atans1

2014: Last chance for govt to increase prices?

In Economy, Indonesia, Political governance on 30/11/2013 at 5:51 am

(Asean round-up)

Ministers no longer joke about COE prices not affecting core inflation, (related post) ’cause increase in food prices is affecting core inflation.

In addition to Thai meat, maybe Burmese rice (see below) will help curb food inflation prior to next GE. Remember that public tpt fares are going up soon despite lack of much improvement. This is ’cause SMRT needs $ (scholar, ex-SAF chief says biz model broken, but nothing that higher fares can’t fix) and 2014 is last possible time that fares can rise. GE must be held in 2016, and increasing fares in 2015 may be too risky for PAP. As an election may be held in 2015, January to June 2014 is the last window of opportunity for us to kanna pay and pay.

Burma plans to more than double rice shipments as the country that used to be the largest exporter embraces trade and opens its economy, challenging Thailand, Vietnam and Cambodia for sales amid a global glut.

Shipments may increase to 2.5 million tonnes in 2014-2015 from an estimated 1.8 million tonnes in the year that started on April 1, according to Toe Aung Myint, director-general of the Department of Trade Promotion at the Ministry of Commerce. Exports are targeted to increase to 4.8 million tonnes in 2019-2020, he said when Hong Kong.

Indonesian coal and property firms could find obtaining loans increasingly difficult next year as banks tighten their lending due to higher interest rates, slowing economic growth and a weakening rupiah, industry officials said. The rupiah has fallen nearly 20 per cent so far this year, hitting 12,000 per US dollar yesterday for the first time in almost five years.

The central bank this month issued guidance to banks to slow loan growth to 15-17 per cent next year, from 18-20 per cent this year, in an effort to protect the financial system from potential turbulence amid heightened global uncertainties. In response, Bank Mandiri, Bank Central Asia (BCA), Bank Tabungan Negara, and other top financial institutions are becoming more particular about companies they lend to.

“We haven’t turned cautious for any sector, but we see challenges in infrastructure, construction, coal, cement, and real estate because of several policies. We are expecting a slowdown,” said Eugene Gailbraith, a BCA director, at an investment conference. He said that the country’s biggest bank by market value plans to “take a breather” and will lend less than its expected 45 trillion rupiah (S$4.79 billion) target this year.

Loan growth at Bank Mandiri is seen slowing to 17-18 per cent in 2014 from 19-20 per cent this year, while Bank Jabar Banten eases to 22 per cent from 33 per cent, company officials said. “We will be more cautious on sectors that are sensitive to interest rates,” said Pahala Mansury, Bank Mandiri chief financial officer. Indonesia’s increased hesitation to lend to coal companies comes as no surprise with banks around the world curbing their exposure to the industry due to a sharp fall in demand and prices. For the property sector, Bank Indonesia has made the industry less attractive to banks by implementing several policy measures to curb the purchases of second homes. Financial institutions are expected to favour consumer driven industries, such as retail and food companies, as domestic consumption continues to remain strong. – Reuters. (BT report)

Indonesia’s most aggressive rate tightening in eight years has barely dented a current account deficit, prompting calls for more increases and other measures before the Federal Reserve cuts stimulus.

Bank Indonesia has raised borrowing costs by 1.75 percentage points to 7.5% since early June, the quickest since 2005.

Following data which recently showed the country recorded its second-highest current account shortfall on record in the three months through September, JPMorgan Chase & Co and Standard Chartered now see a further 50 basis points of increases in the first half of next year.

Foreign funds pulled US$3.8bn from Indonesian stocks and local currency bonds in June after the Fed said it could cut stimulus, and a lack of progress on improving the current account before the US does eventually taper leaves the country vulnerable to another sudden outflow.

In addition to ongoing political unrest in Thailand:

Thai factory output shrank more than expected in October, adding to a string of weak data that prompted the central bank to unexpectedly cut interest rates to support the economy as mounting political tension dents confidence.

The Industry Ministry now expects output to fall 2.8 per cent this year, rather than growth of 0.5-1.0 per cent projected earlier, but predicts a rise of 2 per cent next year.

October was the seventh straight month in which output has declined, falling 4.02 per cent from a year earlier. The median forecast of a Reuters poll was for a decline of 3.3 per cent.

In September, output dropped 2.9 per cent. (BT report)

— Thailand’s central bank unexpectedly lowered the cost of credit Wednesday as escalating protests to topple the government add to pressure on the economy.

The central bank lowered its policy interest rate by a quarter percentage point to 2.25 %, hoping to stimulate lending and investment, saying  in a statement that the “ongoing political situation” could compound existing weaknesses in Southeast Asia’s second-largest economy. Business confidence is fragile and government plans for $69.5 billion of spending on high speed rail and other transport infrastructure have been delayed by legal challenges.

Thailand’s third quarter economic growth was weaker than expected and a recovery in exports has not gained traction, the bank said. Earlier this month, Thailand’s economic planning agency cut its growth forecast for this year to 3% from 3.8-4.3% predicted in August.

  1. Any non-cititzenry behaviour by the government will only be marked and remembered come 2016. This includes price increases.

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