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Indonesia's animal feed industry has contributed considerably to development of livestock farms in the country. Feeds account for 70% of the total production cost of livestock farming.
In general, animal feed industry has good prospects in the country. The country's animal feed production has increased 8.4% annually on the average in the past 5 years. In 2007, the country's production of animal feed shrank 7.7 million tons from 9.9 million tons in the previous year as a result of the dreaded bird flue. Cases of bird flue were reports in various areas including West Java, Jakarta, Banten, Central Java, Bali, North Sumatra, Jambi, South Kalimantan, West Kalimantan and South Sulawesi. Read more
The past three years saw a significant growth of multi-finance industry. The Association of Financing Companies (APPI) said the multi-finance industry has expanded by 15% annually on the average. The expansion followed improved condition of the country's economy. The gradual cut in SBI (Bank Indonesia promissory note) interest rate to 8% by the end of 2007 contributed to the growth of the multi-finance industry. The industry is dominated by leasing and consumer finance especially car and motorcycle purchase financing. The two financing systems contribute 95% to the total value of financing business in the country.
Consumer finance and leasing still dominated the industry until 2007. Non performing credits in the two types of financing business is still tolerable below 3% and the business players are more careful and selective in extending credits to their clients. Factoring and credit card financing have not gained significant market in the country. They are not yet sufficiently socialized. Few businesses use the two types of financing services. Read more
The government has restricted the use of foreign ships for domestic transports of certain commodities but implementation of the policy is not easy as the country still has large shortage of ships. Chairman of the Indonesia Ship Owners Association (INSA) Oentoro Suryo said domestic shipping companies could not face foreign rivals not only because of the shortage but also because of the fact that most of the ships operated by local shipping companies have been too old.
There is only few addition of ships operating in the country as part of the additional ships operated by domestic shipping companies are ones from shipping companies operating in the country flying foreign flag. Read more
The past several years saw no significant increase in the production capacity of the country's cement industry. The production capacity remains around 47 million tons per year. Plan has been made to increase the capacity since 2005, but most of the plans have remained in the pipeline.
The fact that the industry still had high idle capacity until last year discouraged investment. The capacity utilization of cement industry was only 60% in 2006 as demand was weakened by sharp oil fuel price hikes late 2005. In 2007, the impact of the fuel price hikes began to recede resulting in growing demand especially from the property sector and infrastructure projects of the government. A number of cement players, therefore, have plan capacity expansion.
Capacity expansion is necessary to keep pace with growing demand, which reached around 35 million tons in 2007. The requirement is expected to continue to grow in higher rate in 2008 with implementation of large infrastructure projects expected in the year. Read more
Indonesia is facing crisis in electric power supply. Almost the entire areas including Java-Bali, the country's business center, are suffering the inconvenience. Java and Bali account for 77% of power consumption in the country.
With economic growth of around 5% - 6% power requirement grows 7% - 8% a year as against production growth of only 3% per year. New power generating plants have not contributed significantly to supplying capacity since 2006. As a result shortage in supply which will potentially cause a drag on economic development. Read more
The prices of steel shot up lately in the world market mainly as a result of large demand from China and India. The rising prices have put heavier pressures on Indonesia's downstream steel industry. The country's downstream steel industry is still dependent heavily on import for basic materials. Support from upstream industry is still very limited.
There was almost no progress made toward expansion of upstream industry since 2004. Based on official data at the industry ministry, the production of the country's iron making industry totaled only 3.5 million tons s in 2006 as against requirement of 6 million tons. The production capacity of the country's downstream steel industry totaled 24.4 million tons n the same year. Industries using downstream products of steel have expanded including automotive, shipbuilding, electronic, and construction industries. Limited supplying capacity and technology force consumers like automotive and electronic industries to use imported basic materials. Read more
Tariff war
Competition in aviation industry serving scheduled flights in Indonesia is sharper with airlines under cutting each other in tariff. Airlines offer lower ticket prices including for busy routes such as Jakarta-Medan and Jakarta-Surabaya. The competition is sharper with the growing number of airlines serving regular flights, now totaling 21 companies. The government has set only the ceiling price for tickets, therefore, airlines are free to cut their ticket prices.Although the policy is intended to be in favor consumers, it has contributed to sharpening competition causing potential damage. The airline may sacrifice quality for having to cut the price. Efficiency in operating cost will likely lead to cutting maintenance cost. Read more
Limited raw materials still become a constraint
At present, vegetable fuel development to replace fossil fuel still continues. Biofuel will replace premium, diesel fuel, and kerosene or petroleum. The government makes a target that between 2009 and 2010, composition of biofuel and fossil fuel will reach 15 percent compared to 85 percent.
