AmCham Update
AmCham Update Vol. 4 #99
Gov't Plans Digital Transformation Task Force, Indonesia to Make Own Electric Cars Soon: Luhut, Natural Resources Export Proceeds Regulation, Big August Trade Surplus
Sep 18, 2023


Gov’t to Form Digital Transformation Task Force

President Joko Widodo will form a Digital Transformation Task Force, overseeing Indonesia’s digital economy and safeguarding domestic players against e-commerce platform dominance, said the Minister of Cooperatives and Small and Medium-sized Enterprises (SMEs) Teten Masduki. The Task Force will be chaired by Minister of State Secretary, Pratikno.

This plan is a follow-up to issues related to TikTok’s new e-commerce platform which is seen as a threat to Indonesian micro, small and medium-sized enterprises (MSMEs). The government has previously said it will ban the use of social media platforms to sell goods, by separating social media and social commerce under the revision of Minister of Trade Regulation 50/2020. The revision also prohibits foreign merchants from selling any goods valued below $100 to Indonesian customers directly via online marketplaces.

AmCham Indonesia encourages the government and the soon-to-be Task Force to have regular dialogue with the private sector on how digital transformation actually supports MSME development and explore ways to sustain the growth of Indonesia’s digital economy.

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Indonesia Targets Own Electric Cars by 2025/2026

Indonesia aims to manufacture its own electric cars by 2025 or 2026, said Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan.

The transition from conventional vehicles to electric vehicles (EVs) is happening rapidly on a global scale. Many EV industry leaders, representing half of the global production volume, have shown their interest in Indonesia for joint research to develop local EVs. Geely, one of the top EV manufacturers from China, has warmly welcomed Indonesia's offer for joint EV research, and is in discussions with the government about technical matters.

The Ministry of Industry previously targeted local content requirements (TKDN) for electric vehicle (EV) production in Indonesia to reach at least 80 percent by 2030. This is in line with the EV development roadmap regulated in Minister of Industry Regulation (Permenperin) 6/2022, which also covers the development roadmap of vital components such as batteries, electric motors, and converters, Minister of Industry Agus Gumiwang Kartasasmita said.

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AmCham Cares: Danone

Danone-AQUA officially launched the #PikirinDulu campaign on Aug 24 to build awareness and invite the younger generation to be critical before consuming by considering the impact of the products they choose (conscious consumption). As a company which considers not only product quality, but also its impact on health, the environment and society, Danone-AQUA conveys the message to the younger generation that behind a product there are many important values to consider, so it is very important to think before buying or consuming a product.

"Since the beginning of our journey, Danone-AQUA has been committed to bringing health and goodness to many people through quality bottled drinking water (AMDK) products," said Arif Mujahidin, Corporate Communications Director of Danone Indonesia. "Apart from providing quality drinking water to meet hydration needs that support people's health, we also always try to maintain a balance between business sustainability and nature preservation for a healthier Indonesia, as well as providing the best efforts to manage environmental and social impacts in accordance with the company's vision."

Based on NielsenIQ data, 46 percent of consumers expect a brand to bring about the sustainable change they are looking for. These consumers consider the impact of a product as a whole, where they assess the ingredients, production process, and even the impact of a supply chain on the planet before consuming anything – from food, drinks and various other products.

Danone-AQUA is inspired to continue producing quality products which are also sustainably responsible.

"Through the #PikirinDulu social campaign, we invite all levels of society to inspire each other in channeling goodness by practicing thinking first before choosing products that fulfill their responsibilities towards the environment, health and also social issues. That way, we all play an active role in creating sustainability for the future," said Arif.

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Natural Resources Export Proceeds Regulation To Be Evaluated

The mandatory 30 percent deposit of export proceeds from natural resources (DHE SDA) will be reviewed in November, said Deputy for Investment and Mining Coordination Septian Hario Seto. The evaluation will come after observing the first three months of the implementation of Government Regulation (GR) 36/2023 on Export Proceeds of Foreign Exchange (DHE) from Exploitation, Management and/or Processing of Natural Resources.

The Coordinating Ministry for Economic Affairs, Ministry of Finance, Bank Indonesia, the Financial Services Authority (OJK) and related ministries/institutions are currently conducting the evaluations of GR 36/3023, said Secretary of the Coordinating Ministry for Economic Affairs Susiwijono Moegiarso. There are still no substantive changes to be made, he added.

Tax incentives are also being prepared by the government, which will be released through a government regulation, alongside additional financial instruments to be issued by the Indonesian Export Financing Institute (LPEI), such as foreign currency promissory notes, said Head of the Fiscal Policy Agency (BKF) Febrio Nathan Kacaribu.

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August Trade Surplus Higher Than Expected

Indonesia’s trade surplus in August was $3.12 billion, twice the $1.55 billion median forecast and a $1.31 billion increase from the previous month. The increase was driven by a surplus rise in non-oil and gas exports, mainly metal ore and crude palm oil (CPO) commodities, in line with high global commodity prices. Export performance to China, the United States, and India contributed the most to the increase.

Meanwhile, imports of capital goods and raw materials fell 14.77 percent from the previous month, deeper than the 9.33 percent forecast drop, due to seasonal factors, Economist at Bank Danamon Irman Faiz said. Bank Indonesia said the increase would further sustain Indonesia’s economic resilience.

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Indonesia Increases Rice Imports to Meet Demand

Indonesia imported 1.59 million tons of rice from January to August this year, a spike from 237,146 tons in the same period last year, Statistics Indonesia Chairwoman Amalia Adininggar Widyasanti said. This is part of the government’s efforts to increase domestic rice stockpiles to anticipate rising global prices, although importing remains difficult because of restrictions imposed by other countries, President Joko Widodo said during a speech at the Bogor Agricultural Institute, on Sep 15.

The National Logistics Agency (Bulog) is holding 1.5 million tons of rice reserves to stabilize market prices. The effects of El Nino will cause longer drought compared to the previous year, agricultural expert at the Indonesia Association for Political Economy (AEPI) Khudori said. Ramadan celebrations in March and Eid al-Fitr in April next year will also significantly drive national rice consumption.

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Now is the Time to Join AmCham!

Now is the Time to Join AmCham!

We offer a full slate of meetings, events, and information for our community. But we can only do this through the support of our members. If you are not yet an AmCham member please join now.

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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.

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