AmCham Update Vol. 3 #132

Rupiah Plunging, Financial Service Bill Concerns, 2023 Minimum Wage, Some E-Catalogue Imports Frozen

Nov 30, 2022

Rupiah Weakens Amid Concerns Over China Unrest, US Fed

The rupiah exchange rate stagnated at Rp 15,740 per US dollar today, Nov 30, after several days of gradual depreciation. There are concerns that if the depreciation continues the rupiah will hit the psychological barrier of Rp 16,000 per dollar before the year ends.

As a result, economists have urged the government to prevent external risks, ensure policy coordination with Bank Indonesia and the Financial Services Authority (OJK), and be committed to encouraging investment into the country.

Continued depreciation of the rupiah and other Asian currencies is generally attributed to the US Federal Reserve's tightening policy, demonstrations over China’s zero-covid policy and supply chain issues related to the Russian invasion of Ukraine.

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Big Hit Coming on Imported Products in E-Catalogue

If you think it is hard to get imported products now, it may be about to get worse. The National Public Procurement Agency (LKPP) has restricted 14,161 imported products in the e-catalogue system for public procurement, as the government pushes local products by reducing imported goods, the newly appointed Head of LKPP Hendrar Prihadi said during a coordination meeting for monitoring and evaluation on Presidential Instruction 2/2022 on Nov 29.

He said that once Indonesia has the capability to domestically manufacture products that could substitute for imports, they would be removed or frozen in the system. The agency is also working on an Academic Paper on the Public Procurement Bill, which has been included in next year’s National Legislation Program (Prolegnas 2023).

During the meeting, President Joko Widodo encouraged government institutions/agencies to initiate breakthroughs to increase the use of domestically manufactured products. He highlighted strategies such as increasing the number of domestic products with local content certificates and accelerating the digitalization process for domestic product improvement.

Many companies complain that the restrictions are overly harsh and are counterproductive because they limit economic growth and often restrict inputs needed for industrial development. In healthcare, AmCham Indonesia has long warned that the health of Indonesian patients could suffer from restricted access to some foreign medicines.

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AmCham Cares: Black & Veatch

Black & Veatch Jakarta Office has donated 243 computers to 11 non-governmental organizations (NGOs) in Indonesia. The NGOs are located throughout the archipelago and support the needs of education, and access to technology and information.

Menembus Batas (Yayasan Thisable Indonesia) has also received a $10,000 grant from the Black & Veatch Foundation to organize training and workshops for the differently-abled community in Indonesia. Recent activities enjoyed by participants include a three-day barista training and a two-month internship program focused on entrepreneurship and digital literacy.

Such efforts reinforce Black & Veatch’s Sustainability and Citizenship principles to enrich the communities where it works and lives by meeting the needs of the present generation while improving the ability of future generations to meet their own needs. The programs are fully in line with Black & Veatch values and culture to provide equal opportunities to all.

As an employee-owned global engineering, procurement, consulting and construction company with more than 100-years of innovation in sustainable infrastructure, Black & Veatch has been meeting Indonesia’s infrastructure needs through scaled, adapted and reliable solutions across multiple sectors for more than 50 years.

Let Us Know Your Recent Social Responsibility Initiatives!

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 [email protected]with your CSR stories.

DPR Reservations on Financial Services Bill

Members of the House of Representatives (DPR) Commission XI overseeing finance and banking voiced their disagreement with the government's proposal that savings and loan cooperatives be supervised by the Financial Services Authority (OJK), during a working committee meeting on the omnibus Financial Sector Development and Strengthening Reform (RUU PPSK) Law with the government on Nov 24.

They said the spirit of cooperatives is more people-oriented and helping each other, hence they cannot be viewed like banks, and the Ministry of Cooperatives and SMEs is a better institution to supervise cooperatives. Minister of Cooperatives and SMEs Teten Masduki has recommended adding a specific division under the OJK to handle cooperatives to guarantee their growth in accordance with fundamental cooperative principles.

Members also opposed the government's endorsement of mandatory insurance to promote public inclusion and insurance penetration, saying forcing people to buy insurance outside the current national health coverage (BPJS) would create a public outcry and should not be an obligation for every citizen.

Rizal Taufikurahman, Head of the Macroeconomics and Finance Center at the Institute for Development of Economics and Finance (INDEF), said the government and DPR should postpone the discussion of the bill until more input has been received from the public and related stakeholders.

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2023 Minimum Wage Increase: Good or Bad News?

Indonesia's 33 regional governors have set their respective Provincial Minimum Wage (UMP) for 2023, according to the Ministry of Manpower. It said the average increase is 7.50 percent nationwide, with West Sumatra the highest with an increase of 9.15 percent and North Maluku the lowest at only 4.0 percent. Jakarta set an increase of 5.6 percent from Rp 4.6 million to Rp 4.9 million, while Central Java set an 8.01 percent rise, East Java (7.86 percent), and West Java (7.88 percent).

The Ministry said the 2023 UMP calculation is based on reaching a middle-ground between employers and workers. However, businesses say the excessive increase in UMP will negatively affect business during the post Covid-19 recovery phase.

President of the Confederation of Indonesian Trade Unions (KSPI), Said Iqbal, said the increase needs to be revised as it is not in line with inflation. He recommended a rise of between 10 and 13 percent, and threatened to hold demonstrations if this was not met.

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Improvements Needed in Commodity Balance System

Businesses involved in imports and exports have advised the government to improve the implementation of the National Commodity Balance System (SNNK), a government initiative to centralize and streamline export and import licensing. After its initial implementation phase, the system has not yet demonstrated effectiveness in tackling issues, specifically those related to food security. Government officials have also expressed concerns on the certainty of the system’s foundational regulations, which are derived from the omnibus Job Creation Law.

The government has been advised to fix the system before adding new commodity categories next year. Currently, only five food commodities are included in the system, and the government plans to add 19 more, including plastic raw materials and electronic products.

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Habitat for Humanity: Cianjur Earthquake Response

Following the 5.6 magnitude earthquake in the south-west of Cianjur Regency last week, Habitat for Humanity Indonesia has deployed assistance to respond to the urgent and unmet needs of those affected. The response strategy involves relief which includes emergency shelter kits (ESK) and wash cleaning kits (WCK) distribution, early recovery, and reconstruction. With this assistance, affected families can repair their damaged houses by themselves and the community will have improved resiliency in the future.

CLICK HERE FOR PROPOSAL DISASTER CIANJUR

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The AmCham Office is transitioning back to the office. We are still maximizing online meetings, using the Zoom platform, but starting to have in-person meetings. You will be notified of the meetings as they are scheduled.

What is Your Company Doing on COVID-19?

Please let us know what measures your company may be taking in the form of donations and other assistance to help Indonesia during this time of confusion and concern. Contact [email protected] with your news. We would like to publicize the ways that our AmCham companies are pitching in.

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We urge you to send us press releases and other information that we can pass on to the broader AmCham community. If you have items of interest, please email material to [email protected]. Follow this link to information provided by the US Embassy

Stay safe, call a doctor if you have a high fever, cough, or difficulty breathing. Stay healthy above all else.

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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