The national need for vegetable fuel is at least 18 billion liter per year. However, limited raw materials is the main constraint because they must be shared with other industries.
The Head of National Team for Vegetable Fuel Development, Alhilal Hamdi, also declared that limited stock of one of the main raw materials of biofuel, namely ethanol, to fulfill the need for fuel became the main constraint. Ethanol available is competed over other industries. Ethanol in Indonesia is still used for alcohol industry or other industries like cigarette and plastic.
The same with another raw material of biofuel, namely Crude Palm Oil (CPO), the current production is needed more to fulfill domestic for vegetable oil raw material than for biofuel production. Read more
The export oriented gas policy in the past had been driven more by the need to earn as much foreign exchange as possible failing to foresee possible difficulties with the rapid growth in domestic consumption. The country has been bound under long term contracts to export the bulk of its gas production. It is not free to use its natural wealth to feed its industries such as fertilizer factories. At least one major fertilizer factory PT Asean Aceh Fertilizer (AAF) has been closed over scarcity in supplies of gas feedstock. PT Pupuk Iskandar Muda (PIM) was forced to suspend operation for the same reason. Ironically the two factories are located in area of one of the country's largest gas fields in Nanggroe Aceh Darussalam.
Fertilizer factories could not buy gas from producers at a price prevailing in international market as they sell their production at a government set price, which is much below the market level. With the highest retail price (HET) set by the government, a fertilizer factory could pay not more than US$2 per MMBTU of gas. Read more
MARKET INTELLIGENCE REPORT PUBLISHED BY INDONESIAN COMMERCIAL NEWSLETTER
DATA CONSULT conducts multi-client research programs on major themes in various fields of the market, industry and general economic conditions. The major themes include such issues as market forecasts, evaluations of new technology and its marketability, proposals of new business, recommended marketing strategy and investment opportunities. Read more
The global crisis that surged to surface in September this year is feared to have bad impact on the country's electronics industry. A number of electronics manufacturing companies already cut production by 5%-10% since September 2008. The production cut followed falling demand on the domestic market.
The television on technology has advanced rapidly pushing up demand. Rapid development has been recorded in the technology from cathode ray tube (CRT) to flat screen and now to Plasma Display Panel (PDP) and Liquid Crystal Display (LCD) TV technologies.
The LCD market in Indonesia has grown fast with the world trend leading to digital product. Conventional TV sets using CRT began to be put behind in the world market. Currently TV market began to be dominated by Plasma and LCD TV sets. Read more
- Astra Agro to build palm oil factories
- Diversification of business of Pupuk Kaltim to cost US$ 1.4 billion
- Lenzing AG to invest US$150 million in viscose rayon project
- Energi Mega to spend US$ 81 million on tanker procurement
- Indocement raises budget for capital spending
- Japanese electronic giants move operations to Indonesia
- DBS & HSBC provide a loan of US$ 110 million for Bumitama
- Barito Pacific acquires two oil and gas companies
- United Tractors reports surge in sales of heavy equipment
- Pertamina hopes to sign additional supply of crude oil from Aramco
- Aston International prepared opening of 20 new hotels
- Top Glove to invest US$1 billion in rubber hand glove project
- Intraco sets aside US$ 100 million to acquire coal mines
- PT Bumi Resources Tbk (BUMI) plans IPO for subsidiary to raise US$1 billion
- Tugu Re eyeing 58% RIS EIN underwriting
- MEC ready to build US$1 billion coal railway project in e. kalimmantan
- Chairul Tanjung'S PARA Group to acquire 40 of Carrefour Indonesia
- Nestle doubles production capacity of its milk processing plant
- BUMI combines non-coal subsidiaries
- Dubai Dock Yard and Daewoo to invest US$1 billion
- Bakrie Telecom and Icon+ to cooperate in interconnections
