The Jakarta Globe RSS: Business http://www.thejakartaglobe.com 2013 The Jakarta Globe Your City, Your World Mon, 2 Mar 2015 09:15:50 +0000 en-US hourly 1 http://www.thejakartaglobe.com/images/jakarta-globe.gif http://www.thejakartaglobe.com Indonesian Inflation Eased to 6.3 Percent in February http://thejakartaglobe.beritasatu.com/?p=382193 Mon, 2 Mar 2015 14:58:41 +0700 Jakarta. Annual inflation in February decreased to 6.3 percent, compared to 7 percent the previous month, as the prices of fuel and chili peppers fell, Indonesia's Central Statistics Agency, or BPS, announced on Monday. This increase in the consumer price index was lower than the 6.7 percent that 15 economists expected when surveyed by Bloomberg last week. Core inflation, which excludes volatile food prices and regulated prices, slowed to 4.96 percent in February from last month's 4.99 percent. GlobeAsia]]> Jakarta. Annual inflation in February decreased to 6.3 percent, compared to 7 percent the previous month, as the prices of fuel and chili peppers fell, Indonesia's Central Statistics Agency, or BPS, announced on Monday. This increase in the consumer price index was lower than the 6.7 percent that 15 economists expected when surveyed by Bloomberg last week. Core inflation, which excludes volatile food prices and regulated prices, slowed to 4.96 percent in February from last month's 4.99 percent. GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=382193 Indonesia Feb Inflation Cools Faster than Expected, More Rate Cuts Seen http://thejakartaglobe.beritasatu.com/?p=382221 Mon, 2 Mar 2015 13:30:45 +0700 JakartaIndonesia's annual inflation eased more than expected in February due to lower oil prices, adding to views the central bank will roll out more interest rate cuts to prop up growth.

While oil prices have cooled inflation, the country's earnings have been hit be falling oil and commodities prices at a time when economic activity is slowing.

Annual inflation in February eased more than expected to 6.29 percent, from 6.96 percent in January. A Reuters poll had expected inflation to slow to 6.70 percent.

The consumer price index (CPI), on a monthly basis, fell for the second month at a rate of 0.36 percent.

Core inflation, which excludes administered prices and volatile food prices, slowed slightly to 4.96 percent in February from 4.99 percent the month before.

"Inflation is usually low in March and April, we could even be seeing monthly deflation in those months, or at least slow inflation," David Sumual, chief economist at Bank Central Asia in Jakarta said.

Inflation in Southeast Asia's largest economy has decelerated from its peak of 8.36 percent at the end of 2014.

Economists see falling inflation raising the chances of another rate cut.

"Bank Indonesia has said that they will be data dependent on policy making, so there's a big chance of another rate cut by 25 basis points even though the Fed said there was no change in its monetary policy direction and its rate can be raised as early as June," Sumual added.

ING Asia economist Tim Condon said in research note more cuts from Bank Indonesia could be expected this year. He forecast a cumulative 75-basis-point cut in Bank Indonesia's policy interest rate corridor by year-end, taking the main rate to 6.75 percent and the rate on its deposit facility to 4.75 percent.

In a surprise move, Bank Indonesia cut its benchmark interest rate by 25 bps to 7.50 percent last month saying inflation at the end of the year will fall below 4 percent. The central bank next meets on March 17.

President Joko Widodo said last week Bank Indonesia has scope to cut its policy rate again this year if inflation falls below 5 percent. Gasoline subsidies were removed in January, but prices have fallen since then due to a drop in global oil prices.

The fixed income markets in Indonesia have already signalled there will be further cuts this year in policy rates with yields of long term government bonds trading below the main central bank's rate since the beginning of the year, even when economists remain divided over the prospect.

The rupiah barely moved after the inflation data, but it touched a fresh 17-year low of 12,995 per dollar earlier in the day. On Friday, it depreciated after Bank Indonesia said inflation was expected below 6.50 percent in February.

Reuters

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JakartaIndonesia's annual inflation eased more than expected in February due to lower oil prices, adding to views the central bank will roll out more interest rate cuts to prop up growth.

While oil prices have cooled inflation, the country's earnings have been hit be falling oil and commodities prices at a time when economic activity is slowing.

Annual inflation in February eased more than expected to 6.29 percent, from 6.96 percent in January. A Reuters poll had expected inflation to slow to 6.70 percent.

The consumer price index (CPI), on a monthly basis, fell for the second month at a rate of 0.36 percent.

Core inflation, which excludes administered prices and volatile food prices, slowed slightly to 4.96 percent in February from 4.99 percent the month before.

"Inflation is usually low in March and April, we could even be seeing monthly deflation in those months, or at least slow inflation," David Sumual, chief economist at Bank Central Asia in Jakarta said.

Inflation in Southeast Asia's largest economy has decelerated from its peak of 8.36 percent at the end of 2014.

Economists see falling inflation raising the chances of another rate cut.

"Bank Indonesia has said that they will be data dependent on policy making, so there's a big chance of another rate cut by 25 basis points even though the Fed said there was no change in its monetary policy direction and its rate can be raised as early as June," Sumual added.

ING Asia economist Tim Condon said in research note more cuts from Bank Indonesia could be expected this year. He forecast a cumulative 75-basis-point cut in Bank Indonesia's policy interest rate corridor by year-end, taking the main rate to 6.75 percent and the rate on its deposit facility to 4.75 percent.

In a surprise move, Bank Indonesia cut its benchmark interest rate by 25 bps to 7.50 percent last month saying inflation at the end of the year will fall below 4 percent. The central bank next meets on March 17.

President Joko Widodo said last week Bank Indonesia has scope to cut its policy rate again this year if inflation falls below 5 percent. Gasoline subsidies were removed in January, but prices have fallen since then due to a drop in global oil prices.

The fixed income markets in Indonesia have already signalled there will be further cuts this year in policy rates with yields of long term government bonds trading below the main central bank's rate since the beginning of the year, even when economists remain divided over the prospect.

The rupiah barely moved after the inflation data, but it touched a fresh 17-year low of 12,995 per dollar earlier in the day. On Friday, it depreciated after Bank Indonesia said inflation was expected below 6.50 percent in February.

