The Ministry of Trade is considering halting the import of ethylene glycol (EG), diethylene glycol (DEG), and ethylene glycol butyl ether (EGBE), which have reportedly caused the alarming hike in acute kidney injury in children. According to the Observatory of Economic Complexity (OEC), Indonesia imported EG worth $147 million in 2020, making it one of the largest importers of the chemical.
Acting Director of Foreign Trade at the Ministry of Trade Didi Sumedi said the chemicals are not currently included in the limited ban category, but the Ministry is coordinating with the Ministry of Health and other stakeholders, including the Ministry of Industry and National Single Window Institution (LNSW), to consider revising import regulations and a possible ban.
Indonesia's Vice President Ma’ruf Amin highlighted the importance of increased climate financing at the United Nations Climate Change Conference (COP27) in Sharm El Sheikh, Egypt, on Nov 7. Ma’ruf emphasized the need to work together with the spirit of burden-sharing and that developed countries need to provide support to developing countries.
The delegation from Pakistan also expressed concern over the losses and damages it was experiencing and pushed for a “loss and damage” fund, where developed countries — who contribute the most to climate change — pay poorer countries as they experience most damage and must recover from resulting disasters.
So far, only five developed countries have supported the Santiago Network as the official framework for loss and damage. Negotiators said it is likely the loss and damage conversation will continue through COP27, which runs from Nov 6-18, hopefully ending with a more established framework and more financing from developed countries.
YCAB Foundation and Lautan Luas are to launch the STEM and Work Readiness Program, a nine-month hybrid learning program which will teach 100 students from 10 high schools in West Jakarta digital literacy to prepare them for science, technology, engineering and mathematics (STEM) careers.
The program will partner with several stakeholders such as the Ministry of Communication and Informatics, the Ministry of Education and Culture and the West Jakarta Education Office.
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President Joko Widodo will attend the ASEAN Summit in Cambodia on Nov 9–12, and will also assume the ASEAN chair from Cambodia. Coordinating Minister for Political, Legal, and Security Affairs Mahfud MD will accompany the President to Phnom Penh, as the discussions in the Summit will revolve around democracy, human rights, intelligence and common security.
Mahfud said ASEAN is one of the most prominent inter-governmental forums in the world, with strong neutrality principles. The Summit will aim to establish agreed rules among member countries to achieve a peaceful, secure, and prosperous region. Topics to be discussed include the South China Sea, human trafficking, and the situation in Myanmar.
After Cambodia, President Joko will directly fly to Bali to attend the G20 Summit on November 15–16, and is scheduled to have bilateral meetings with several countries, including the United States.
Economy Grows 5.72%, High Level of Digital Tax Collected
The Indonesian economy grew 5.72 percent in the third quarter year-on-year (YoY), while government consumption declined by 2.88 percent, according to Statistics Indonesia (BPS) data. Growth was underpinned by improved investment, increased exports, and government spending, economists said.
While investment grew at its fastest pace in more than a year and exports rose by double-digits, government spending slowly shrank due to a decrease in the realization of the state budget (APBN) spending on goods and services up to September. However, other areas such as household consumption (5.39 percent) and investment (4.96 percent) were major contributors to Indonesia’s economic growth.
However, growth was below most predictions of 5.9 percent to 6 percent. Economists also warned this is “as good as it gets” and the economy will drag in the following quarter due to the effects of global inflation. Interest rates are still expected to rise and exports have slowed in recent months, prompting layoffs in several industries.
Meanwhile, value-added tax revenue from trade through electronic systems (PPN PMSE) was Rp 9.17 trillion between 2020 and October 2022. With over 131 businesses participating, over Rp 4.53 trillion PPN PMSE was collected between January and October this year. The Ministry of Finance said it will continue to appoint PMSE businesses who sell goods and provide digital services from abroad to consumers in Indonesia to collect PMSE VAT, particularly for those whose annual transaction value with Indonesian buyers exceeds Rp 600 million and/or the volume of traffic in Indonesia exceeds 12,000 per year.
The government is developing new manpower policies as a result of the weakening growth of high labor-intensive sectors, including textiles, apparel and footwear, as well as a wave of layoffs. The Textile Producer Association West Java reported around 64,000 workers have been laid off, 18 companies stopped operations, and other 124 reduced their workforce, due to the weakening demand for the export of textiles and garments.
However, Statistics Indonesia (BPS) said that as of August 2022, the average monthly wage for Indonesian workers rose 12.2 percent year-on-year to Rp 3,000,000, with the highest increase in financial services and insurance. Minister of Manpower Ida Fauziyah has said the minimum salary increase will be higher than the average of 1.09 percent in 2022.
The Confederation of the Indonesian Trade Union Alliance Congress (KASBI) has demanded a 30 percent increase in the provincial minimum wage, based on economic growth of 5.72 percent in Q3. The Indonesian Employers’ Association (Apindo) has also called for stimuli for the private sector to avoid mass layoffs, especially for labor-intensive industries.
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AmCham Update is AmCham's regular newsletter on developments related to the pandemic crisis and other issues in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard is the Managing Editor.