LQ Average Value of Manufacturing Industry,
2007-2011
DS Value of Manufacturing Industry,
2007-2011
Figure 14. Provinces with key sectors of manufacturing industries included Banten, Riau Islands.
West Java, Central Java and East Kalimantan (Source: BPS, processed data)
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Meanwhile, industries of the basis sectors in Riau Islands
Province included wood products and other forest products
industry, cement and non-metal mineral industry, basic iron
and steel metal industry, transportation equipment,
machinery and equipment industry and other goods industry.
Riau Islands also had the highest basis sector of basic iron and
steel metal industry.
LQ Average Value of Manufacturing Industry of Banten Province
2007-2011
Figure 15. Banten Province had the highest basis sectors in iron and steel basic metal industry.
(Source: BPS, processed data)
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Other goods industry and textile, leather products and
footwear industry, transport equipment and machinery and
equipment industry, fertilizer, chemical and rubber products
LQ Average Value of Manufacturing Industry of Riau Islands Province
2007-2011
Figure 16. Riau Islands Province had the highest basis sector in iron and steel basic metal industry.
(Source: BPS, processed data)
LQ Average Value of Manufacturing Industry of West Java Province
2007-2011
Figure 17. Industries of the highest basis sectors in West Java Province were textile, leatherproducts, & foot wear industries. (Source: BPS, processed data)
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© Office of Chief Economist Page 21 of 36
industry are the basis of West Java Province. Although the
textile, leather products and footwear industry was the
second highest basis sector, the average growth was negative
during the period 2007-2011.
For Central Java, an industry of the highest basis sector was
the Wood products and other forest products industry. Other
basis industries included food, beverages and tobacco
industry, textile, leather products, footwear industry and
cement and non-metal mineral industry. Central Java also had
a basis sector in oil and gas industry particularly the petroleum
refining industry.
In contrast to West Java, textile, leather products, footwear
industry in Central Java had an average positive growth during
the period 2007-2011. Similarly, the wood products and otherforest products industry was the highest basis sector, with a
positive growth.
A province outside of Java with a basis sector of
manufacturing industry was East Kalimantan. Unlike other
provinces with a basis sector of manufacturing industry, East
Kalimantan had a basis sector in the oil and gas industry (the
petroleum refining industry and the liquefied natural gas
LQ Average Value of Manufacturing Industry of Central Java Province
2007-2011
Figure 18. Non-oil industry as the highest basis sector in Central Java Province is wood and other
products industries. (Source: BPS, processed data)
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© Office of Chief Economist Page 22 of 36
industry). Non-oil and gas industry, which was the basis sector
of East Kalimantan, was the paper and printing products
industry.
Loan Distribution of Manufacturing Industry Sector
Once you know which provinces having advantages in the
manufacturing industry, we will discuss the development of loan distribution in the manufacturing industry. It is intended
to determine whether bank loan distribution is in accordance
with the basis sector mapping of the manufacturing industry.
Loan distribution of
manufacturingsector ranked the
third largest.
LQ Average Value of Manufacturing Industry of East Kalimantan Province
2007-2011
Figure 19. East Kalimantan had a basis sector in the oil and gas industry (liquefied natural gas
industry and petroleum refining industries). (Source: BPS, processed data)
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© Office of Chief Economist Page 23 of 36
Manufacturing industry was the largest share in GDP.
However, the loan distribution of manufacturing industry was
16.4% in September 2012 or ranked.
Manufacturing industry was the largest share in GDP.
However, the loan distribution of manufacturing industry was
16.4% in September 2012 or ranked the third largest after the
loans of non-industrial origin (29.7%) and loans of wholesale
and retail trade (17.9%). Share of manufacturing industry
loans to total loans declined since 2010, from 20.5% in 2007 to
16.4% in September 2012. It shows there are still potentialsthat can be optimized in bank lending in the manufacturing
industry.
Average growth of manufacturing loans during 2007 to
September 2012 was 16.8%. The highest loan growth in the
manufacturing industry occurred in 2008 (31.9%), while the
negative growth was in 2009 (-8.8%) due to the global crisis.