- Telkom to replace all copper cable networks with optic fibers
- Chandra Asri may team up with Aramco to produce naphtha
- Bukit Asam to team up with China Railway to build coal railway project
- Sharp fall estimated in net profit of Bakrieland
- CPO producers seek contract renegotiations with Unilever and Nestle
- Jasa Marga reports 41% increase in net profit
- Indonesia to become production base for Toshiba LCD
- Adira seeking additional fund of Rp 5 trillion
- Panasonic to move energy saving lamp factory to Surabaya
- Petrogres to invest US$ 760 million
- Construction of two steel factories in S. Kalimantan to be set earlier
- Bank Mandiri to spend US$ 75 million in IT
- Chandra Asri and Tri Polyta expanding capacity
- Pertamina eyeing assets of ConocoPhilips
- Posco and KS agree to build a steel plant
- Two foreign companies to build photographic copy machine factories
- Semen Gresik to build cement factory and bagging plant in Papua
- Sasol discusses plan to build $10 b coal liquefaction project
- Jamsostek eyeing stakes in sharia and agro banks and property company
- Emaar replacement sought to resume Lombok project
- Pertamina needs to invest US$ 400 million in gas stations actory
- Car makers plan new investment in Indonesia
- Natrindo and XL compete for SLI license
- Holcim and RMI build liquid carbon factory
- Pertamina finalizes acquisition of Hanoi Block
- Mustika Ratu invests Rp 65 billion
- Suzuki increases investment by US$100 million
- Two telecommunications operators to invest in backbone networks
- BNI sets aside Rp2.2 trillion in credit for electricity projects
- Sijiro International to invest US$ 200 million in animal husbandry project
- Hyundai set to assemble MPV of H-1 model in Indonesia
- Bumi sets aside US$ 500 million to acquire mining assets
- China's Dingxing to develop nickel mines in Sulawesi
- Russal confirms commitment to develop Tayan aluminum project
- Smelting Gresik predicts smaller profit
- 13 Chinese companies to build steel factories
- Matahari to invest Rp 1 trillion in 2010
- Astra Agro to build two new CPO factories
- Posco to build multi billion dollar steel factory in Indonesia
- BRI ready with Rp1 trillion to finance acquisition
- Bakrie Plantations to acquire plantation in Liberia
- Indofood spin off instant noodle
- Indika takes control of 98.55% of Petrosea
- Holcim to wrap up acquisition of Holcim Sdn Bhd
- Adaro dan Shell investasi US$40 juta
- Antam reviewing 4 large projects
- Total E&P investasi US$22 miliar
- Bakrie Telecom posts 16.6% increase in net profit
- Mandan Steel to produce special steel
- Nippon Koei wins MRT basic design tender
- Conoco-Chevron sign gas transaction valued at US$ 2.5 billion
- Bosowa has option to control 52% of JORR W1
- Hexindo secures a contract valued at US$ 19 million
- India business leaders plan to invest $ 4 billion in Indonesia
- TPPI to build US$ 500 million petrochemical factory
- Telkomsel and Indosat to have additional 3G frequency
- Merukh takes over DAS and SMAC at US$ 70 million
- Carbon Plus set to invest Rp1.8 trillion in HTI (Wood Plantation)
- Mitra Rajasa acquires 22.5% of Pangansari
- Moratel investing US$40 million in submarine cable project
- Berca enters telecommunications business
- PLN secures a loan of Rp11 trillion
- Mandala operates two more units of A320 aircraft
- Adaro to build $52 mln power plant
- Foton to build car factory in Indonesia
- Garuda seeks to buy airlines facing financial problem
- Sebukit to build peat fueled power plant with an investment of US$400 million
- ICON+ set to finish construction of fiber optic telecommunication system in this year
- Heidelberg maintains control of Indocement
- Garda Tujuh to acquire two coal mines
- Bosowa Group the standby buyer for right shares of Bank Kesawan
- BAT to hold tender offer for Bentoel shares
- Bakrie Plantations doubles capital expenditure
- Malindo to build a new animal feed factory
- Global Mediacom to invest Rp500 billion in TV networks
- Pertamina takes over 46% stake in ONWJ block
- RMI to build waste processing plant
- Astra Honda Motor builds wheel rim factory
- BHP Billiton to sell coal mine in C. Kalimantan at at $400 mln
- Bank of China to finance PLN's electricity projects.