Reuters

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http://thejakartaglobe.beritasatu.com/?p=382221
S. Korea Current Account Surplus Falls in January http://thejakartaglobe.beritasatu.com/?p=382157 Mon, 2 Mar 2015 09:56:08 +0700 Seoul. South Korea's current account surplus sank in January due to falling exports and increasing overseas spending by South Korean travelers, state data showed on Monday. The $6.94 billion surplus compared with the $7.02 billion posted in December, according to preliminary figures from the central Bank of Korea. The current account — the broadest measure of foreign trade in goods and services — has been in the black for nearly three years. Exports, which account for more than a half of what is Asia's fourth-largest economy, stood at $45.5 billion, down from $53.7 billion in December. Imports sagged to $38.4 billion from $45.4 billion in December, logging a surplus of $7.1 billion in the goods account. The services account, which includes spending on overseas trips and royalty payments, saw its deficit expand to $2.4 billion in January from $1.5 billion a month earlier. Agence France-Presse]]> Seoul. South Korea's current account surplus sank in January due to falling exports and increasing overseas spending by South Korean travelers, state data showed on Monday. The $6.94 billion surplus compared with the $7.02 billion posted in December, according to preliminary figures from the central Bank of Korea. The current account — the broadest measure of foreign trade in goods and services — has been in the black for nearly three years. Exports, which account for more than a half of what is Asia's fourth-largest economy, stood at $45.5 billion, down from $53.7 billion in December. Imports sagged to $38.4 billion from $45.4 billion in December, logging a surplus of $7.1 billion in the goods account. The services account, which includes spending on overseas trips and royalty payments, saw its deficit expand to $2.4 billion in January from $1.5 billion a month earlier. Agence France-Presse]]> http://thejakartaglobe.beritasatu.com/?p=382157 Asian Firms Challenge Apple With Snazzy New Smartphones http://thejakartaglobe.beritasatu.com/?p=382149 Mon, 2 Mar 2015 09:33:18 +0700 Barcelona, Spain. Several big Asian phone companies launched new high-end smartphones and other wireless gizmos on Sunday, hoping to challenge US giant Apple in a big year for wireless gadgets. Samsung, fellow South Korean firm LG and hip Chinese maker HTC timed their smartphone launches to grab the attention on the eve of the Mobile World Congress, the world's biggest telecoms trade fair, in Barcelona, Spain. In a head-on challenge to Apple's popular iPhone 6 which was released last year, Samsung came out fighting on Sunday with the Galaxy S6, a smartphone with a touchscreen that curves around the edges and has a wireless charger. It also presented the larger S6 Edge, a "phablet" somewhere between a tablet and a phone in size. LG unveiled a new top-line phone with a curved back to sit snugly in the palm, the LG Flex 2, as well as a range of four new mid-range smartphones and two new luxury internet-connected watches. At a noisy stage presentation before a crowd of hundreds, HTC chief executive Peter Chou meanwhile presented the HTC One M9, with a grey metallic handset molded from a single piece of aluminum. HTC also revealed a new connected "fitness band" body-monitoring bracelet and a virtual reality headset that it said it hoped to sell commercially by the end of the year. Apple as usual was staying away from the Barcelona show but was reported to be preparing a coup with the launch next month of its new Apple Watch, reflecting a major trend in wearable gadgets this year. The chief executive of Samsung's mobile division, J.K. Shin, said the company aimed to set "a new standard to drive the global mobile agenda", claiming his phones had the fastest processors and most high-performance cameras on the market. Samsung is the world's biggest seller of smartphones but saw its world market share fall last year from 34 percent to 20 percent, according to a report by tech consultancy IDC. "There's a risk Samsung's 2015 flagship devices are insufficient for the company to regain brand leadership among consumers and businesses looking for high-end smartphone experiences," said Thomas Husson, an analyst at another consultancy, Forrester, in a note after Sunday's launch. "Samsung's lack of software DNA will still prevent it from delivering truly differentiated service experiences like Apple does." Also present at the congress were two of the world's other biggest-selling smartphone makers, Chinese companies Huawei and Xiaomi. Joining in the rush for big launches on the eve of the trade fair, Huawei unveiled its first "smartwatch", a round luxury design that, like LG's, can display incoming call and message alerts. The companies refused to cite consumer prices for the new products. Top-end smartphones typically cost several hundred dollars. Agence France-Presse]]> Barcelona, Spain. Several big Asian phone companies launched new high-end smartphones and other wireless gizmos on Sunday, hoping to challenge US giant Apple in a big year for wireless gadgets. Samsung, fellow South Korean firm LG and hip Chinese maker HTC timed their smartphone launches to grab the attention on the eve of the Mobile World Congress, the world's biggest telecoms trade fair, in Barcelona, Spain. In a head-on challenge to Apple's popular iPhone 6 which was released last year, Samsung came out fighting on Sunday with the Galaxy S6, a smartphone with a touchscreen that curves around the edges and has a wireless charger. It also presented the larger S6 Edge, a "phablet" somewhere between a tablet and a phone in size. LG unveiled a new top-line phone with a curved back to sit snugly in the palm, the LG Flex 2, as well as a range of four new mid-range smartphones and two new luxury internet-connected watches. At a noisy stage presentation before a crowd of hundreds, HTC chief executive Peter Chou meanwhile presented the HTC One M9, with a grey metallic handset molded from a single piece of aluminum. HTC also revealed a new connected "fitness band" body-monitoring bracelet and a virtual reality headset that it said it hoped to sell commercially by the end of the year. Apple as usual was staying away from the Barcelona show but was reported to be preparing a coup with the launch next month of its new Apple Watch, reflecting a major trend in wearable gadgets this year. The chief executive of Samsung's mobile division, J.K. Shin, said the company aimed to set "a new standard to drive the global mobile agenda", claiming his phones had the fastest processors and most high-performance cameras on the market. Samsung is the world's biggest seller of smartphones but saw its world market share fall last year from 34 percent to 20 percent, according to a report by tech consultancy IDC. "There's a risk Samsung's 2015 flagship devices are insufficient for the company to regain brand leadership among consumers and businesses looking for high-end smartphone experiences," said Thomas Husson, an analyst at another consultancy, Forrester, in a note after Sunday's launch. "Samsung's lack of software DNA will still prevent it from delivering truly differentiated service experiences like Apple does." Also present at the congress were two of the world's other biggest-selling smartphone makers, Chinese companies Huawei and Xiaomi. Joining in the rush for big launches on the eve of the trade fair, Huawei unveiled its first "smartwatch", a round luxury design that, like LG's, can display incoming call and message alerts. The companies refused to cite consumer prices for the new products. Top-end smartphones typically cost several hundred dollars. Agence France-Presse]]> http://thejakartaglobe.beritasatu.com/?p=382149 Australia Shares Storm to Fresh 7-Year High as China Rate Cut Spurs Resources http://thejakartaglobe.beritasatu.com/?p=382139 Mon, 2 Mar 2015 09:12:08 +0700 Sydney/Wellington. Australian shares rose to a fresh seven-year high on Monday as a Chinese rate cut pushed up resources stocks while growing expectations of a domestic rate cut prompted investors to buy banks. On Saturday, China's central bank cut rates just as official data showed a second straight month of shrinking manufacturing activity. The move is expected to kickstart spending across the board, driving demand for key steel-making ingredient iron ore. Australian iron ore majors BHP Billiton and Rio Tinto rallied 1.7 percent and 1 percent respectively, pushing up the broader index. Expectations the Australian central bank may announce a second 2015 rate cut on Tuesday or in the next few months at least fueled expectations of a pickup in borrowing domestically, sending bank stocks higher. The S&P/ASX 200 index rose 43 points or 0.74 percent to 5973.1 by 0145 GMT, its highest intraday level since May 2008. "It does look as though, as often is the case, there's a bit of an announcement effect following the rate cut," said CMC Markets chief analyst Ric Spooner, referring to the China rate cut. In terms of an Australian rate cut, Spooner added, "there is a consensus view it's that if it isn't tomorrow it's by May". Australia's so-called "big four" banks — Westpac Banking Corp, Commonwealth Bank of Australia, Australia and New Zealand Banking Group and National Australia Bank each rose 1 percent on in the hope that a rate cut would drive up borrowing. Energy stocks were higher after a sharp rebound in the oil price on Friday. Energy retailer Caltex jumped 1.4 percent while oil producer Santos added 1.6 percent and Oil Search firmed 0.3 percent. Department store giant Myer Holdings dropped 13 percent to its lowest in a month after its long-standing chief executive officer stepping down. New Zealand's benchmark NZX share index edged up 9.70 points or 0.2 percent