Figure 20. Loan distribution in the manufacturing industry ranks the third largest. (Source:BI)
Credit
(IDR Bn)
Share
(%)
Credit
(IDR Bn)
Share
(%)
Agricultures, Hunting and Forestry 131,784.8 5.2 Real Estate, Business, Ownership, and Business
Services
140,338.3 5.5
Fisher 5,228.2 0.2 Government administration, Defese and Compulsory
social security
2,777.8 0.1
Mining and Quarrying 93,978.3 3.7 Education Services 4,482.7 0.2
Manufacturing Industry 420,406.3 16.4 Health Services and Social Activities 8,126.3 0.3
Electrici ty, Gas and Water 68,386.1 2.7 Community, Sociocultura l,Entertainment and Other
Individual Services
43,645.8 1.7
Construction 98,999.2 3.9 Individual Services which Serve Households 709.3 0.0
Wholesale and Retail Trade 457,612.7 17.9 International Agency and Other Extra Agency
International
515.7 0.0
Provision of accomodation and eating and drinking 39,520.1 1.5 Business Activities which are not clearly defined 40,235.4 1.6
Transportat ion, Warehousing and Communicat ions 114,610.8 4.5 Loans to Non Industria l Or ig in 760,019.0 29.7
Financial intermediaries 124,462.1 4.9
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© Office of Chief Economist Page 24 of 36
When viewed from the Non-Performing Loan (NPL), the NPL
level of the manufacturing industry declined since 2011, from
4% in January 2011 to 2.7% in September 2012. But the NPL
level in the manufacturing industry was still above the
national loan. In September 2012, the NPL level of the
manufacturing industry ranked the 7th highest out of a total
of 19 sectors. Although NPL of the manufacturing industry wasstill above the recorded national rate of 2.1% in September
2012, the NPL level of the manufacturing industry was still
under the NPL of the wholesale and retail trade sector (3%).
Spatially, over 50% of loan distribution of the manufacturing
industry was in DKI Jakarta (57.2%). It was followed by East
Java (14.9%), West Java (7.7%), Central Java (6.2%), North
Sumatra (5.9%) and Batam (1.4%). The development of
manufacturing loan share to total loans in provinces with
advantages of manufacturing industry (West Java, Central
Java, Banten, Riau Islands and East Kalimantan) showed adecline in 2007-2011. In addition, the NPL level in the
provinces having advantages in the manufacturing industry is
still below the NPL level of the national manufacturing
industry (figure 22). It shows there are still potentials that can
be optimized in banking lending for the manufacturing
Loan Growth of Industrial Manufacturing and Total Industry
11.7
31.9
-8.8
11.3
25.1
29.4
26.5
30.5
10.0
22.8 24.6 22.9
2007 2008 2009 2010 2011 Sep-12
Manufacturing Credit Growth (% yoy) Credit Growth (% yoy)
% Manufacturing to total credit
Figure 21. Loan distribution in the manufacturing sector ranked the third largest. (Source: BI)
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© Office of Chief Economist Page 25 of 36
industry in the areas with advantages in the manufacturing
industry.
Percentage to National Manufacturing Loan byProvince (%)
Percentage Manufacturing Credit to TotalCredit, 2011 (%)
Figure 22. Loan distribution of 57.2% was for the manufacturing industry sector in DKI Jakarta.
(Source:BI)
NPL of Manufacturing Industry Loan (%) NPL of Manufacturing Industry Sector by Province (%)
Figure 23. NPL of manufacturing sector has declined since the beginning of 2011. Provinces having
advantages in the manufacturing sector have NPL under the national level (Source:BI)
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© Office of Chief Economist Page 26 of 36
Reviewing Differences in Automotive Market TrendsFaisal Rino Bernando (rino.bernando@bankmandiri.co.id)
Contrary Trends
Throughout the year, the automotive market in Indonesia
showed unusual development. The growth of the car and
motorcycle markets always has a consistent trend and is only
distinguished by its magnitude, but this year it has a highly
contrary trend.
Up to October 2012, the automotive market still showed
impressive performance and would certainly record the
highest annual sales record in history. After a decrease in the
monthly sales seasonally due to reduced working days duringEid al-Fitr, monthly auto sales rebounded at over 100
thousand units from September 2012, and again reached the
highest monthly sales record in October 2012, which reached
106.8 thousand units. Cumulative sales up to October 2012
have reached 923.1 thousand units (23.7% yoy), exceeding
sales in 2011 amounted to 894.2 thousand units. We
expectauto sales this year will enter a new era by penetrating
1 million units and is in the range of 1.10 to 1.15 million units,
growing by 23-28% yoy.
Differently, for the motorcycle market, negative monthly salesgrowth has been felt since the first quarter of 2012. In fact,
the historical trend in recent years showing the monthly
growth trend, which was increasing at every beginning of the
year, is not seen this year. With sales that only reached 5.96
million units up to October 2012 (-14% yoy), the motorcycle
market in 2012 was expected to be in the range of 7 to 7.2
only million units or slower at approximately 10-13% yoy.
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© Office of Chief Economist Page 27 of 36
Why Did Correction only Occur in Motorcycle Market?