- Pertamina wins tender to acquire ONWJ block
- Indonesia Heavy to expand business to mining and energy sectors
- Summer Triangle to invest US$250 million bio fuel project
- Toyota to boost production
- Telkomsel granted additional 3G frequencies
- Pertamina hands over management of non core business to PPA
- Telkom secures US$100 mlm loan in vendor financing from Chinese company
- Semen Tonasa to start construction of new factory to cost US$318 million
- Bakrie Sumatera Reports Rp2.9 trillion in income.
- Bukit Asam to invest US$20 million power generating project
- Kideco posts 141.47% in net profit
- Philips lighting to build energy saving lamp factory
- Antam-Krakatau Steel to invest $63.5 million Steel project
- Ancora plans to acquisition in energy sector
- Rio Tinto to go ahead with nickely venture
- Antam sets aside US$35 mln to start work in cibaliung gold mine
- Perum pegadaian to issue bond
- Humpuss sets aside US$150 million for capital expenditures
- Bengkulu Energi Mandiri to build biodiesel factory
- Telkomsel wins USO Project valued at Rp534 billion
- Semen padang & Nedo to build power plant
- Foreign investors to compete for Pemalang power plant project
- Yu Won to build handset assembling plant
- Lotte Mart set for expansion
- Central Omega to invest Rp1 trillion in coal mines
- Asahimas to invest US$40 million to buy new technology
- Northstar Acquire 29% of alfaria
- Astra Agro shelves plan to build four palm oil factories
- Pertamina to sell subsidiaries operating in non core business
- Truba seeking loans to build power palant in Kuala Tanjung
- Medco secures US$480 million in new credit
- Indosat delays selling telecommunications towers
- Merger plan for UOB Buana and UOB Indonesia
- Exxon Mobil resumes gas supply to PIM fertilizer plant
- Krakatau Ilthabi to build pig iron factory
- Pelindo II sets aside Rp300 billion for Muara Sabak project
- Indofood completes acquisition and settles debt of acs
- Maspion build LPG terminal
- Rio Tinto expected to sign nickel mining contract
- Wings Air to buy 27 units of aircraft
- GM Set To Continue Expansion Plan In Indonesia
- Indika Energy To Acquire BHP Kendilo
- Lotte Group Acquires Makro Indonesia
- HSBC Acquires Bank Ekonomi
- Pertamina GE To Build Geothermal Power Plants
- BCA Agrees To Acquire Bank UIB
Corporate News in Brief
Internet Service provider (ISP) entered a new era in the past three years after PT Telekomunikasi Indonesia Tbk (Telkom) offered broadband internet service in 2006 with a cheap tariff. Since then the number of subscribers of broadband internet has continued to scale up.
Previously the number of internet users in Indonesia grew sluggishly as access service through dial up using telephone network of Telkom was not up to expectation with low speed. Meanwhile, high speed internet access offered at that time was too expensive that only corporate subscribers could afford to use that service.
Internet users is growing in number with the launching of Hybrid Fiber Coaxial (HFC)-based internet broadband access offered by First Media with low tariff although the coverage was limited in Jakarta and a number of other large cities. Read more
Indonesia, like most countries in the world, could not go unscathed in 2009 under the global financial crisis. Until the third quarter of 2008, the country's economy still showed healthy growth. The condition changed in the last quarter of 2008. The global crisis began to bite. The economy, therefore, grew only 6.1% in the whole of that year. Indonesia, however, still fared better than other neighboring countries such as Singapore, which was estimated to grow only 2.2%.
A number of industrialized and developing countries were already beset by liquidity problem and rising prices of primary commodities as a result of the global financial crisis in the last quarter of 2008. Indonesia also was hurt by the global economic slowdown but the country was blessed with sharp increases in the prices of its main export commodities.
