Indonesia Macroeconomic Outlook 2020

Indonesia’s Economic Outlook
2020
Office of Chief Economist
Bank Mandiri
The Global Economic Update: Recesssion or Slow Down?
Flagging Global Economy in 2019
Weakening global demand causing commodity prices to be stagnant and major CBs to be more
dovish
Global Economic Growth Projection (%)
Growth Projection for Large Economies (%)
Country
4.7
4.8
4.6
4.3
4.6
4.5
3.9
3.8
3.6
3.5
3.4
3.6
3.4
3.0
2.5
2.3
2.1
2.3
1.7
2014
2015
World
1.7
2016
2017
Advanced economies
2018
1.7
2019
2020
Emerging market and developing economies
Source: IMF (World Economic Outlook, Oct-19)
Commodity Price Forecast
Commodity
Oil
(USD/barrel)
2019F
2020F
2.9
2.4
2.1
1.9
1.2
1.4
0.8
0.9
0.5
1.4
1.2
1.4
6.6
6.1
5.8
6.8
6.1
7.0
2.3
1.1
1.9
1.1
0.9
2.0
0.8
0.7
1.1
Source: IMF (World Economic Outlook, Oct-19)
2018
2019F
2020F
71.7
68.0
69.0
CPO
(MYR/metric ton)
2,252
Coal
(USD/metric ton)
107.2
Source: OCE Bank Mandiri Estimation
2018
2,035
76.0
Policy Rate Forecast in Advanced Economies (%)
Country
2018
2019F
2020F
2.5
1.75
1.5
0.0
0.0
0.0
-0.1
-0.1
0.0
2,094
81.0
Source: Bloomberg as of 17 Oct 2019
Will the US Economy be Heading for Recession?
10-year, 2-year & 3-month US treasury bond yield spread (lag 8 quarters) is narrowing
The spread keeps narrowing in
2018 & 2019. This indicates
slowing growth in 2020 & 2021.
6
5
10
8
4
6
3
4
2
2
1
0
0
Early 1990s Recession –
1990 Oil Price Shock
1980-1982 Recession – Doubledip or W-shaped Recession:
Consequence of 1979 Energy
Crisis (Iranian Revolution)
-1
-2
2008/09 Great Recession –
the Subprime Mortgage Crisis: the
spread was negative (USGG10YR
yield was lower than USGG2YR
yield & USGG3M yield) in 2006
Early 2000s Recession –
the Dot-com Bubble &
Sep 11th Attacks
-2
-4
2Y10Y Spread (lag 8) - lhs
3M10Y Spread (lag 8) - lhs
2Q21
3Q20
4Q19
1Q19
2Q18
3Q17
4Q16
1Q16
2Q15
3Q14
4Q13
1Q13
2Q12
3Q11
4Q10
1Q10
2Q09
3Q08
4Q07
1Q07
2Q06
3Q05
4Q04
1Q04
2Q03
3Q02
4Q01
1Q01
2Q00
3Q99
4Q98
1Q98
2Q97
3Q96
4Q95
1Q95
2Q94
3Q93
4Q92
1Q92
2Q91
3Q90
4Q89
1Q89
2Q88
3Q87
4Q86
1Q86
2Q85
3Q84
4Q83
1Q83
2Q82
3Q81
4Q80
1Q80
-6
2Q79
-3
GDP (yoy, %) - rhs
The US macroeconomic condition comparison pre & during recession:
US Economic Indicator
1979
1980
1981
1982
1989
1990
1991
1999
2000
2001
2007
2008
2009
2018
1H19
GDP (%)
3.2
-0.3
2.5
-1.8
3.7
1.9
-0.1
4.8
4.1
1.0
1.9
-0.1
-2.5
2.9
2.5
Inflation (Avg. %)*
11.2
13.5
10.4
6.2
4.5
5.4
4.2
2.2
3.4
2.8
2.9
3.8
-0.3
2.4
1.7
Unemployment (Avg. %)**
5.8
7.1
7.6
9.7
5.3
5.6
6.8
4.2
4.0
4.7
4.6
5.8
9.3
3.9
3.8
Change in FFR (bps)
400
400
-600
-350
-50
-125
-300
75
100
-475
-100
-400
0
100
0
Debt to GDP Ratio (%)
32.3
32.6
31.8
34.3
51.6
54.4
59.1
59.1
55.6
54.8
62.6
67.7
82.3
106.1
Key points:
• Inflation usually rose when the US economy was heading recession.
• FFR was aggressively cut during recession.
