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Today the indonesian central bank Bank Indonesia realeased the consumer confidence index (CCI) for June 2008.

Consumer confidence index was reported at 79.1, down from 82.4 in May 2008. This is the lowest level since October 2005. In June 2007 the consumer confidence index was still at 95.8. Regionally consumers in DKI Jakarta (68.1), Denpasar (67.1) and Surabaya (63.3) were most pessimistic, while consumers in Makassar (110.2), Samarinda (97.3) and Pontianak were most optimistic in Indonesia.

This survey shows a gloomy future for Indonesia especially after new car sales rose by 39% and Toyota Astra, the market leader in Indonesia, sold 41% more cars in June 2008. Southeast Asia’s largest economy depends heavily on consumer spending. But after inflation reached double digit rates and the third straight key interest rate increase in three months consumers worry about their future.

Consumer Survey-Bank Indonesia (CS-BI) is a monthly survey that has been conducted since October 1999. By significance level of 99%, the sample has sampling error of 2%. Balance Score Method (net balance + 100) has been adopted to construct the index, whenever the index is above 100 points indicates an optimism (positive responses) and vice versa.

Today the Indonesian central bank, Bank Indonesia, increased again the key interest rate by 25 basis points to 8.75%. This was third rate increase after Bank Indonesia increased their rates to 8.25% in May 2008 and 8.50% in June 2008.

Bank Indonesia, headed by Governor Boediono wants to avoid second round price effects and hopes to keep inflation below 12.5% in 2008. On July 1st, the National Statistics Office reported that consumer prices rose by more than 11%, based on a new consumption pattern. Without this modification consumer prices would have risen by 12.8% in June 2008.

On August 5th, 2008 Bank Indonesia will hold its next regular monthly monetary policy meeting.

Today the National Statistics Office (Badan Pusat Statistik) reported that consumer prices rose at 11.03% in June 2008. In May 2008 the Indonesian Government increased fuel prices dramatically pushing consumer prices by 10.4%.

Dr. Rusman Heriawan, Director General of BPS presented the latest figures in Jakarta. Starting with June 2008, CPI will be based on a consumption pattern obtained from 2007 Cost of Living Survey in 66 cities (2007=100). Without this modification inflation would have been reported at 12.8% for June 2008.

Especially poor people were hurt by higher food and fuel prices. In Indonesia more than 15% of the population live on less than USD 20.- a month.

The increase in consumer prices make it more likely that Bank Indonesia will increase key interest rates at the next meeting on July 3rd, 2008 to fight inflation.

Since the beginning of 2008 most of the Asian governments had to cut their fuel subsidies because skyrocketing crude oil prices threatened their budget balance.  As a result inflation rates increased to their highest level in may 2008. The central banks of India, Indonesia and the Philippines already raised their key interest rates this June and Malaysia and Thailand are expected to follow at their next central bank meetings.

At the moment the GDP is still growing at a respectable level but recent data already shows a remarkable decline in consumer confidence. With high inflation and further possible rate increases investors will have to find better places to invest their money than in the stock market.

^a) since 31.12.2007

¹⁾ On June 5th, 2008 Bank Indonesia raised its key interest rate by 25 basis points to 8.5%.

²⁾ On June 4th, 2008 the Reserve Bank of India raised its key interest rate by 25 basis points to 8%.

³⁾ On May 26th 2008 Bank Negara Malaysia kept its key interest rate unchanged (no change since April 2006)

⁴⁾ On June 5th, 2008 Bangko Sentral ng Pilipinas raised its key interest rate by 25 basis points to 5.25%.

⁵⁾ On May 21st, 2008 Bank of Thailand kept its interest rate unchanged (no change since August 2007)

Today Bank Indonesia (BI) raised its key interest rate by 25 basis points to 8.5%. This increase was expected after the inflation reached new records in Indonesia and the price increase of fuel prices by an average of 28.7% on May 23rd, 2008.

Bank Indonesia (BI) has counted in high energy and food prices in its decision to raise the rate said BI BI governor Boediono. Bank Indonesia expects inflation to climb up to a level between 11.5% and 12.5% by the end of 2008.

Higher interest rates may also support the weak Rupiah, which lost 3.5% against the Euro since the beginning of 2008 and nearly 20% in the last 12 months.

Today investors from the United States, Asia and Europe can meet directly with indonesian businesspeople at the Indonesian Regional Investment Forum (IRIF). While there are big infrastructure projects seeking billions US dollars of investment there are smaller projects for private investors too. Below you can find a summary of projects for private investors with less than USD 2.5 Million of capital needed.

With a population of more than 230 million, Indonesia might reach again the high economic growth rate as before the Asian crisis when the gross domestic product (GPD) grew by an average of more than 7% per year from 1989-1997.