The global financial crisis did not immediately hit the country's financial sector as no Indonesian bank was dragged into the mire of the U.S. sub prime mortgages crisis that triggered the global financial storms. Read more
A strong growth was still recorded for the country's motorcycle industry until the third quarter of 2008, a growth attributable mainly to increase in the purchasing power of people in the regions as a result of soaring price of plantation commodities. A slowdown, however, was felt in the last quarter of that when the global financial crisis began to bite.
For most people in urban and rural areas in Indonesia, motorcycles provide a cheap means of transport. The existing motorcycle makers, therefore, continued to plan capacity expansion and more investors indicated interest in starting business in motorcycle industry toward the end of 2008. Starting the fourth quarter of 2008, sales of motorcycles began to decline with weak demand but altogether, a strong growth of 33.24% was recorded in sales in 2008. However, the prospects look gloomy in 2009. Read more
Development of sharia banking system in Indonesia is implemented in the framework of the Indonesian Banking Architecture (API), to provide an alternative in banking service to conventional banking service. Sharia banking and conventional banking systems will be developed together to mobilize public funds more intensively and effectively to support the country's economic development.
The sharia financial system was first introduced in the country around a decade ago, but it has grown fast during the relatively short period not only in banking sector but also in insurance, and mutual fund. Sectors. The first sharia financial institution in the country is in the banking sector pioneered by Bank Muamalat Indonesia.
However, despite the leapfrogging growth of 35.6% annually with assets valued at Rp49.5 trillion in assets in 2008, the market share of sharia banks remains small with assets only 2.08% of those of conventional banks or far from the target of 5% set by Bank Indonesia (BI) . Read More
The country's cable industry was badly hit by the 1998 crisis. Until 2004, utilization of the production capacity of the industry was only around 25%- 30% of installed production capacity. The industry began to revive only in the past three years starting 2006. In 2007, the country's cable production totaled 300,000 tons or 65% of the installed capacity of 445,000 tons. Brisk developments in the power sector and growing exports have also boosted the industry lately.
The fast growing demand for electricity has forced the government to launch am ambitious plan called crash program to build coal fired power plants with a total capacity of 10,000 megawatts to be completed in 2010-2011. The program is to be followed with a second phase with the same capacity. The first program is in progress pushing up demand for electric cable. Read more
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The continued increase in rice production in the past four years is partly attributable to the wider use of certified rice seeds by farmers as indicated by the increase in production of certified rice seeds in the same period - from 117,000 tons in 2005 to 177,000 tons in 2008. The production of certified rice seeds has reach around 50% of the country's rice seeds requirement of around 360,000 tons per year for 12.66 million hectares of rice-fields.
The growing demand for high quality seeds has encouraged investment in rice seed breeding industry in the private sector. PT Sang Hyang Seri (SHS), a state company operating in seed breeding industry has built new production facility with a production capacity of 10,000 tons of seed a year. Interest has also been shown by foreign investors such as PT BISI Internasional, which is affiliated to the Charoen Pokhpand group, PT DuPont Indonesia (Pioneer), PT. Syngenta Indonesia and PT Bayer Indonesia. Read more>>
The global financial crisis has served a big blow to the world's financial market including the Indonesian capital market. Until now the capital market in Indonesia is still struggling amid the global financial crisis, which has caused a slowdown in the growth of the market, and delay in many plans to launch initial public offering (IPO) under market uncertainty.
Falling share price index was recorded by almost capital market s in the world in October, 2008. The composite share price index (IHSG) of the Indonesian Stock Exchange (BEI) sank to the lowest level forcing it to suspend trading for several days after recording a sharp fall. Suspension began 8 October 2008 when the IHSG dived 10.38% to the level of 1,451.669 points. Trading, however, was resumed on Oct 13, 2008. The suspension was to protect investors and the market. Later the capital market began to grow though thanks only to short term funds. Read more
The soaring prices of commodities in international market pushed up the inflation rate weakening the purchasing power of the general consumers. As a result demand for food products including instant noodles declined notably in the lower segment of the market. A number of producers of instant noodles for lower market segment were forced to suspend or stop operation with the rising price of wheat flour the main basic material of instant noodles.
