AmCham Update Vol. 3 #107

2023 State Budget Approved, New Powers for BI, Halal Update, Sri Mulyani Bullish on Economy

Sep 30, 2022

DPR Approves 2023 State Budget Bill

The House of Representatives (DPR) has passed next year’s state budget bill (RUU APBN 2023) into law. The state budget sets the 2023 budget deficit at 2.84 of total GDP, lower than this year’s figure, and expected total revenue at Rp 2,463 trillion. With the expected budget deficit, the government is continuing its commitment to not overstay the “above 3-percent deficit policy”. Economic growth is targeted at 5.3 percent and inflation at 3.6 percent.

Minister of Finance Sri Mulyani Indrawati said the Ministry of Finance considered next year’s commodity price fluctuations in the budget formula and had prepared a plan to combat the risk of a weakening economy.

Meanwhile, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan has ordered ministries and government institutions to reduce the purchase of imported products. Luhut told relevant state institutions to use more domestic products, preferably manufactured by micro, small, and medium-sized enterprises (MSMEs), in government-related events to help improve domestic productivity.

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New Responsibilities for Bank Indonesia

The Omnibus Financial Sector Development and Strengthening Reform Bill (PPSK) has been included in the priority list for the 2023 National Legislation Program (Prolegnas). It stipulates new roles and responsibilities for financial regulators such as Bank Indonesia (BI), the Financial Services Authority (OJK), the Indonesia Deposit Insurance Corporation (LPS), the Financial Sector Stability Committee (KSSK), as well as bank and non-bank financial service institutions.

Under the new Omnibus Bill, BI’s role is not only limited to maintaining stability of the rupiah and the financial system, but also to support sustainable economic growth. The Bill also gives more binding power for BI's benchmark 7-Day Reverse Repo interest rate (BI7DRR), where banks must adjust their interest rates to the BI level not later than seven days after the rate is set.

The Bill also abolishes the ban on politicians being members of BI's Board of Governors. This is seen as a way to open the talent pool even wider to politicians, as long as they are competent and professional, but once a person joins the Board, they must leave their position in their political party.

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AmCham Cares: Grand Hyatt

Grand Hyatt Jakarta is helping promote Indonesia’s cultural heritage and a healthy lifestyle through a number of beverage options at different outlets. The hotel’s collaboration with local jamu artisan brand Acaraki highlights indigenous spices, such as turmeric, tamarind, curcuma and many more. Equally beneficial for the immune system are the refreshing kombuchas served in four tangy flavors: charcoal, green tea, mixed berries and lychee. These nutritious drinks are available for guests to consume both during the buffet breakfast and a la carte throughout the day at Grand Café and the Grand Club lounge.

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We have received positive responses for this program and would like to continue featuring your CSR stories and best practices. It is wonderful to learn the great things that our members are doing for the community.

Contact awis.mranani@amcham.or.idwith your CSR stories.

Ministry of Religious Affairs Assesses US Halal Body

As a part of mutual recognition and acceptance on halal assurance between the US and Indonesia, the Halal Product Assurance Organizing Agency (BPJPH) under the Ministry of Religious Affairs assessed the Islamic Food and Nutrition Council of America (IFANCA) during a visit to the US. IFANCA is the second foreign halal certifier body (FHCB) assessed by the agency, Head of BPJPH Aqil Irham said. In June, the agency assessed the Korea Muslim Federation (KMF), based in Seoul.

Aqil Irham emphasized the importance of collaboration and cooperation in advancing the global halal market. Foreign halal institutions which meet BPJPH’s applied requirements and standards for halal product assurance could significantly support trade activities between their respective countries and Indonesia. Some 97 FHCBs from 40 countries have applied for BPJPH accreditation. The BPJPH delegation also met with a US Trade Representative delegation and discussed the application of five US FHCBs in the SiHalal website.

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Sri Mulyani Bullish on Economic Outlook

Signs of an economic recession in 2023 are increasing with high inflation, drastic benchmark interest rate hikes in many countries, and the ongoing the Ukraine-Russia war. But Minister of Finance Sri Mulyani Indrawati said that while the UK’s benchmark interest rate has risen by 200 basis points in 2022, and the US by over 300 basis points as the countries ramp up their efforts to control inflation, the Indonesian economy is healthy enough to withstand the situation.

Sri Mulyani said Indonesia’s economy remains resilient from the threat of a recession, taking into account economic growth of 5.01 percent in Q1 of 2022, and controlled inflation levels of 4.35 percent in June. She said that in 2023, economic performance would be supported heavily by the recovery of public consumption, investment, and international trade. The government is also targeting economic growth of 5.3 percent in 2023, and hopes to control inflation so basic commodities remain affordable.

However, the domestic economy may still feel the impact of a global recession, said Bank Mandiri Macro Economist Faisal Rachman. Impacts from the recession may include: Indonesia’s trade balance returning to a deficit, state revenue threatened due to potential disruption of exports, potential weakening of the rupiah exchange rate, import performance may be impacted as the value of imported raw materials and capital could increase, and disruptions in domestic investment.

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Govt Adds More Commodities to Commodity Balance System

The government will fully implement the commodity balance (NK) system, under Presidential Regulation 32/2022. Some 24 commodities will be included in the NK national system (SNANK), and five commodities, mostly in the food and agriculture sector, have been included in the first phase of the implementation starting this year. In the second phase, which will start next year, 19 new commodities will be included. With the system, importers and exporters must acquire import and export permits prior to conducting trade.

Ministries and various government institutions are expected to continue encouraging business players to accelerate their preparations so the system can be implemented effectively and efficiently.

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Indonesian Passport Validity Extended from 5 to 10 Years

Indonesian passports will now be valid for 10 years from the original five-year validity period. Minister of Law and Human Rights Regulation 18/2022 regarding Amendments to the Regulation of the Minister of Law and Human Rights 8/2014 concerning Ordinary Passports and Travel Document in Lieu of a Passport (SPLP), came into effect on Sept 29. However, passports with 10 year validity will only be given to Indonesian citizens who are 17 years old or married, while the passport validity period for children with dual nationality must not exceed the age limit to declare their citizenship.

CLICK HERE FOR MINISTER OF LAW AND HUMAN RIGHTS REGULATION 18/2022

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https://bit.ly/straittimessingaporeovertakeshongkongasasiastopfinancialcenter

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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.

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