to an lifetime intraday high of 5,888.17, lifted by gains in Air New Zealand and Precinct Properties. Air New Zealand climbed 1.4 percent to its highest since mid-2007, extending gains after the national carrier raised its half-year dividend and issued an optimistic outlook for future earnings. Property developer Precinct rose 1.3 percent saying late last week that it had raised roughly NZ$74 million from institutional investors as part of a NZ$174.1 million capital raising. Online accounting software developer Xero fell 1.8 percent as some investors booked profits on a 54 percent rise seen in past weeks, when the company announced a capital raising. Reuters]]> Sydney/Wellington. Australian shares rose to a fresh seven-year high on Monday as a Chinese rate cut pushed up resources stocks while growing expectations of a domestic rate cut prompted investors to buy banks. On Saturday, China's central bank cut rates just as official data showed a second straight month of shrinking manufacturing activity. The move is expected to kickstart spending across the board, driving demand for key steel-making ingredient iron ore. Australian iron ore majors BHP Billiton and Rio Tinto rallied 1.7 percent and 1 percent respectively, pushing up the broader index. Expectations the Australian central bank may announce a second 2015 rate cut on Tuesday or in the next few months at least fueled expectations of a pickup in borrowing domestically, sending bank stocks higher. The S&P/ASX 200 index rose 43 points or 0.74 percent to 5973.1 by 0145 GMT, its highest intraday level since May 2008. "It does look as though, as often is the case, there's a bit of an announcement effect following the rate cut," said CMC Markets chief analyst Ric Spooner, referring to the China rate cut. In terms of an Australian rate cut, Spooner added, "there is a consensus view it's that if it isn't tomorrow it's by May". Australia's so-called "big four" banks — Westpac Banking Corp, Commonwealth Bank of Australia, Australia and New Zealand Banking Group and National Australia Bank each rose 1 percent on in the hope that a rate cut would drive up borrowing. Energy stocks were higher after a sharp rebound in the oil price on Friday. Energy retailer Caltex jumped 1.4 percent while oil producer Santos added 1.6 percent and Oil Search firmed 0.3 percent. Department store giant Myer Holdings dropped 13 percent to its lowest in a month after its long-standing chief executive officer stepping down. New Zealand's benchmark NZX share index edged up 9.70 points or 0.2 percent to an lifetime intraday high of 5,888.17, lifted by gains in Air New Zealand and Precinct Properties. Air New Zealand climbed 1.4 percent to its highest since mid-2007, extending gains after the national carrier raised its half-year dividend and issued an optimistic outlook for future earnings. Property developer Precinct rose 1.3 percent saying late last week that it had raised roughly NZ$74 million from institutional investors as part of a NZ$174.1 million capital raising. Online accounting software developer Xero fell 1.8 percent as some investors booked profits on a 54 percent rise seen in past weeks, when the company announced a capital raising. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=382139 Japan's Slowing Business Capex Growth in Q4 Points to Economic Headwinds http://thejakartaglobe.beritasatu.com/?p=382118 Mon, 2 Mar 2015 08:50:06 +0700 Tokyo. Japanese corporate capital expenditures grew in October-December from a year earlier but the pace slowed from the prior quarter, casting doubt about strength of business investment seen as key to spurring growth in the world's third-largest economy. The 2.8 percent year-on-year increase in capital spending in the fourth quarter followed a 5.5 percent annual gain in July-September, data by the Ministry of Finance showed on Monday. Nonetheless, the data, which will be used for calculating revised gross domestic product data due March 9, suggests little revision to a preliminary reading of 2.2 percent annualized economic growth in the fourth quarter, analysts say. "Looking at today's data and preliminary GDP figures, capital spending appears to be stalling and it shows no signs of accelerating despite rising profits and share prices," said Takeshi Minami, chief economist at Norinchukin Research Institute. "Sluggish demand is causing companies to take a wait-and-see stance. They will probably stick to this stance until the economy firms up in the coming fiscal year from April." Excluding spending on software, capital expenditure rose a seasonally adjusted 0.6 percent from the previous quarter, a second straight quarter of increases. Preliminary GDP data released last month showed fourth-quarter economic growth sharply lagged expectations as household and corporate spending disappointed, underlining the challenge premier Shinzo Abe faces in reviving the economy. Corporate spending on plant and equipment, along with wages growth, hold the key to the ultimate success of Abe's policy recipe dubbed "Abenomics" aimed at generating a virtuous cycle of private-sector-led growth. But companies have so far been slow to implement their robust capital spending plans as seen in the Bank of Japan's key tankan survey due to uncertainty over the economy's outlook. Recent indicators including machinery orders and factory output show tentative signs of recovery in capital spending on the back of external demand led by the US economy. Monday's data showed recurring profits at Japanese firms rose 11.6 percent in the year to October-December to a record 18.0651 trillion yen ($151 billion) as a weaker yen boosts profits at sectors such as transport machinery, electronics, information and communications. Sales rose 2.4 percent year-on-year in the same quarter. Reuters]]> Tokyo. Japanese corporate capital expenditures grew in October-December from a year earlier but the pace slowed from the prior quarter, casting doubt about strength of business investment seen as key to spurring growth in the world's third-largest economy. The 2.8 percent year-on-year increase in capital spending in the fourth quarter followed a 5.5 percent annual gain in July-September, data by the Ministry of Finance showed on Monday. Nonetheless, the data, which will be used for calculating revised gross domestic product data due March 9, suggests little revision to a preliminary reading of 2.2 percent annualized economic growth in the fourth quarter, analysts say. "Looking at today's data and preliminary GDP figures, capital spending appears to be stalling and it shows no signs of accelerating despite rising profits and share prices," said Takeshi Minami, chief economist at Norinchukin Research Institute. "Sluggish demand is causing companies to take a wait-and-see stance. They will probably stick to this stance until the economy firms up in the coming fiscal year from April." Excluding spending on software, capital expenditure rose a seasonally adjusted 0.6 percent from the previous quarter, a second straight quarter of increases. Preliminary GDP data released last month showed fourth-quarter economic growth sharply lagged expectations as household and corporate spending disappointed, underlining the challenge premier Shinzo Abe faces in reviving the economy. Corporate spending on plant and equipment, along with wages growth, hold the key to the ultimate success of Abe's policy recipe dubbed "Abenomics" aimed at generating a virtuous cycle of private-sector-led growth. But companies have so far been slow to implement their robust capital spending plans as seen in the Bank of Japan's key tankan survey due to uncertainty over the economy's outlook. Recent indicators including machinery orders and factory output show tentative signs of recovery in capital spending on the back of external demand led by the US economy. Monday's data showed recurring profits at Japanese firms rose 11.6 percent in the year to October-December to a record 18.0651 trillion yen ($151 billion) as a weaker yen boosts profits at sectors such as transport machinery, electronics, information and communications. Sales rose 2.4 percent year-on-year in the same quarter. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=382118 China's Economic Growth Expected to Slow to 7% in Q1 http://thejakartaglobe.beritasatu.com/?p=382116 Mon, 2 Mar 2015 08:42:31 +0700 Shanghai. China's economy is expected to slow to an annual 7 percent in the first quarter of this year, a top Chinese government think tank said in a research report, a sign policy makers will have to roll out more stimulus to support faltering growth. The forecast by the State Information Center underscored the rationale of Saturday's move by China's central bank to cut interest rates for the second time in less than four months as it steps up efforts to ward off deflation. "Our country's economic growth still faces relatively heavy downward pressure amid structure adjustments," the think-tank said in its research report published in the official China Securities News on Monday. "As such, it will continue searching for a bottom in the first quarter of 2015 and is preliminarily forecast to grow around 7 percent in the quarter," it said. The think tank operates under the purview of China's top economic planner, the National Development and Reform Commission. China's economic growth held steady at 7.3 percent in the fourth quarter of 2014 from a year earlier but still hovered near the weakest pace since the global financial crisis, reinforcing expectations that policymakers will have to roll out more support measures to avert a sharper slowdown. China's consumer price index is expected to increase only 1.2 percent on-year in the first quarter of 2015, compared with 2 percent a year earlier, the think tank said. Annual growth of exports is expected at 5 percent in the first quarter, slowing from 6 .1 percent a year