Source: the Fed, Bloomberg & OCE Bank Mandiri’s calculation
*) Average US inflation for 1948 – 2018 is 3.5%
**) Average US unemployment for 1948 – 2018 is 5.8%
As for now, an expectation of US deceleration, not recession
GDP growth (%)
Forecasters
IMF World Economic Outlook
World Bank's Global Economic Prospects
Bank of America Merrill Lynch
Barclays
Bloomberg Economics
Capital Economics
Citigroup
Fitch Ratings
Goldman Sachs Group
JPMorgan Chase
Moody's
Nomura Securities
Oxford Economics
Societe Generale
Standard Chartered
UBS
Wells Fargo
Average
Median
2019
2020
2.6
2.5
2.3
2.2
2.4
2.1
2.6
2.3
2.3
2.2
2.3
2.3
2.3
2.3
2.3
2.3
2.3
2.3
2.3
1.9
1.7
1.7
1.6
2.1
1.2
2
1.8
2.2
1.7
2.1
1.5
1.8
0.5
1.8
1.3
2.3
1.7
1.8
Source: Bloomberg and various reports
5
Another Risk: The Early Sign of Recession in Eurozone
Eurozone’s economic engines has been slowing down
Eurozone’s Industrial Production (% yoy)
Germany & UK Economic Growth (% qoq)
1.4
6
1.2
Germany 2Q19 GDP growth -0.1%
qoq
4
1.0
0.8
2
0.6
0
0.4
-0.8
0.2
-2
-2.0
-2.0
-2.4
0.0
-2.0
-4
-0.2
UK 2Q19 GDP growth -0.2%
qoq
Source: Bloomberg
Source: Bloomberg
Sep-19
Aug-19
Jul-19
Jun-19
May-19
Apr-19
Feb-19
Mar-19
Jan-19
Dec-18
Nov-18
Oct-18
Sep-18
Jul-18
Aug-18
Jun-18
May-18
Apr-18
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
UK GDP (% qoq)
Aug-17
Germany GDP (% qoq)
-6
Jul-17
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
Jun-17
-0.4
How long is The US - China Trade War?
US to hit USD300 bn worth of Chinese products with 10%
tariff
Value of import goods (USD bn)
China imports from US
110
46
US imports from China
250
0
300
100
200
300
Tariff imposed in 2018 - May 2019
Tariffs threatened
400
13
500
600
Remains
Note:
US total import from China in 2018 was USD563 billion
China’s total import from US in 2018 was USD156 billion
Top 10 US imports from China affected by the new tariff (USD bn)
Cellphones
15
Laptops
14.1
Telecoms equipment not previously tariffed
5.1
Wheeled toys, puzzles, scale models
3.4
Monitors
2
Flat panel TVs < 13.5" with VCEs or other players
1.6
Storage devices, e.g. USB drives, hard disks
1.1
Sandals with plastics or rubber soles
1.1
Plastic articles
1
Handheld power tools other than drills or saws
1
Source: US International Trade Commission, Bloomberg & Reuters
US trade deficit to China is trending down
Neraca perdagangan AS terhadap Tiongkok (USD bn)
US Export and Import to and from China (% yoy)
Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19
-10.0
40.0
30.0
-15.0
20.0
-20.0
10.0
-20.75
0.0
-25.0
-10.0
-11.6
-30.0
-19.6
-20.0
-31.62
-30.0
-35.0
8
-45.0
-43.10
Export to China (%yoy)
Sumber : CEIC
Import from China (% yoy)
Sep 19
Aug 19
Jul 19
Jun 19
May 19
Apr 19
Mar 19
Feb 19
Jan 19
Dec 18
Nov 18
Oct 18
Sep 18
Aug 18
Jul 18
Jun 18
May 18
Apr 18
Mar 18
-40.0
Feb 18
Jan 18
-40.0
Fed Funds Rate Target: how low can you go?
From the latest projection, The Fed expect FFR will increase in 2021
Source: Bloomberg as of 1 October 2019
Projection of domestic policy rate:
There is still room for another rate cut to 4.75%
Policy rate forecast (%)
BI 7 DRR
Deposit Facility
Term structure interest rates (%)
Lending Facility
Jul-18
9.0
Dec-18
May-19
Aug-19
8.0%
8.0
forecast
7.5%
7.00%
6.75
7.0
6.90%
7.0%
6.77%
6.00
6.00
6.0
5.25
6.5%
6.25%
6.00%
5.25
6.1%
6.0%
5.0
6.0%
4.50
5.75%
5.5%
4.0
5.3%
5.0%
5.00%
4.5%
4.5%
3.0
Dec-19
Sep-19
Jun-19
Mar-19
Dec-18
Sep-18
Jun-18
Mar-18
Dec-17
Sep-17
Jun-17
Mar-17
Dec-16
Sep-16
Jun-16
Mar-16
Dec-15
Sep-15
Jun-15
2.0
4.0%
ON (DF)
1W RR
2W RR
1M RR
3M RR
6M SDBI
9M SDBI 12M SDBI
Commodity price will remain flat
Spot
Price
Jenis Komoditas
6 Sept
2019
End of Period
Price
2017
2018