As widely discussed, the decrease in the motorcycle market is
certainly a result of the enactment ofminimum down-payment
(DP) policy for consumer financing, including cars and
motorcycles. The question is why did the market correction
only occurin the motorcycle market, while the car market iseven more ferocious? Obviously this is an interesting fact to
be discussed. The reason is that the interest rate as one factor
in the rise and fall of automotive sales (since 80% of
automotive sales use financing services) does not apply in the
motorcycle market. Moreover, the recent interest rate is
relatively low with the continuously decreasing trends. Even
when seeing the correlation, the motorcycle market is more
sensitive to the interest rate compared to the car market. The
motorcycle market, that is usually in line with the car market
trend, is highly opposite at this moment. In fact, theinfluence
of down-payment factor is more dominant than the interestrate for the motorcycle market.
Why is down-payment very influential on the motorcycle
market? This shows that down-payment applied for
motorcycle financing was very low. In fact there were
Figure 24. Monthly car and motorcycle sales (unit). Opposite trends occur in both markets since the
first quarter of 2012. (Source: Gaikindo, AISI)
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
J a n
F e b
M a r
A p r
M a y
J u n
J u l
A u g
S e p
O c t
N o v
D e c
2008 2009 2010 2011 2012
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
750,000
800,000
J a n
F e b
M a r
A p r
M e i
J u n
J u l
A g s
S e p
O k t
N o v
D e s
2008 2009 2010 2011 2012
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© Office of Chief Economist Page 28 of 36
consumers who could bring home a motorcycle without down-
payment, despite the relatively high interest rate. Moreover,
proportion of consumers with low down-payment is much
higher in motorcycle market than that of car market. Before
the minimum down-payment regulation was applied, morethan 60% of motorcycle financing applied down-payment
below the current regulation of 20%. Meanwhile, over 70% car
financing has been complying with the current regulation
before it is applied.
In addition, commodity prices that tend to fall as currently
occurring also affect the automotive market, especially the
motorcycle market. The data show that there is a strong
positive correlation between commodity prices andautomotive market. No wonder when the commodity prices
boomed in 2008, sales of cars and motorcycles grew higher, by
40% and 33% yoy, respectively.
Figure 25. Relationship between lending rates & automotive sales and proportion of consumers
with down-payment above/below 20% (%). Lending rate does affect automotive sales (correlation
>80%). Proportion of consumers with low down-payment is much higher in 2W market than that of
4W market. (Source: BI, MoF, Gaikindo, AISI)
0
5
10
15
20
25
Ja
n-
01
No
v-
01
Se
p-
02
J
ul-
03
M
ay-
04
M
ar-
05
Ja
n-
06
No
v-
06
Se
p-
07
J
ul-
08
M
ay-
09
M
ar-
10
Ja
n-
11
No
v-
11
Se
p-
12
0
20,000
40,000
60,000
80,000
100,000
120,000
Inflation (%, yoy) BLRKK (%) 4W Sales (Unit)
0
5
10
15
20
25
Ja
n-
01
No
v-
01
Se
p-
02
J
ul-
03
M
ay-
04
M
ar-
05
Ja
n-
06
No
v-
06
Se
p-
07
J
ul-
08
M
ay-
09
M
ar-
10
Ja
n-
11
No
v-
11
Se
p-
12
0100000200000300000400000500000600000700000800000
Inflati on (%, yoy) BLRKK (%) 2W Sales (Uni t)
<20, 63.7
<20, 23.2
>20, 36.3
>20, 76.8
2W 4W
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© Office of Chief Economist Page 29 of 36
Increasing Income Does Affect Demand for Automotive
How about the Automotive Demand Prospects for the Future?
If we see the potential, the Indonesian automotive market will
still grow in the higher rate. The increasing middle incomepopulation will certainly affect the increasing purchasing
power in the automotive market. A study conducted by the
Carnegie Endowment shows that there is a strong positive
correlation between income per capita (based on purchasing
power parity) and average income elasticity for car ownership.