Demands for instant noodles from the middle and higher market segments also scarcely grew resulting in sharp competition. The competition, however, has remained fair and healthy. There is no more price war between the country’s largest instant noodles producers – the Indofood Group and the Wings Group like in previous three years. All producers decided to raise their selling prices to follow the rise in production cost.
The sharp market competition in the market of instant noodles, has resulted in cut in the market share of the Indofood Group through PT. Indofood Sukses Makmur with the market control by the brand of Indomie slashing to 77% from 90% earlier. Read more
The world oil industry has expanded fast in the past four years with crude oil prices soaring to unprecedented high of more than US$140 per barrels early 2008.
Indonesia, however, failed to gain from the surge in the oil price as the country’s crude oil output has tended to decline over the past several years. The country even has become a net import of oil.
The past several years saw the country failed in reaching its oil lifting target as many oil wells have been too old with oil deposits almost depleted. Some major producers including Chevron, which operate the country’s largest oil fields in Riau, recorded a decline in output in 2008. Medco EP, the subsidiary of PT Medco Energi Internasional, the largest Indonesian private energy company, is also expected to post a decline in crude oil production in 2009. Read more
The country’s poultry farming industry has gone through the global crisis relatively unscathed. The animal husbandry industry performed well in 2008 when the crisis began to hit In 2009, when the purchasing power of the people is still weak as a result of the economic slow down, the poultry farming industry continues to expand. Chicken and chicken egg production continue to increase providing cheaper source of protein in the country .
The country’s production broiler DOC (Daily Old Chick) surged to 1.2 million in 2008 from 1.1 million in the previous year. Increase was also recorded in the production egg layer DOC – from 64 million in 2007 to 68 million in 2008.
The increase in production, however, brought on a problem. The domestic market was oversupplied by 27% in mid 2009, up from only 5% in 2008 causing a price fall on the domestic market. More
The country’s aluminum industry especially aluminum sheet and aluminum foil industry has not expanded as expected. There has been no capacity expansion although increase in production. The production has increased from year to year. The production of aluminum sheet rose to 61,900 tons in 2008 from 54,400 tons in 2004. Similarly the production of aluminum foil rose from 13,200 tons in 2004 to 13,600 tons in 2008.
The country’s production capacity for aluminum sheet and aluminum foil remained unchanged in 2004 - 2008. The production capacity for aluminum sheet was 116,000 tons per year and the production capacity for aluminum foil at 20,000 tons per year.
PT. Alumindo Light Metal Industry Tbk, the country’s largest producer of aluminum sheets and aluminum foils, plans to expand its production capacity for aluminum sheet and aluminum foil respectively by 144,000 tons and 20,000 tons per year from 70,000 tons and 15,600 tons per year.Read more
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The country’s spinning industry has expanded considerably in the past several years marked by the increase in production which surged from 1,872,000 tons in 2006 to 2,199,000 tons in 2008. Meanwhile, the capacity utilization of the country’s spinning industry rose to 80.9% in 2008 from 78.1% in 2006.
However, exports of the country spinning products have declined in the past several years to 679,000 tons valued at US$ 1,720 million in 2008 from 870,000 tons valued at US$ 1,785 million in 2006. The decline in exports followed the global crisis that badly weakened demand in the world market for textiles and textile products. Read more
The oil palm sector has continued to grow in the country as indicated by the expansion of the total area of oil palm plantations from 7 million hectares in 2008 to 7.3 million hectares in 2009 with crude palm oil (CPO) production rising from year to year – from 19.2 million tons in 2008 to 19.4 million tons in 2009. Increase has also been recorded in the exports of CPO. In the first nine months of 2009, CPO exports already reached 14.9 million tons as against 18.1 million tons in the whole of 2008.
Indonesia has climbed to the top of world’s palm oil producers in the past several years with CPO production reaching 19.4 million tons in 2009. Most of the production was exported with domestic consumption totaling only 4.8 million tons or around 25%. Read More
Unlike in early 2009, optimism was high toward the end of 2009, about global economic recovery and stronger performance of Indonesian economy. A number of macro economic indicators showed improvement in major economies including the United States, Japan and Europe. Indicators even showed that the manufacturing sector of China and India already fully recovered.