earlier, while imports are likely to decrease 10.7 percent in the quarter, compared with a 0.4 percent increase in the same period of 2014, it said. Reuters]]> Shanghai. China's economy is expected to slow to an annual 7 percent in the first quarter of this year, a top Chinese government think tank said in a research report, a sign policy makers will have to roll out more stimulus to support faltering growth. The forecast by the State Information Center underscored the rationale of Saturday's move by China's central bank to cut interest rates for the second time in less than four months as it steps up efforts to ward off deflation. "Our country's economic growth still faces relatively heavy downward pressure amid structure adjustments," the think-tank said in its research report published in the official China Securities News on Monday. "As such, it will continue searching for a bottom in the first quarter of 2015 and is preliminarily forecast to grow around 7 percent in the quarter," it said. The think tank operates under the purview of China's top economic planner, the National Development and Reform Commission. China's economic growth held steady at 7.3 percent in the fourth quarter of 2014 from a year earlier but still hovered near the weakest pace since the global financial crisis, reinforcing expectations that policymakers will have to roll out more support measures to avert a sharper slowdown. China's consumer price index is expected to increase only 1.2 percent on-year in the first quarter of 2015, compared with 2 percent a year earlier, the think tank said. Annual growth of exports is expected at 5 percent in the first quarter, slowing from 6 .1 percent a year earlier, while imports are likely to decrease 10.7 percent in the quarter, compared with a 0.4 percent increase in the same period of 2014, it said. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=382116 Australia's RBA Swept Along in Global Stimulus Rush http://thejakartaglobe.beritasatu.com/?p=382114 Mon, 2 Mar 2015 08:35:50 +0700 Sydney. Australia could well ease monetary policy this week for the second time in as many months as business investment disappoints at home and yet more central banks join the global rush to the bottom on interest rates. China trimmed interest rates over the weekend, putting pressure on the Reserve Bank of Australia (RBA) to keep easing if only to prevent an undesirable rise in the local dollar. China is Australia's single biggest export market so the RBA would be relieved Beijing is acting to support demand, but concerned that action was necessary in the first place. There are plenty of home-grown reasons for stimulus as data showed mining investment in full retreat after a decade of madcap expansion and other sectors unprepared to fill the gap. "The sober message from the report is too disturbing to ignore. Corporate 'animal spirits' remain in very short supply," said Stephen Walters, chief economist at JPMorgan, while predicting a cut on Tuesday. "It remains a very close call, but we now think the RBA will be more inclined to front-load additional policy stimulus, rather than wait for more information." A Reuters poll of 29 analysts produced the slimmest of margins with 15 tipping a cut and 14 on hold. Many argue a jolt is needed to reinvigorate an economy that has been running below trend for more than two years now. Data out on Wednesday is expected to show the economy grew around 2.5 percent in the last quarter of 2014, compared to a year earlier. That would actually pip the pace of the supposedly outperforming United States, but remain sub par for a nation that used to average at least 3.25 percent. The result has been the steady rise in unemployment to a 12-year peak of 6.4 percent, and a corresponding slowdown in annual wages growth to a 17-year low of 2.5 percent. That in turn has helped restrain domestically generated inflation and provided the scope for yet lower rates. Indeed, investors have already priced in two more quarter point cuts which would take the cash rate to just 1.75 percent. Yet they are divided on whether the next one will come on Tuesday, with interbank futures <0#YIB:> putting the probability at almost 50-50. The doubt partly reflects minutes of the RBA's February meeting which showed its Board was not then contemplating back to back easings in policy. Neither did RBA governor Glenn Stevens sound in any rush to move when testifying before parliament last month. He played down a spike in the jobless rate in January, while noting the local dollar was falling more in line with fundamentals. Stevens also repeated warnings about the rapid rise of lending for property investing which was fueling unwelcome home price increases in inner Sydney and Melbourne. This topic will be high on the agenda at this week's policy meeting as the Board will get an advance briefing on the RBA's twice-yearly assessment of the financial system. The 60-odd page report is certain to highlight the dangers of debt-driven speculation given the February rate cut triggered a whole new wave of demand with clearance rate at Sydney home auctions near record highs in the last few weeks. Regulators are working on tighter lending rules for property investment and it is possible the RBA might choose to wait for those to be announced before cutting again. Reuters]]> Sydney. Australia could well ease monetary policy this week for the second time in as many months as business investment disappoints at home and yet more central banks join the global rush to the bottom on interest rates. China trimmed interest rates over the weekend, putting pressure on the Reserve Bank of Australia (RBA) to keep easing if only to prevent an undesirable rise in the local dollar. China is Australia's single biggest export market so the RBA would be relieved Beijing is acting to support demand, but concerned that action was necessary in the first place. There are plenty of home-grown reasons for stimulus as data showed mining investment in full retreat after a decade of madcap expansion and other sectors unprepared to fill the gap. "The sober message from the report is too disturbing to ignore. Corporate 'animal spirits' remain in very short supply," said Stephen Walters, chief economist at JPMorgan, while predicting a cut on Tuesday. "It remains a very close call, but we now think the RBA will be more inclined to front-load additional policy stimulus, rather than wait for more information." A Reuters poll of 29 analysts produced the slimmest of margins with 15 tipping a cut and 14 on hold. Many argue a jolt is needed to reinvigorate an economy that has been running below trend for more than two years now. Data out on Wednesday is expected to show the economy grew around 2.5 percent in the last quarter of 2014, compared to a year earlier. That would actually pip the pace of the supposedly outperforming United States, but remain sub par for a nation that used to average at least 3.25 percent. The result has been the steady rise in unemployment to a 12-year peak of 6.4 percent, and a corresponding slowdown in annual wages growth to a 17-year low of 2.5 percent. That in turn has helped restrain domestically generated inflation and provided the scope for yet lower rates. Indeed, investors have already priced in two more quarter point cuts which would take the cash rate to just 1.75 percent. Yet they are divided on whether the next one will come on Tuesday, with interbank futures <0#YIB:> putting the probability at almost 50-50. The doubt partly reflects minutes of the RBA's February meeting which showed its Board was not then contemplating back to back easings in policy. Neither did RBA governor Glenn Stevens sound in any rush to move when testifying before parliament last month. He played down a spike in the jobless rate in January, while noting the local dollar was falling more in line with fundamentals. Stevens also repeated warnings about the rapid rise of lending for property investing which was fueling unwelcome home price increases in inner Sydney and Melbourne. This topic will be high on the agenda at this week's policy meeting as the Board will get an advance briefing on the RBA's twice-yearly assessment of the financial system. The 60-odd page report is certain to highlight the dangers of debt-driven speculation given the February rate cut triggered a whole new wave of demand with clearance rate at Sydney home auctions near record highs in the last few weeks. Regulators are working on tighter lending rules for property investment and it is possible the RBA might choose to wait for those to be announced before cutting again. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=382114 Indonesia to Regulate E-Commerce http://thejakartaglobe.beritasatu.com/?p=382078 Mon, 2 Mar 2015 09:58:50 +0700 Jakarta. The Indonesian government has begun laying the groundwork to regulate e-commerce activities in the country amid breakneck growth in online transactions, particularly among the country’s young and affluent middle class. Chief economics minister Sofyan Djalil last week called for a series of discussions between officials from the trade, finance and communications ministries, among others, to discuss a new government regulation on electronic-based commerce, according to Rudiantara, the communications minister. He said the various ministries had their own issues to address in terms of regulating e-commerce. “Logistics is a matter of the Transportation Ministry. Then in terms of finance, it will be Bank Indonesia’s responsibility to determine the payment systems that will be used,” Rudiantara told reporters in Jakarta on Friday. “Each government body has to converge to address this issue because this isn’t just the responsibility of a single ministry.” Srie Agustin, the director general for domestic trade at the Trade Ministry, said her office would work on at least four aspects of e-commerce regulation: business identity, products, payment methods, and delivery methods. “The first is the business’s legal identity. There are those who sell the products – or merchants – and there are also the e-commerce sites, known as the marketplace. We’ll discuss all this,” Srie said on Friday. Indonesia’s e-commerce scene has flourished in recent years with the flux of players ranging from giants like Rakuten of Japan to local players such as Tokopedia, all of which are banking on the rapid growth of Internet access and smartphone penetration in the archipelago. Researcher IDC recently estimated the value of online transactions in Indonesia would top $3 billion this year. Despite its rapid growth, the industry remains largely unregulated right now due to a lack of coordinated efforts from the relevant government bodies. This has left consumers and sellers, as well as the marketplace, vulnerable to risks without any safety net. The Trade Ministry, for instance, currently regulates e-commerce through a combination of a 2014 law on trade, which is aimed largely at consumer protection. But given the rise of e-commerce, businesses have called for the government to quickly establish a clear set of regulations for the industry. Daniel Tumiwa, the chairman of the Indonesia E-Commerce Association (idEA), said the new regulations should attempt to protect the growth of legitimate e-commerce businesses, particularly in terms of taxation. “Most established e-commerce firms are already paying some form of tax. Those who aren’t are generally informal sellers who use social media sites like Facebook or Instagram, which is akin to selling goods on the sidewalk,” Daniel told the Jakarta Globe. “The government must make a distinction between e-commerce startups and sellers who use the Internet. They are two different things.” GlobeAsia]]> Jakarta. The Indonesian government has begun laying the groundwork to regulate e-commerce activities in the country amid breakneck growth in online transactions, particularly among the country’s young and affluent middle class. Chief economics minister Sofyan Djalil last week called for a series of discussions between officials from the trade, finance and communications ministries, among others, to discuss a new government regulation on electronic-based commerce, according to Rudiantara, the communications minister. He said the various ministries had their own issues to address in terms of regulating e-commerce. “Logistics is a matter of the Transportation Ministry. Then in terms of finance, it will be Bank Indonesia’s responsibility to determine the payment systems that will be used,” Rudiantara told reporters in Jakarta on Friday. “Each government body has to converge to address this issue because this isn’t just the responsibility of a single ministry.” Srie Agustin, the director general for domestic trade at the Trade Ministry, said her office would work on at least four aspects of e-commerce regulation: business identity, products, payment methods, and delivery methods. “The first is the business’s legal identity. There are those who sell the products – or merchants – and there are also the e-commerce sites, known as the marketplace. We’ll discuss all this,” Srie said on Friday. Indonesia’s e-commerce scene has flourished in recent years with the flux of players ranging from giants like Rakuten of Japan to local players such as Tokopedia, all of which are banking on the rapid growth of Internet access and smartphone penetration in the archipelago. Researcher IDC recently estimated the value of online transactions in Indonesia would top $3 billion this year. Despite its rapid growth, the industry remains largely unregulated right now due to a lack of coordinated efforts from the relevant government bodies. This has left consumers and sellers, as well as the marketplace, vulnerable to risks without any safety net. The Trade Ministry, for instance, currently regulates e-commerce through a combination of a 2014 law on trade, which is aimed largely at consumer protection. But given the rise of e-commerce, businesses have called for the government to quickly establish a clear set of regulations for the industry. Daniel Tumiwa, the chairman of the Indonesia E-Commerce Association (idEA), said the new regulations should attempt to protect the growth of legitimate e-commerce businesses, particularly in terms of taxation. “Most established e-commerce firms are already paying some form of tax. Those who aren’t are generally informal sellers who use social media sites like Facebook or Instagram, which is akin to selling goods on the sidewalk,” Daniel told the Jakarta Globe. “The government must make a distinction between e-commerce startups and sellers who use the Internet. They are two different things.” GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=382078 Indonesia Says Fate of Mahakam Gas Block Will Be in Pertamina’s Hands http://thejakartaglobe.beritasatu.com/?p=382071 Sun, 1 Mar 2015 21:26:18 +0700 Jakarta. Indonesia says it plans to hand control over the Mahakam gas block to Pertamina once its current operator’s contract, held by Total, expires in 2017, but details of a proposed partnership remain unclear. Total’s contract to operate the Mahakam block, Indonesia’s single-largest source of natural gas, is one of numerous oil and gas contracts due to expire under uncertain terms, a stumbling block that the government of Southeast Asia’s largest economy has promised to address. Indonesia is one of the world’s biggest liquefied natural gas exporters, but with domestic output slipping and local demand growing the country has begun consuming more of its production and is seeking overseas supplies. Questions have circled Pertamina’s technical and financial capacity to operate the block, situated in East Kalimantan, and maintain current production levels of around 1.7 billion cubic feet last year. “The government will give 100 percent of the Mahakam block to Pertamina. The government will let Pertamina decide their partner by themselves,” Energy Ministry performance unit chief Widhyawan Prawiraatmadja told reporters on Friday, In response to the comments, one of Pertamina’s directors said the firm was open to working in a partnership in the block. “This is in line with what Pertamina wants. Pertamina is open to working in partnership with others,” Pertamina upstream director Syamsu Alam told Reuters via text message late on Friday. He did not say who the partnership would be with or how long it would last. Earlier, Total proposed a five-year transition period in which it continues to operate the block in partnership, and has warned that output could decline sharply if a decision on future plans for the block are not made quickly. Last week another official at Indonesia’s energy ministry said the East Kalimantan administration may take a 10 percent participating interest in the Mahakam block under the revised contract, which the government hopes to finalize in March. Reuters]]> Jakarta. Indonesia says it plans to hand control over the Mahakam gas block to Pertamina once its current operator’s contract, held by Total, expires in 2017, but details of a proposed partnership remain unclear. Total’s contract to operate the Mahakam block, Indonesia’s single-largest source of natural gas, is one of numerous oil and gas contracts due to expire under uncertain terms, a stumbling block that the government of Southeast Asia’s largest economy has promised to address. Indonesia is one of the world’s biggest liquefied natural gas exporters, but with domestic output slipping and local demand growing the country has begun consuming more of its production and is seeking overseas supplies. Questions have circled Pertamina’s technical and financial capacity to operate the block, situated in East Kalimantan, and maintain current production levels of around 1.7 billion cubic feet last year. “The government will give 100 percent of the Mahakam block to Pertamina. The government will let Pertamina decide their partner by themselves,” Energy Ministry performance unit chief Widhyawan Prawiraatmadja told reporters on Friday, In response to the comments, one of Pertamina’s directors said the firm was open to working in a partnership in the block. “This is in line with what Pertamina wants. Pertamina is open to working in partnership with others,” Pertamina upstream director Syamsu Alam told Reuters via text message late on Friday. He did not say who the partnership would be with or how long it would last. Earlier, Total proposed a five-year transition period in which it continues to operate the block in partnership, and has warned that output could decline sharply if a decision on future plans for the block are not made quickly. Last week another official at Indonesia’s energy ministry said the East Kalimantan administration may take a 10 percent participating interest in the Mahakam block under the revised contract, which the government hopes to finalize in March. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=382071 Management Shake-Up at Indonesia’s Top Banks as 2015 Unfolds Into a Tough Year http://thejakartaglobe.beritasatu.com/?p=382069 Sun, 1 Mar 2015 21:20:44 +0700 Jakarta. Some of Indonesia’s top lenders are heading for a management shake-up to replace existing leaders at a time when the sector is overshadowed by challenges, including falling profitability, slow economic growth and currency depreciation. Some banks have suffered as a result of the tougher economic conditions prevailing since last year, while others managed to weather the difficulties during 2014, maintaining high margins as they trimmed costs. This year, there is the risk of tighter liquidity and rupiah volatility on the back of possible capital outflows when the United States Federal Reserve raises its interest rates ­— a move predicted by analysts to take place in the middle of the year. Meanwhile, on the domestic side, expectations of slower growth also pose the risk of weaker loan demand and higher non-performing loans. Bankers in Indonesia admit that 2014 was “challenging” while this year isn’t likely to be any easier. Also complicating the matters in 2015 are changes likely to occur at the top of a number of banks, while others will leave their current bosses in place in the hope their experience will help them at least conserve profitability. Wanted: Bank CEOs Indonesia is home to 119 commercial banks, but about 70 percent of the more than Rp 5,000 trillion ($385 billion) worth of total banking assets is controlled by just 10 lenders. And the top three — Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank CIMB Niaga — are expected to get new leaders. Another three — Bank Danamon, Bank Permata and Bank Pan Indonesia (Bank Panin) — have either just replaced their chief executives or announced successors. The remaining four will stay with their current top officials. BRI announced in January that it has appointed Asmawi Syam as acting president director, replacing Sofyan Basir, who was moved to head state power utility PLN.  Shareholders at the bank are scheduled to hold a meeting in March to discuss, among other points, the appointment of a permanent CEO. “Sofyan has left BRI with a sound legacy. The fundamentals are good. The bank’s performance has beaten Bank Mandiri and our challenge in the future is to introduce BRI to the international [banking] sector,” said Enny Sri Hartati, an economist with the Institute for Development of Economics and Finance (Indef), as quoted by Metrotvnews.com. She suggested for the government, the controlling shareholder, to select a new leader from the ranks of the bank’s own senior personnel. “Looking at BRI’s current condition, there are some [officials] who have the capability [to act as CEO]. It only needs to be seen whether they have the vision and mission to take BRI international,” said Enny. The government has yet to announce its candidate BRI chief. The lender posted solid profit growth last year. Net income rose 13.6 percent toRp 24.4 trillion, thanks to a 16.6 percent increase in net interest income to Rp 51.44 trillion. The second biggest lender by asset value maintained its status as the king of micro-lending in Indonesia. Still, loan growth proved to be disappointing, landing lower than the average growth projected by Bank Indonesia for 2014. BRI’s outstanding loans grew 14 percent last year to Rp 495.1 trillion, below the 15 percent to 17 percent central bank projection for the year’s average loan growth. And while the bank maintained a strong net interest margin of 8.51 percent, it saw gross non-performing loans (NPL) rise by 14 basis points to 1.69 percent. Still, none of this rendered BRI’s stocks less attractive. In an equity research note released on Jan. 29, Valbury Asia Securities said it maintained its “buy” recommendation for BRI, with a target price steady at Rp12,500 per share. BRI’s shares closed at Rp12,475 on Feb. 8 at the Indonesia Stock Exchange (IDX). Another major lender expecting a new leader is state-controlled BNI. President director Gatot Suwondo wraps up his term after leading the bank since February 2008. He says his successor should be chosen from the lender’s current line-up of directors. Gatot has presented the government with a list of names to replace him, but declined to reveal them. “If this was my company, I would want an insider to be the president director so that there is continuity,” he said. The media has dubbed Gatot the “savior” who pulled BNI out of a financial crisis by restructuring its cost structure and funding costs. BNI, the country’s fourth largest lender by assets, booked a solid 19 percent rise in net income to Rp 10.8 trillion last year, thanks to strong net interest income growth. Outstanding loans grew 11 percent to Rp 277.6 trillion, also lower than the central bank’s 2014 projection for national loan growth. Arwin calls it a day Next in line for a new leader is Bank CIMB Niaga, the local unit of Malaysia’s CIMB Group. President director Arwin Rasyid filed his resignation last year after leading the bank since November 2008. Arwin will reportedly step down from his post in April. “I have [been president director] for two periods and it was extended a year, so it will end after the shareholders’ meeting in April,” he said. Lo Pain Khing, CIMB Niaga’s deputy president director, notified the IDX of Arwin’s resignation in a filing on Feb. 6, which also confirmed the time line. Indonesia’s fifth-largest lender by assets posted a 46 percent decline in net profit in 2014 as inflation dragged on interest income growth and the slowing economy increased the number of bad loans, forcing the lender to put aside higher provisions. The bank posted Rp 2.3 trillion in consolidated net income last year, compared to Rp 4.3 trillion in 2013. Arwin said has conceded the lender last year faced challenges stemming from a pick-up in inflation and higher interest rates, which raised funding costs. A fluctuating exchange rate and weakening commodity prices also undermined CIMB Niaga’s asset quality, he added. Loans at CIMB Niaga rose 12 percent to Rp176.4 trillion in 2014. Gross non-performing loans rose to 3.9 percent from 2.2 percent in 2013. Neither Bank CIMB Niaga nor its parent company in Malaysia have announced a nominee for the bank’s top post. Settling in While BRI, BNI and CIMB Niaga are expecting new leaders, three rivals — Bank Danamon, Bank Permata and Bank Panin — changed or announced their future chiefs last year. Bank Danamon, the country’s sixth-largest lender, announced in December that it will have a new president director soon as current chief Henry Ho was set to retire. Sng Seow Wah, a banker with more than 26 years experience at several well-respected regional and international banks, has been appointed to replace Ho. Shareholders of Bank Danamon approved Sng’s appointment on Friday. Sng was the group chief executive and director of Alliance Bank Malaysia and Alliance Financial Group, which he joined in 2010. Sng is set to face a number of challenges at Danamon as the lender is currently grappling with falling profitability. The bank saw its profit decline by 36 percent to Rp 2.6 trillion last year, a massive drop from Rp 4 trillion in 2013. Chief financial officer Vera Eve Lim attributes the profit slump to a regulatory change in accounting for automotive insurers imposed by the Financial Services Authority (OJK) last year. Still, even discounting the regulatory change, the lender’s net income would have been Rp3.54 trillion, 15 percent lower than in 2013. The country’s economic slowdown and a high interest-rate environment dragged Bank Danamon’s lending growth down last year, which in turn also affected the lender’s profitability, said Vera. In a statement sent to GlobeAsia Friday, Sng voiced his optimism over the sector. “The Indonesian banking industry still offers various opportunities for growth, particularly in the micro, small and medium enterprises sector,” Sng wrote. “I am looking forward to expand Danamon’s presence in the industry and its contribution to this growing economy.” At Bank Permata, the seventh largest lender by assets, a new chief is just settling in. Shareholders approved the appointment of Roy Arman Arfandy last November for president director, replacing David Fletcher, who had led the bank since 2009. Roy joined Bank Permata in 2007 and has since served in various strategic positions, including vice president director, director for wholesale banking, head of client relationships and head of credit services. Bank Permata is a joint venture between British lender Standard Chartered Bank and Indonesia’s automotive giant Astra International. Its bottom-line performance last year was less than impressive, with net income dropping 9.65 percent to Rp 1.59 trillion. “2014 was challenging as the banking industry faced higher cost of funds and slower business growth as a result of inflationary pressures and weakening of the rupiah,” said Sandeep Jain, finance director of Bank Permata. However despite last year’s headwinds, “Permata remained healthy, well-capitalized and liquid.” New CEO Roy was upbeat about 2015, saying: “We remain cautiously optimistic in 2015 as the banking industry, regulatory landscape and technology continue to change and grow. Yet, by sticking to our strategy, remaining true to our values and by being innovative and adaptive, I am confident that Permata is well-positioned to continue to grow even stronger.” Meanwhile Bank Panin, the nation’s eighth largest lender by assets, also made a bold move last year. It replaced its long-time chief Rostian Sjamsudin with Herwidayatmo, a top official from a rival bank. Rostian, who had been serving as the president director at the family-controlled lender since June 1994, can finally enjoy his retirement after shareholders approved the appointment of Herwidayatmo, former vice president director of Bank Permata, as CEO last September. The lender, one of the oldest in Indonesia, is controlled by Mu’min Ali Gunawan, a tycoon who owns a diversified range of business, interests, including insurance and property. Panin was one of the major banks to report profit growth, though at a modest rate. The lender booked profit of Rp 2.36 trillion last year, up 4 percent from 2013, with net interest income moving up only 2 percent  to Rp 6.21 trillion. The old guard The remaining four of the top 10 lenders still have members of the old guard to deal with their respective challenges. Bank Mandiri, the biggest lender by assets, got a new chief in 2013, when Budi Gunadi Sadikin was appointed to lead the bank until 2016. Budi, the managing director of micro and  retail banking at Mandiri from 2006 to 2013, helped the lender sail through a difficult 2014. Net profit grew by a