Data of cross country say that when a country’s per capita
income is below USD 3,400, the elasticity is 0.6only. This
means that every 1% increase in per capita income of a
country, there is a rise in carownership of 0.6%. Elasticity
increases sharply to 1.9 when a country’s per capita income is
in the range of USD 3,400-10,000, slightly decreases to 1.6when the per capita income in the range of USD 10,000-
25,000, and drops drastically to 0.9 when the per capita
incomeis above USD 25,000 . The study is confirmed with what
happened in Indonesia. Indonesia’s per capita income reached
USD 3,400 in 2006. And since 2007 until now, in the state of
Figure 26. Relationship between soft commodity prices and automotive sales. Strong positive
correlation between commodity prices and automotive market, especially Non-Java market. (Source:
Bloomberg, Gaikindo, AISI)
0
20,00040,000
60,000
80,000100,000
120,000
Ja
n-
01
No
v-
01
Se
p-
02
J
ul-
03
M
ay-
04
M
ar-
05
Ja
n-
06
No
v-
06
Se
p-
07
J
ul-
08
M
ay-
09
M
ar-
10
Ja
n-
11
No
v-
11
Se
p-
12
0.001.00
2.003.004.005.006.007.00
4W Sales (Unit) Rubber Price (USD/Kg)
0
200000
400000
600000
800000
Ja
n-
01
No
v-
01
Se
p-
02
J
ul-
03
M
ay-
04
M
ar-
05
Ja
n-
06
No
v-
06
Se
p-
07
J
ul-
08
M
ay-
09
M
ar-
10
Ja
n-
11
No
v-
11
Se
p-
12
0.00
2.00
4.00
6.00
8.00
2W Sales (Unit) Rubber Price (USD/Kg)
0
200000
400000
600000
800000
Ja
n-
01
No
v-
01
Se
p-
02
J
ul-
03
M
ay-
04
M
ar-
05
Ja
n-
06
No
v-
06
Se
p-
07
J
ul-
08
M
ay-
09
M
ar-
10
Ja
n-
11
No
v-
11
Se
p-
12
0
400
800
1200
1600
2W Sales (Unit) CPO Price (USD/MT)
0
20,00040,000
60,000
80,000100,000
120,000
Ja
n-
01
No
v-
01
Se
p-
02
J
ul-
03
M
ay-
04
M
ar-
05
Ja
n-
06
No
v-
06
Se
p-
07
J
ul-
08
M
ay-
09
M
ar-
10
Ja
n-
11
No
v-
11
Se
p-
12
0200400600800100012001400
4W Sales (Unit) CPO Price (USD/MT)
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© Office of Chief Economist Page 30 of 36
the market without shock, the growth of the car market was
relatively highand started to be higher than the growth of the
motorcycle market.
And what about the motorcycle market prospects for thefuture? Will it begin to decline due to the continuously
increasing demand for cars in line with the income per capita?
Indeed, when referring to the study above, the increased
share of the middle class occurring in Indonesia could pose a
potential shifting of the motorcycle market to the car market
for specific consumer groups.
If we refer to the World Bank classification of middle-class, the
middle-class composition is divided into four groups:
groupswith spending of USD 2-4, USD 4-6, USD 6-10 and USD
10-20 per day. From simple simulation we did, it appears thatgroups expected to be able to repay the carfinancing, both for
low-cost car (often called Low Cost Green Car or LCGC) and
Low Multi-Purpose Vehicle (MPV), arein the upper-middle
(USD 10-20 per day). However, the group portion is relatively
small, which is 1.3% of the total population. Meanwhile,the
portion of three groups below it (middle and lower-middle) is
much higher, amounting to 55.2% of the total population.
Thus, the three groups are still potential for the motorcycle
market development.
Figure 27. Population composition by expenditure and dependency ratio. 50 million additional
middle income population in 7 years or about 7 million per year. (Source: World Bank and BPS)
Class Cut-Off (USD) 2003 (%) 2010 (%)
Low< 1.25 21.9
62.214.0
43.3
1.25 - 2 40.3 29.3
Middle
2 - 4 32.1
37.6
38.5
56.54 - 6 3.9 11.7
6 - 10 1.3 5.0
10 - 20 0.3 1.3
High > 20 0.1 0.10 0.2 0.20
Total Population (mn) 213 234
Class Cut-Off (USD) 2003 (%) 2010 (%)
Low< 1.25 21.9
62.214.0
43.3
1.25 - 2 40.3 29.3
Middle
2 - 4 32.1
37.6
38.5
56.54 - 6 3.9 11.7
6 - 10 1.3 5.0
10 - 20 0.3 1.3
High > 20 0.1 0.10 0.2 0.20
Total Population (mn) 213 234
81 mn 131 mn
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The slowdown in the motorcycle market in our opinion is just
temporary because the portion using down-payment under
the current regulation was very high. Delay in purchase and
saving for the down-payment is the most reasonable optionfor prospective motorcycle buyers in low down-payment
segment.
We expect the motorcycle market will start to pick up in the
mid next year and begin to have the similar trend with the car
market. Increase in purcashing power due to the minimum
wage increase (18.4% on average) starting next year would
help motorcycle market to recover, especially in the regions
with higher percentage increases like Riau and East
Kalimantan. However, the business climate must be
maintained, especially related to regulations on the demandside, because the potential in the motorcycle market is still
growing in the long run.