China leads the world toward economic recovery. The United States and a number of European countries have gone through global economic recession and began to post positive growth. The world market is brisker and firmer, opening an opportunity for Indonesia to boost exports.
In 2009, Indonesia managed to grow stronger than expected. Previous prediction put the country's economic growth at 3%-3.5% but in the first 11 months of 2009, the country's economy grew 4.2%. The growth rate was estimated to reach 4.3% in the whole of 2009. Read more
Development of infrastructure is an important and vital aspect in the efforts to accelerate the country's economic development. Infrastructure is one of the main driving motor for the country's economic growth. Economic development needs the support of various types of infrastructure such as transport, telecommunication, sanitation, and energy facilities. Transport infrastructure is the backbone of the process of production and it will facilitate the mobility of the people and distribution of commodities and exports. Other facilities and infrastructure such as telecommunication, electricity and water are also important elements in the process of production of economic sectors such as trade, industry and agriculture.
The government has set the country's economic growth target at 7% in 2012. In order to meet the target, there should be adequate infrastructure. The National Development Planning Board (Bappenas) said around Rp1,400 trillion would be needed for infrastructure development in 2010-2014. Read more>>
Natural gas has been growing in demand in the past several years with the growing use of gas as source industrial and household energy, as well as feedstock for fertilizer industry.
Gas is the country's third main source of energy after oil fuel (BBM) and coal. Gas accounted for 13.7% of the country's energy consumption in 2008. Shortage in the supply of natural gas in the country has affected the operations of a number of industries notably fertilizer industry.
The gas price, which is not dictated by the market mechanism for domestic consumption has led to producers seeking to export most or all of their production resulting in scarcity in supply on the domestic market. The price of gas on the domestic market has always been cheaper than in export market. Read more
The impact of the global financial crisis that struck in 2008 has affected the performance of the country's automotive industry especially in 2009. Based on a report from the Association of Indonesian Motor Vehicle Industries (Gaikindo) car production and sales in 2009 dropped form the previous year. The production shrank to 464,815 units in 2009 from 600,628 units in 2008 or a decline of 22.6%.
Meanwhile, sales fell 19.9% from 603,774 units in 2008 to 483,548 units in 2009 although exceeding the target set by Gaikindo of 450,000 units. Sales in 2008 were the highest in five years. The decline followed the falling value of the rupiah that resulted in an increase in prices. The price hikes forced consumers to postpone plan to purchase new cars. Read more>>
The global economic crisis in 2008 served a big blow to the plastic basic material industry including polyethylene (PE) industry. Weak demand and large stocks of plastic basic materials including polyethylene (PE) resulted in a decline in production of PE to 425,000 tons in 2008 from 479,000 tons in the previous year. The condition, however, began to improve especially since the third quarter of 2009. The country production of PE began to scale up.
According to association of plastic industries (INAplas) the domestic consumption of plastic basic material early 2009 fell 5% Consumption of plastics averages 20,000 tons per month. Decline in the purchasing power of the people as a result of soaring food prices led to a decrease consumption food products in plastic packages.
The market size of PE will depend much on demand from the user industries mainly plastic and plastic packaging industries. Plastic packages are still the main type of packages used for food and beverage products as they are more efficient and cheaper. According to INAplas, Indonesia is a big market for plastic goods with a market size predicted to reach around 4 million tons in 2015. Read more
Indonesia's sugar industry and sugar plantations have supported each other in development. Sugar plantations in Indonesia have continued to expand from year to year marked with expanding areas for cultivation. Until 2009, Indonesia's sugar plantations totaled 473,000 hectares or an increase of 2.9% from 460,000 hectares in 2008. Sugar plantations have been expanded not only in Java, but also in other islands.
In the past sugar plantations were concentrated in Java, but now plantations have been opened in other regions such as North Sumatra, South Sumatra, Lampung, South Sulawesi and Gorontalo. In Java plantations are found mainly in West Java, Yogyakarta and East Java. Expansions now are planned to West Kalimantan, West Sumatra, Riau, Merauke, South Sulawesi and Southeast Sulawesi.