respectable 9.2 percent on a solid net interest margin, but Budi admitted that it was not all smooth sailing. “It was a tough year for the banking industry in 2014 and while 2015 will be less tough, it won’t be as good as 2011,” he told reporters in Jakarta on Feb. 11. Bank Internasional Indonesia, which is controlled by Malaysia’s biggest bank, Malayan Banking (Maybank), changed its chief in September 2013. Shareholders of the bank appointed Taswin Zakaria, a seasoned investment banker who had served as president director of state-owned Indonesia Infrastructure Finance from 2010 to 2011, to replace Khairussaleh Ramli. Taswin will have his work cut out for him in reviving the lender’s profitability. Profit of the country’s ninth-biggest lender by assets fell by more than half last year due to rising interest costs and slowing loan expansion. BII booked consolidated net income of Rp 699 billion in 2014, compared to Rp 1.54 trillion in 2013, according to a statement from the lender. Loans expanded just 4.2 percent to Rp 106.3 trillion, while gross non-performing loans increased to 2.2 percent of total lending, up from 2.1 percent in 2013. State lender Bank Tabungan Negara (BTN) and family-controlled Bank Central Asia have the longest-serving chiefs out of the top 10. Veteran banker Maryono, who was appointed to head BTN in 2012, is slated to remain in his post until 2017. BTN has yet to announce its full-year earnings for 2014, but January-September figures have already signaled that profit likely tumbled. In the first nine months of last year, profit dropped 29 percent as the lender, which concentrates on home loans, suffered from the negative impact of tight liquidity. Net income fell to Rp 755 billion in the January-September period from Rp 1.06 trillion in the same period in 2013. The inauguration of President Joko Widodo and his administration has given hope that BTN can soon expect better times. As the biggest home lender in Indonesia, analysts say it should benefit from the government’s plan to build one million houses this year to reduce the housing backlog of as many as 15 million units needed by Indonesian families. Still, some questions have been raised over the plan to build so many dwellings at a time when property developers have been struggling with high interest rates, slowing economic growth and tougher government regulations. Last in the big league is Indonesian banking giant BCA, watched over by president director Jahja Setiaatmadja, who has been in charge of the lender since May 2011. BCA, known as a bank strong in deposit products, has also yet to reveal its 2014 full-year earnings at the time of writing, but its January-September performance suggests the bank has done well. Net income at BCA, the third-biggest lender by assets in the country, rose 17.7 percent to Rp12.2 trillion in the first nine months of 2014, compared to the same period in 2013. Still, in a note released on Jan. 25, JP Morgan highlighted the fact that the bank makes most of its money in the form of deposit spreads. These margins are increasingly coming under pressure and it “increases the need for the bank to change its main strategy, including to boost its loan-to-deposit ratio and to boost its non-interest income,” the investment bank said. While the top 10 banks in Indonesia are each facing their unique challenges, Angga Aditya Assaf, an analyst with Trimegah Securities, hasn’t abandoned his optimism about the sector’s prospects. “We think that the worst will pass as we overlook a better growth period this year, following some policies to be implemented by the government,” he said on Jan. 22. He mentioned prospects of strong loan demand for loans to infrastructure, maritime, and agriculture sectors. President Joko has pledged that these three sectors will become the key focus of development under his administration. But Angga didn’t deny that risks still linger, saying: “Risks to our call include a possible Fed fund rate hike in the second half of 2015; a delay in the implementation of the government’s infrastructure and maritime programs; adverse rise in industry’s non-performing loans and slower industry deposit growth.” GlobeAsia]]> Jakarta. Some of Indonesia’s top lenders are heading for a management shake-up to replace existing leaders at a time when the sector is overshadowed by challenges, including falling profitability, slow economic growth and currency depreciation. Some banks have suffered as a result of the tougher economic conditions prevailing since last year, while others managed to weather the difficulties during 2014, maintaining high margins as they trimmed costs. This year, there is the risk of tighter liquidity and rupiah volatility on the back of possible capital outflows when the United States Federal Reserve raises its interest rates ­— a move predicted by analysts to take place in the middle of the year. Meanwhile, on the domestic side, expectations of slower growth also pose the risk of weaker loan demand and higher non-performing loans. Bankers in Indonesia admit that 2014 was “challenging” while this year isn’t likely to be any easier. Also complicating the matters in 2015 are changes likely to occur at the top of a number of banks, while others will leave their current bosses in place in the hope their experience will help them at least conserve profitability. Wanted: Bank CEOs Indonesia is home to 119 commercial banks, but about 70 percent of the more than Rp 5,000 trillion ($385 billion) worth of total banking assets is controlled by just 10 lenders. And the top three — Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank CIMB Niaga — are expected to get new leaders. Another three — Bank Danamon, Bank Permata and Bank Pan Indonesia (Bank Panin) — have either just replaced their chief executives or announced successors. The remaining four will stay with their current top officials. BRI announced in January that it has appointed Asmawi Syam as acting president director, replacing Sofyan Basir, who was moved to head state power utility PLN.  Shareholders at the bank are scheduled to hold a meeting in March to discuss, among other points, the appointment of a permanent CEO. “Sofyan has left BRI with a sound legacy. The fundamentals are good. The bank’s performance has beaten Bank Mandiri and our challenge in the future is to introduce BRI to the international [banking] sector,” said Enny Sri Hartati, an economist with the Institute for Development of Economics and Finance (Indef), as quoted by Metrotvnews.com. She suggested for the government, the controlling shareholder, to select a new leader from the ranks of the bank’s own senior personnel. “Looking at BRI’s current condition, there are some [officials] who have the capability [to act as CEO]. It only needs to be seen whether they have the vision and mission to take BRI international,” said Enny. The government has yet to announce its candidate BRI chief. The lender posted solid profit growth last year. Net income rose 13.6 percent toRp 24.4 trillion, thanks to a 16.6 percent increase in net interest income to Rp 51.44 trillion. The second biggest lender by asset value maintained its status as the king of micro-lending in Indonesia. Still, loan growth proved to be disappointing, landing lower than the average growth projected by Bank Indonesia for 2014. BRI’s outstanding loans grew 14 percent last year to Rp 495.1 trillion, below the 15 percent to 17 percent central bank projection for the year’s average loan growth. And while the bank maintained a strong net interest margin of 8.51 percent, it saw gross non-performing loans (NPL) rise by 14 basis points to 1.69 percent. Still, none of this rendered BRI’s stocks less attractive. In an equity research note released on Jan. 29, Valbury Asia Securities said it maintained its “buy” recommendation for BRI, with a target price steady at Rp12,500 per share. BRI’s shares closed at Rp12,475 on Feb. 8 at the Indonesia Stock Exchange (IDX). Another major lender expecting a new leader is state-controlled BNI. President director Gatot Suwondo wraps up his term after leading the bank since February 2008. He says his successor should be chosen from the lender’s current line-up of directors. Gatot has presented the government with a list of names to replace him, but declined to reveal them. “If this was my company, I would want an insider to be the president director so that there is continuity,” he said. The media has dubbed Gatot the “savior” who pulled BNI out of a financial crisis by restructuring its cost structure and funding costs. BNI, the country’s fourth largest lender by assets, booked a solid 19 percent rise in net income to Rp 10.8 trillion last year, thanks to strong net interest income growth. Outstanding loans grew 11 percent to Rp 277.6 trillion, also lower than the central bank’s 2014 projection for national loan growth. Arwin calls it a day Next in line for a new leader is Bank CIMB Niaga, the local unit of Malaysia’s CIMB Group. President director Arwin Rasyid filed his resignation last year after leading the bank since November 2008. Arwin will reportedly step down from his post in April. “I have [been president director] for two periods and it was extended a year, so it will end after the shareholders’ meeting in April,” he said. Lo Pain Khing, CIMB Niaga’s deputy president director, notified the IDX of Arwin’s resignation in a filing on Feb. 6, which also confirmed the time line. Indonesia’s fifth-largest lender by assets posted a 46 percent decline in net profit in 2014 as inflation dragged on interest income growth and the slowing economy increased the number of bad loans, forcing the lender to put aside higher provisions. The bank posted Rp 2.3 trillion in consolidated net income last year, compared to Rp 4.3 trillion in 2013. Arwin said has conceded the lender last year faced challenges stemming from a pick-up in inflation