For the car market, we are more optimistic. Realized
investment, especially from the Japanese car manufacturers
to add capacity, will accommodate the increasing domestic
demand. On the other hand, the car export market also
continues to grow. Exports of Completely Built-Up (CBU) cars,
which grew very high (57.4% yoy) as of October 2012, was
higher than the growth in exports in Completely Knocked
Down (CKD) cars, which amounted to 24.2% yoy, indicatingthe growing importance of the Indonesian position as part
from the production network of the global automotive
manufacturers. Currently, Indonesia is a regional production
base of several Japanese manufacturers, especially for MPV
type cars.
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© Office of Chief Economist Page 32 of 36
mandiri leading economic index (LEI)November 2012
Mandiri Leading Economic Index (MLEI) fluctuated in the
range of 99.1 to 100.4 during the period of January to
September 2012. The index has increased to 100.0
(+1.5%MoM) in September 2012, from a decreased 1.1%MoM
in August 2012. From several constituent indicators of MLEI
such as JCI index, export index, USD/IDR index and the volume
of total savings index showed an increase in September 2012.
It is predicted the growth in the domestic economy will still
experience a stable growth at current level from 4Q12 to
1Q13 and predicted to rise in 2Q13.
In September 2012, Indonesia’s trade balance consolidated its
surplus as exports rose 13.2%MoM. According to Central
Statistic Agency (BPS) data released, September’s exports hit
USD15.9 billion, compared to USD14.1 billion a month earlier.
The better export outcome was driven by non-oil and gas
exports, animal and vegetable oil, mechanical appliances and
ready-made clothing. Imports, meanwhile, rose 11.1%MoM in
September 2012 after a surprise 15.5% decline in August
2012.
Indonesia's GDP (gross domestic product) grew 6.2%YoY in3Q12 (was above 6.0% for the eighth straight quarter) as
domestic consumption and investment remained strong
despite a deteriorating global economy. Indonesia's economy
has so far remained resilient in the face of a global slowdown;
driven by robust investment and buoyant domestic demand in
the world's fourth most populous nation. The continued
strength of domestic consumption was highlighted by a 28.0%
jump in vehicle sales in September 2012, despite new down
payment requirements for auto purchases. Indonesia also
booked a record FDI (foreign direct investment) of IDR 56.6
trillion (or USD 5.88 billion) in 3Q12, up 22.0%YoY. Healthy3Q12 GDP numbers indicate growth for the full year is likely to
come in within Bank Indonesia's 2012 target of 6.1% - 6.5%.
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© Office of Chief Economist Page 33 of 36
97.0
97.5
98.0
98.5
99.0
99.5100.0
100.5
101.0
101.5
102.0
Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12*
94.0
96.0
98.0
100.0
102.0
104.0
106.0
108.0
MLEI (lhs) MCEI (rhs)
2010 2011 2012
Oct Nov Dec Oct Nov Dec Jun Jul Aug Sep*)
MLEI 100.6 101.2 100.3 99.5 99.8 99.2 99.1 99.6 98.5 100.0
Change (%MoM) 0.9 0.5 (0.9) (0.6) 0.3 (0.6) (0.6) 0.5 (1.1) 1.5
MCEI 99.9 99.8 99.6 101.2 101.0 100.9 98.7 98.3 98.7 98.1
Change (%MoM) 0.9 (0.1) (0.2) 0.6 (0.2) (0.1) (1.1) (0.4) 0.4 (0.6)
note : *) preliminary
Index > 100 and increasing indicates expansion
Index > 100 but decreasing indicates downturn
Index < 100 and decreasing indicates slowdown
Index < 100 but increasing indicates recovery
Changes in parentheses indicate negative numbers
LEI and CEI are composite indices for predicting the movement of GDP (Gross Domestic Product) so they can beuseful as an early warning on the movement of Indonesian economy. LEI is used to predict the movement of
GDP in the next 6 months, while CEI is used to predict the movement of GDP in the same month. LEI and CEI
composite indices are formed from several indicators deemed important in studying the movement of
Indonesian economy.