Tomorrow the Indonesian Regional Investment Forum (IRIF) will open its doors. More than 200 projects in infrastructure, mining and energy, property and tourism sector are searching for potential investors.

Tony Gorlay, project leader of the IRIF, expects more than 300 investors to join the two days event and to get more information about the proposed projects with a volume of nearly USD 19 billion.

Investors from China, India, the United States, Japan, Singapore, Malaysia and several European countries can put their money into small projects like a cattle breeding project in Central Sulawesi (USD 88.000) or like projects like the development of the Bojonegara oil refinery in Banten (USD 4 Billion).

The following businesspeople and politicans will participate:

• Agus Martowardojo, President Director Bank Mandiri
• Arie Soemarno, CEO Pertamina 
• Dato’ Azman bin Hj. Mokhtar, CEO of Malaysia-based investment bank Khazanah Nasional
• Edgar A. Cua, Country Director, Asian Development Bank, Indonesia
• Gita Wirajawan, Country Head, JP Morgan
• Guy Outen, Executive Vice President Shell
• James Riady, Chairman Lippo Group
• Miranda S. Goeltom, Senior Deputy Governor Bank Indonesia
• MS Hidayat, Chairman, Indonesian Chamber of Commerce Industry (KADIN)
• Muhamad Lutfi, Chairman Indonesian Investment Coordinating Board
• Sofyan Basir, President Director of Bank Rakyat Indonesia
• Sri Mulyani Indrawati, Minister of Finance, Indonesia
• Thaksin Shinawatra, former Prime Minister of Thailand
• Tun Musa Hitam, Chairman of Malaysia’s palm oil producer Sime Darby
• Tanri Abeng, Chairman PT Telekomunikasi

Date: May 26th & May 27th, 2008, 09:00-21:00 WIB
Venue: The Ritz Carlton Jakarta, Pacific Place 

Today the Indonesian Government raised subsidized fuel prices by an average of 28.7%.

The price for premium gasoline was increased from IDR 4.500 to IDR 6.000 (up 33.3%), diesel rose from IDR 4.300 to IDR 5.500 (up 27.9%) and kerosene prices climbed from IDR 2.000 to IDR 2.500 (up 25%) per liter.

After the skyrocketing oil price reached levels above USD 135 per barrel the Indonesian Government had to adjust the fuel prices Energy and Mineral Resources Minister Purnomo Yusgiantoro announced in a press conference today. In Indonesia the last fuel price increase took place in October 2005 after the oil prices broke the psychological barrier of USD 60.-/barrel for the first time in history in June 2005.

The chairman of the Central Statistics Agency, Dr. Rusman Heriawan expects that inflation rate for May 2008 will now rise above the level of 10%.

In 2007 Indonesia’s gross domenst product (GDP) expanded by 6.3%. This economic growth was mainly driven by private consumption.

For the first quarter of 2008 Bank Indonesia (BI) estimates that the economy has grown by 6.1%, which is below the government’s estimated growth of 6.2% to 6.3%. Higher food and crude oil prices and a global economic slowdown are responsible for the slower investment and consumption growth.

Indonesia’s economy depends highly on local consumer spending and exports. While rising prices and lower consumer confidence caused weakening consumer spending exports were hurt by the US subprime crises.

Bank Indonesia predicts that investment growth slowed to 8.3% in the first three months of 2008 compared to 12.1% in the same period of 2007, while consumption only grew by 4.6% compared to 5.1%.

In the first quarter 2008 crude oil and commodity prices rose dramatically. Basic food products like rice and soya beans doubled its price.

Miranda Swaray Goeltom, Bank Indonesia’s senior deputy governor, expects rising inflation after the year-on-year inflation for the first quarter of 2008 reached 8.17% compared to 6.59% in the last quarter of 2007.

The Central Statistics Agency (BSP) will announce the official data of Indonesia economic growth for the first quarter of 2008 on May 15h, 2008.

In the first quarter of 2008 PT Bakrieland Development posted a net profit increase of 116.5% to IDR 30.1 billion from IDR 13.9 billion in the same period of 2007.

The profit increase was attributed to a 83.4% rise in sales from IDR 111.4 billion in the first quarter of 2007 to IDR 204.3 billion in 2008. Bakrielands operating profit also grew 159.2 % to IDR 50.8 billion compared to IDR Rp 19.6 billion in the first quarter of 2007.

CEO Hiramsyah Thaib expects to meet the revenue target of IDR 1.1 trillion.

PT Bakrieland Development is a publicly listed property developer and develops real estate and resorts projects for the middle-to-high-income markets, such as Rasuna Epicentrum in Kuningan, South Jakarta, and the Legian Nirwana Suites and Residences in Kuta, Bali. Additionally to several middle-lower-income residential properties, such as the Sentra Timur Residence in Pulogadung, East Jakarta the company also invests in infrastructure projects.