and higher interest rates, which raised funding costs. A fluctuating exchange rate and weakening commodity prices also undermined CIMB Niaga’s asset quality, he added. Loans at CIMB Niaga rose 12 percent to Rp176.4 trillion in 2014. Gross non-performing loans rose to 3.9 percent from 2.2 percent in 2013. Neither Bank CIMB Niaga nor its parent company in Malaysia have announced a nominee for the bank’s top post. Settling in While BRI, BNI and CIMB Niaga are expecting new leaders, three rivals — Bank Danamon, Bank Permata and Bank Panin — changed or announced their future chiefs last year. Bank Danamon, the country’s sixth-largest lender, announced in December that it will have a new president director soon as current chief Henry Ho was set to retire. Sng Seow Wah, a banker with more than 26 years experience at several well-respected regional and international banks, has been appointed to replace Ho. Shareholders of Bank Danamon approved Sng’s appointment on Friday. Sng was the group chief executive and director of Alliance Bank Malaysia and Alliance Financial Group, which he joined in 2010. Sng is set to face a number of challenges at Danamon as the lender is currently grappling with falling profitability. The bank saw its profit decline by 36 percent to Rp 2.6 trillion last year, a massive drop from Rp 4 trillion in 2013. Chief financial officer Vera Eve Lim attributes the profit slump to a regulatory change in accounting for automotive insurers imposed by the Financial Services Authority (OJK) last year. Still, even discounting the regulatory change, the lender’s net income would have been Rp3.54 trillion, 15 percent lower than in 2013. The country’s economic slowdown and a high interest-rate environment dragged Bank Danamon’s lending growth down last year, which in turn also affected the lender’s profitability, said Vera. In a statement sent to GlobeAsia Friday, Sng voiced his optimism over the sector. “The Indonesian banking industry still offers various opportunities for growth, particularly in the micro, small and medium enterprises sector,” Sng wrote. “I am looking forward to expand Danamon’s presence in the industry and its contribution to this growing economy.” At Bank Permata, the seventh largest lender by assets, a new chief is just settling in. Shareholders approved the appointment of Roy Arman Arfandy last November for president director, replacing David Fletcher, who had led the bank since 2009. Roy joined Bank Permata in 2007 and has since served in various strategic positions, including vice president director, director for wholesale banking, head of client relationships and head of credit services. Bank Permata is a joint venture between British lender Standard Chartered Bank and Indonesia’s automotive giant Astra International. Its bottom-line performance last year was less than impressive, with net income dropping 9.65 percent to Rp 1.59 trillion. “2014 was challenging as the banking industry faced higher cost of funds and slower business growth as a result of inflationary pressures and weakening of the rupiah,” said Sandeep Jain, finance director of Bank Permata. However despite last year’s headwinds, “Permata remained healthy, well-capitalized and liquid.” New CEO Roy was upbeat about 2015, saying: “We remain cautiously optimistic in 2015 as the banking industry, regulatory landscape and technology continue to change and grow. Yet, by sticking to our strategy, remaining true to our values and by being innovative and adaptive, I am confident that Permata is well-positioned to continue to grow even stronger.” Meanwhile Bank Panin, the nation’s eighth largest lender by assets, also made a bold move last year. It replaced its long-time chief Rostian Sjamsudin with Herwidayatmo, a top official from a rival bank. Rostian, who had been serving as the president director at the family-controlled lender since June 1994, can finally enjoy his retirement after shareholders approved the appointment of Herwidayatmo, former vice president director of Bank Permata, as CEO last September. The lender, one of the oldest in Indonesia, is controlled by Mu’min Ali Gunawan, a tycoon who owns a diversified range of business, interests, including insurance and property. Panin was one of the major banks to report profit growth, though at a modest rate. The lender booked profit of Rp 2.36 trillion last year, up 4 percent from 2013, with net interest income moving up only 2 percent  to Rp 6.21 trillion. The old guard The remaining four of the top 10 lenders still have members of the old guard to deal with their respective challenges. Bank Mandiri, the biggest lender by assets, got a new chief in 2013, when Budi Gunadi Sadikin was appointed to lead the bank until 2016. Budi, the managing director of micro and  retail banking at Mandiri from 2006 to 2013, helped the lender sail through a difficult 2014. Net profit grew by a respectable 9.2 percent on a solid net interest margin, but Budi admitted that it was not all smooth sailing. “It was a tough year for the banking industry in 2014 and while 2015 will be less tough, it won’t be as good as 2011,” he told reporters in Jakarta on Feb. 11. Bank Internasional Indonesia, which is controlled by Malaysia’s biggest bank, Malayan Banking (Maybank), changed its chief in September 2013. Shareholders of the bank appointed Taswin Zakaria, a seasoned investment banker who had served as president director of state-owned Indonesia Infrastructure Finance from 2010 to 2011, to replace Khairussaleh Ramli. Taswin will have his work cut out for him in reviving the lender’s profitability. Profit of the country’s ninth-biggest lender by assets fell by more than half last year due to rising interest costs and slowing loan expansion. BII booked consolidated net income of Rp 699 billion in 2014, compared to Rp 1.54 trillion in 2013, according to a statement from the lender. Loans expanded just 4.2 percent to Rp 106.3 trillion, while gross non-performing loans increased to 2.2 percent of total lending, up from 2.1 percent in 2013. State lender Bank Tabungan Negara (BTN) and family-controlled Bank Central Asia have the longest-serving chiefs out of the top 10. Veteran banker Maryono, who was appointed to head BTN in 2012, is slated to remain in his post until 2017. BTN has yet to announce its full-year earnings for 2014, but January-September figures have already signaled that profit likely tumbled. In the first nine months of last year, profit dropped 29 percent as the lender, which concentrates on home loans, suffered from the negative impact of tight liquidity. Net income fell to Rp 755 billion in the January-September period from Rp 1.06 trillion in the same period in 2013. The inauguration of President Joko Widodo and his administration has given hope that BTN can soon expect better times. As the biggest home lender in Indonesia, analysts say it should benefit from the government’s plan to build one million houses this year to reduce the housing backlog of as many as 15 million units needed by Indonesian families. Still, some questions have been raised over the plan to build so many dwellings at a time when property developers have been struggling with high interest rates, slowing economic growth and tougher government regulations. Last in the big league is Indonesian banking giant BCA, watched over by president director Jahja Setiaatmadja, who has been in charge of the lender since May 2011. BCA, known as a bank strong in deposit products, has also yet to reveal its 2014 full-year earnings at the time of writing, but its January-September performance suggests the bank has done well. Net income at BCA, the third-biggest lender by assets in the country, rose 17.7 percent to Rp12.2 trillion in the first nine months of 2014, compared to the same period in 2013. Still, in a note released on Jan. 25, JP Morgan highlighted the fact that the bank makes most of its money in the form of deposit spreads. These margins are increasingly coming under pressure and it “increases the need for the bank to change its main strategy, including to boost its loan-to-deposit ratio and to boost its non-interest income,” the investment bank said. While the top 10 banks in Indonesia are each facing their unique challenges, Angga Aditya Assaf, an analyst with Trimegah Securities, hasn’t abandoned his optimism about the sector’s prospects. “We think that the worst will pass as we overlook a better growth period this year, following some policies to be implemented by the government,” he said on Jan. 22. He mentioned prospects of strong loan demand for loans to infrastructure, maritime, and agriculture sectors. President Joko has pledged that these three sectors will become the key focus of development under his administration. But Angga didn’t deny that risks still linger, saying: “Risks to our call include a possible Fed fund rate hike in the second half of 2015; a delay in the implementation of the government’s infrastructure and maritime programs; adverse rise in industry’s non-performing loans and slower industry deposit growth.” GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=382069 Banks Eye Tech to Gain Advantage For Bottom Line http://thejakartaglobe.beritasatu.com/?p=382064 Sun, 1 Mar 2015 21:12:41 +0700 GlobeAsia]]> GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=382064 Adam Tepper, Founder of Bitcoin Market Dead at 34 http://thejakartaglobe.beritasatu.com/?p=382059 Sun, 1 Mar 2015 21:03:39 +0700 Bloomberg]]> Bloomberg]]> http://thejakartaglobe.beritasatu.com/?p=382059 China Eases With Second Rate Cut in Three Months http://thejakartaglobe.beritasatu.com/?p=382056 Sun, 1 Mar 2015 20:57:20 +0700 Bloomberg]]> Bloomberg]]> http://thejakartaglobe.beritasatu.com/?p=382056 Buffett Sets Stage for Big Buyback, or Dividends http://thejakartaglobe.beritasatu.com/?p=382054 Sun, 1 Mar 2015 21:11:53 +0700 http://thejakartaglobe.beritasatu.com/?p=382054