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MACRO ECONOMIC INDICATORS AND FORECAST 2009 2010 2011 2012F 2013F
National Account
Real GDP (% yoy) 4.6 6.1 6.5 6.3 6.5
Domestic Demand (% yoy) 5.5 5.2 5.4 7.2 7.7Real Consumption: Private (% yoy) 4.9 4.6 4.6 5.0 5.3
Real Gross Fixed Capital Formation (% yoy) 3.3 8.5 8.8 11.9 12.2
GDP (USD bn) - nominal 539 707 846 909 1,051
GDP per capita (USD) - nominal 2,337 2,981 3,509 3,711 4,231External Sector
Exports (%yoy,USD) - Merchandise (14.3) 32.1 26.9 (4.5) 9.5
Imports (%yoy,USD) - Merchandise (24.0) 43.7 30.8 9.3 10.2
Trade Balance (US$ bn) 30.9 30.6 33.9 10.3 10.0
Current Account (% of GDP) 1.9 0.8 0.2 (2.2) (2.1)
Current Account (USD bn) 10.7 5.1 1.7 (20.4) (22.0)
External Debt (% of GDP) 32.1 27.4 25.3 25.9 24.6
International Reserves (USD bn) 66.1 96.2 110.1 115.7 126.8
Import cover (months) 8.1 8.5 7.6 7.3 7.4
Rp/USD (period average) 10,408 9,087 8,776 9,398 9,510Rp/USD (year end) 9,470 8,963 9,000 9,670 9,461
Other
BI rate (% period average) 6.9 6.5 6.6 5.8 5.8
BI rate (% year end) 6.5 6.5 6.0 5.8 5.8Headline Inflation (% yoy, year end) 2.8 7.0 3.8 5.0 5.0
Headline Inflation (% yoy, period average) 4.3 5.3 5.1 4.5 4.8
Fiscal Balance (% of GDP) (1.6) (0.6) (1.5) (1.6) (1.1)
S&P's Rating - FCY BB- BB BB+ BB+ BB+
S&P's Rating - LCY BB+ BB+ BBB- BBB- BBB-
MACRO ECONOMIC INDICATORS AND FORECAST 2009 2010 2011 2012F 2013F
National Account
Real GDP (% yoy) 4.6 6.1 6.5 6.3 6.5
Domestic Demand (% yoy) 5.5 5.2 5.4 7.2 7.7Real Consumption: Private (% yoy) 4.9 4.6 4.6 5.0 5.3
Real Gross Fixed Capital Formation (% yoy) 3.3 8.5 8.8 11.9 12.2
GDP (USD bn) - nominal 539 707 846 909 1,051
GDP per capita (USD) - nominal 2,337 2,981 3,509 3,711 4,231External Sector
Exports (%yoy,USD) - Merchandise (14.3) 32.1 26.9 (4.5) 9.5
Imports (%yoy,USD) - Merchandise (24.0) 43.7 30.8 9.3 10.2
Trade Balance (US$ bn) 30.9 30.6 33.9 10.3 10.0
Current Account (% of GDP) 1.9 0.8 0.2 (2.2) (2.1)
Current Account (USD bn) 10.7 5.1 1.7 (20.4) (22.0)
External Debt (% of GDP) 32.1 27.4 25.3 25.9 24.6
International Reserves (USD bn) 66.1 96.2 110.1 115.7 126.8
Import cover (months) 8.1 8.5 7.6 7.3 7.4
Rp/USD (period average) 10,408 9,087 8,776 9,398 9,510Rp/USD (year end) 9,470 8,963 9,000 9,670 9,461
Other
BI rate (% period average) 6.9 6.5 6.6 5.8 5.8
BI rate (% year end) 6.5 6.5 6.0 5.8 5.8Headline Inflation (% yoy, year end) 2.8 7.0 3.8 5.0 5.0
Headline Inflation (% yoy, period average) 4.3 5.3 5.1 4.5 4.8
Fiscal Balance (% of GDP) (1.6) (0.6) (1.5) (1.6) (1.1)
S&P's Rating - FCY BB- BB BB+ BB+ BB+
S&P's Rating - LCY BB+ BB+ BBB- BBB- BBB-
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Disclaimer: This material is for information only, and we are not soliciting any action based upon it. This report is not to beconstrued as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer orsolicitation would be illegal. The information herein has been obtained from sources believed to be reliable, but we do notwarrant that it is accurate or complete, and it should not be relied upon as such. Opinion expressed is our current opinion as of the date appearing on this material only, and subject to change without notice. It is intended for the use by recipient only andmay not be reproduced or copied/photocopied or duplicated or made available in any form, by any means, or redistributed toothers without written permission of PT Bank Mandiri Tbk. Additional information is available upon request. For furtherinformation please contact: Office of Chief Economist, Ph. (021) 524 5516/5272 or Facs. (021) 521 0430.
INDONESIA CURRENT DATA
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Exchange Rate
End of Period IDR/USD 9393 10900 9390 8978 8855 9200 9069 8990 9023 9146 9189 9400 9433 9467 9581 9589 9608
Average IDR/USD 9354 1167 9462 9021 8886 9040 9059 9071 9020 9251 9175 9320 9442 9451 9505 9565 9599
Monetary Sector
Base money M0, eop IDRtn 379.58 344.69 402.12 518.45 566.28 568.78 613.49 594.08 578.96 586.03 596.59 604.98 627.36 634.99 657.96 638.87 648.11
Narrow money M1 IDRtn 450.06 456.79 515.82 605.38 665.00 667.61 733.99 696.32 683.25 714.25 720.92 749.45 779.41 771.79 772.42 795.51
Broad Money M2 IDRtn 1,649.66 1,883.85 2,141.38 2,469.40 2,677.79 2,728.74 2,877.22 285.49 284.97 291.19 292.72 299.20 305.03 305.48 308.90 312.55
Outstanding Loan IDRtn 995.11 1,313.87 1,446.81 1,783.60 2,128.72 2,169.61 2,223.69 218.34 222.77 229.15 234.34 241.17 248.00 249.87 253.92 258.42
Outstanding Deposit IDRtn 1,459.44 1,673.82 1,914.11 2,208.72 2,396.28 2,450.33 2,596.33 2,540.24 2,567.36 2,624.51 2,636.04 2,697.10 2 ,735.35 2,738,926 2,761,230 2,799,056
Lending rate (working capital) % p.a 13.00 15.22 13.69 12.83 12.36 12.31 12.16 12.09 12.02 12.01 11.86 11.78 11.79 11.78 11.73 11.70
3-month deposit rate, eop % p.a 7.42 11.97 6.85 7.06 7.11 6.99 6.81 6.68 6.52 6.31 6.00 5.89 5.76 5.67 5.61 5.69
Overnight rate, eop % p.a 4.50 9.40 6.24 5.72 5.05 4.55 4.55 4.02 3.75 3.76 3.76 3.93 4.05 4.06 4.09 4.10 4.18
Prices
Headline CPI (2007=100) Index 155.5 113.86 117.03 125.17 128.74 129.18 129.91 130.9 130.96 131.05 131.32 131.41 132.23 133.16 134.43 134.45 134.67
Year on year inflation rate % 6.59 11.06 2.78 6.96 4.42 4.15 3.79 3.65 3.56 3.97 4.50 4.45 4.53 4.56 4.58 4.31 4.61
Month on month inflation rate % 1.1 -0.04 0.33 0.92 -0.12 0.34 0.57 0.76 0.05 0.07 0.21 0.07 0.62 0.70 0.95 0.01 0.16
Year to date inflation rate % N/A 11.06 2.78 6.96 2.85 3.20 3.79 0.76 0.81 0.88 1.09 1.15 1.79 2.50 3.48 3.49 3.66
Wholesale Price Index (2000=100) Index 217 238.0 167.35 177.87 184.64 184.94 185.76 187.11 187.77 188.54 189.45 189.72 190.22 190.76 191.81 192.11
Trade
Export USDbn 10.86 8.69 13.35 16.83 16.96 17.24 17.20 15.49 15.69 17.25 16.17 16.82 15.44 16.10 14.04 15.90
Oil USDbn 2.51 1.24 2.50 3.26 3.06 3.52 3.60 2.97 3.35 3.48 3.56 3.72 2.89 2.91 2.78 2.77
Non oil USDbn 8.36 7.45 10.85 13.57 13.90 13.71 13.60 12.51 12.33 13.76 12.61 13.11 12.55 13.17 11.26 13.13
Import USDbn 6.81 6.29 10.33 13.15 15.53 15.39 16.34 14.55 14.86 16.32 16.93 17.03 16.72 16.35 13.81 15.34
Oil USDbn 2.39 0.98 2.10 2.64 3.28 3.45 3.63 2.98 3.49 4.00 4.12 3.44 3.35 2.76 3.31 3.44
Non oil USDbn 4.42 5.31 8.22 10.50 12.25 11.94 12.71 11.53 11.37 12.31 12.81 13.60 13.37 13.60 10.50 11.90
Trade Balance USDbn 4.06 2.40 3.02 3.68 1.42 1.84 0.86 0.94 0.83 0.93 (0.76) (0.21) (1.28) (0.25) 0.23 0.56
Output
GDP (current price) IDRtn 1034.86 1274.29 1450.82 1670.52 1921.56 1972.35 2050.09 2122.81
G DP (c on st an t p ri ce at 20 00 ) I DR tn 493.37 518.94 547.54 585.10 623.96 632.77 650.58 671.47
Real Growth % YoY 5.88 5.20 5.43 6.89 6.49 6.32 6.37 6.17
Capital Market
JCI Index, eop Index 2745.83 1355.41 2534.36 3703.51 3790.85 3715.08 3821.99 3941.69 3985.21 4121.55 4180.73 3832.82 3955.57 4142.33 4060.33 4262.56 4350.29
Volume, avg shares mn 3155.65 1743.25 3422.10 3965.38 4905.28 3098.96 3496.38 4045.49 3482.60 2751.16 4407.93 3092.99 2936.69 2529.66 2624.87 3796.55 3916.49
Value, avg IDRbn 4340.55 1454.61 2332.42 3959.30 3885.67 2870.38 2684.29 3269.50 4161.39 3773.30 4103.34 3967.34 3216.60 3347.23 3068.91 3518.67 3623.31
Consumer Confidence Index 99.10 90.60 108.70 109.30 116.20 114.30 116.60 119.20 111.70 107.30 102.50 109.00 114.40 113.50 115.70 117.70 119.50
2007 2008 2009 20102011 2012
Indicators Unit
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OOvveerrsseeaass OOf f f f iicceess
Hongkong Branch7
thFloor, Far East Finance Centre
16 Harcourt Road, Hongkong
Tel: 852-2527-6611
Fax: 852-2529-8131
Singapore Branch
3 Anson Road #12-01/02, Springleaf Tower
Singapore 079909
Tel: 65-6213-5688
Fax: 65-6438-3363
Cayman Islands Branch
Cardinal Plaza 3rd
Floor
30 Cardinal Avenue, PO Box 10198,
Grand Cayman, KY1-1002, Cayman IslandsTel: 1-345-945-8891
Fax: 1-345-945-8892
Bank Mandiri (Europe) Limited, London
Cardinal Court (2nd
Floor),
23 Thomas More Street
London EIW IYY, United Kingdom
Tel: 44-207-553-8688
Fax: 44-207-553-8699
Shanghai Representative Office
3401, Bank of China Tower
200 Yin Cheng (M) Road,
Pudong New Area, Shanghai, 200120
People’s Republic of China
Tel: 86-21-5037-2509
Fax: 86-21-5037-2507
Dilli Branch – Timor Leste
Avenida Presidente Nicolao Lobato
No.12, Colmera
Dilli – Timor Leste
Tel: +670-331-7777
Fax: +670-331-7190/74444
Mandiri International Remittance Sdn.Bhd.
Wisma Mepro, 29 & 31 Jalan Ipoh 51200 Kuala
Lumpur, Malaysia
Telp : +60-3-4045-988
Shanghai Branch
1201-1204 Bank Of Shanghai Tower
168 Yin Cheng Zhong Road , Pudong, Shanghai
200120
People’s Republic Of China
Phone : (86-21) 20332603
Fax : (86-21) 20282817
HHeeaadd OOf f f f iiccee
Plaza MandiriJl. Jend. Gatot Subroto Kav. 36-38
Jakarta 12190, Indonesia
Tel: (62-21) 526 5045 – 526 5095
Fax: (62-21) 526 8372 – 526 5008
Website: www.bankmandiri.co.id
Zulkifli Zaini
President Director & CEO
Tel: (62-21) 3002 3067, Fax: (62-21) 526 3459
Riswinandi
Deputy President Director
Tel: (62-21) 3002 3028, Fax: (62-21) 526 3408
Abdul Rachman
Director Institutional Banking
Tel: (62-21) 3002 3839, Fax: (62-21) 526 3671
Sentot A. Sentausa
Director Risk Management
Tel: (62-21) 3002 3454, Fax: (62-21) 526 8213
Budi Gunadi Sadikin
Director Micro & Retail Banking
Tel: (62-21) 3002 3079, Fax: (62-21) 252 1585
Ogi Prastomiyono
Director Compliance & Human Capital
Tel: (62-21) 3002 3666, Fax: (62-21) 252 1585
Pahala N. Mansury
Director Finance & Strategy
Tel: (62-21) 3002 3089, Fax: (62-21) 526 8213Fransisca N. Mok
Director Corporate Banking
Tel: (62-21) 3002 3847, Fax: (62-21) 252 1585
Sunarso
Director Commercial & Business Banking
Tel: (62-21) 3002 3087, Fax: (62-21) 252 1585
Kresno Sediarsi
Director Technology & Operation
Tel: (62-21) 524 3092, Fax: (62-21) 526 3617
Royke Tumilaar
Director Treasury, FI & Special Asset Management
Tel: (62-21) 3002 3057, Fax: (62-21) 5296 4053
Mansyur S. Nasution
EVP Coordinator Consumer Finance
Tel: (62-21) 3002 3075, Fax: (62-21) 5296 4116
Riyani T. Bondan
EVP Coordinator Internal Audit
Tel: (62-21) 3002 3722, Fax: (62-21) 5296 4116
Ventje Raharjo
EVP Coordinator Change Management Office
Tel: (62-21) 3002 3076, Fax: (62-21) 526 8213
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