Average Price
2017
2018
2019
2019
(ytd)
OCE
F’cast
Bloomberg
Consensus
(Dec 2018)
Bloomberg
Consensus
(Apr-Jun
2019)
2020
Bloomberg
Consensus
Jul – Aug
2019
Forward
Price
(Jul 15,
2019)
OCE
F’cast
Bloomberg
Consensus
(Dec 2018)
Bloombe
rg
Consensu
s
(Apr-Jun
2019)
Bloomberg
Consensus
Jul – Aug
2019
Forward
Price
(Jul 15,
2019)
Oil (Brent)
USD/bbl
61,5
66,9
53,8
54,8
71,7
64,8
65,6
69,8
67,7
66,2
65,6
67,6
71,8
68,4
66,8
62,8
CPO* (FOB
Malaysia)
USD/Ton
506,2
601,8
484,8
647,7
559,5
494,8
510,0
503,9
508,5
502,8
503,7
540,0
512,7
537,4
525,9
574,4
Coal
(Newcastle)
66,3
100,8
102,1
88,1
107,2
83,3
82,4
85,3
79,8
81,4
78.3
80,7
84,3
75,3
75,5
81,1
Gold
(USD/Troy
Ounce)
1.506
1.309
1.281
1.259
1.268
1.350
NA
1.263
1.331
1.359
1.425
1.306
1.372
1.409
1.451
LME Nickel Price
(USD/Ton)
17.685
12.714
10.62
3
10.42
0
13.12
7
13.09
6
NA
13.225
12.527
12.650
13.051
NA
13.804
12.940
12.882
13.801
LME Aluminum
Price
(USD/Ton)
1.765
2.258
1.823
1.968
2.112
1.812
NA
2.120
1.849
1.847
1.839
NA
2.118
1.892
1.859,8
1.927
Sources: Bloomberg and OCE’s forecast
NA
Indonesia is among the stable countries due to high contribution from HH
spending
Country
Average
GDP growth
in 5 years
Average
GDP growth
in 10 years
Current Account
Balance (%of
GDP 2018)
Fiscal
External
Balance (%of Debt to
GDP 2018)
GDP
Inflation
(YoY)
CDS
5Y
Indonesia
5.0%
5.5%
-3.04%
-1.1%
36%
3.49%
86.2
Malaysia
5.2%
4.3%
2.3%
-2.7%
58%
*1.40%
49.9
Thailand
3.2%
3.3%
8.1%
-0.8%
27%
0.52%
32.0
India
7.0%
7.4%
-2.8%
-6.6%
22%
*3.15%
68.1
Turkey
4.9%
5.3%
-5.0%
-4.9%
60%
15.01%
402.7
Brazil
-0.8%
1.2%
-1.0%
-7.3%
36%
*3.22%
132.3
South Africa
1.2%
1.5%
-3.3%
-3.9%
46%
*4.00%
174.6
Source: Heat Map EM Vulnerabilities IIF, as of Dec-18
Indonesia fiscal balance and CAD as of July 2019 and 2Q19
Inflation as of Aug 2019 and CDS as of Sep 3, 2019
*)Inflation data as of Jul 2019
Capital flows in EM was strong mainly in bond market
Stronger flows in EM was supported by more accommodative policy by Fed and ECB
Capital flows to Asia EMs (USD bn)
Capital flows in equity market by countries (USD bn)
10.0
25
20
8.0
15
6.0
10
4.0
5
0
2.0
-5
0.0
-10
-2.0
-15
Equity
Sep 19
Aug 19
Jul 19
Jun 19
May 19
Apr 19
Mar 19
Feb 19
Jan 19
Dec 18
Nov 18
Oct 18
Sep 18
Aug 18
Jul 18
Jun 18
May 18
Apr 18
Mar 18
Feb 18
-20
-4.0
China
India
Indonesia
Jul 19
Aug 19
S Korea
Philippines
Sep 19
Debt
Source: US Federal Reserves
13
Thailand
Several positive catalysts had supported Rupiah appreciation
Rupiah rebound to below 14,500 per US Dollar in second quarter 2019
Downside trend of USD index (around 94 - 96 level)
Easing trade war tension between US and country’s trading partner (China, India,
etc)
More “dovish tone” on The Fed policy. Downgraded FOMC target projections.
Government and Bank Indonesia policy mix (Economic packages, BI rate hike,
OMO, DNDF transaction, etc.)
Bilateral swap agreement to reduce USD transaction with South Korea, Japan,
Thailand, etc.
Capital flow back in to domestic market, worth IDR150 tn in 1H19
FORECAST *
Macro Indicator
1Q19
2Q19
3Q19
4Q19
2020
Bank Mandiri
14,241
14,128
14,285
14,248
14,296
Market Consensus
14,241
14,300
14,400
14,400
14,100
notes : * as of 16 September 2019
Source: Bloomberg
Indonesia economy : More stimulus to come
Indonesia GDP growth : Investment is the key in the midst of unfavor global
economic condition
Quarterly GDP growth (% yoy)
Annual GDP growth (% yoy)
5.56
5.27
5.21
5.18
5.15
5.12
5.07 5.05
5.06
5.01
5.02
5.17
5.01
3Q19
2Q19
1Q19
4Q18
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
5.07
2016
2017
5.14
5.06
4.88
4.74
1Q14
5.03
2013
2014
2015
2018
2019F
2020F
GDP growth by components (% yoy)
GDP component
(% yoy)
2017
2018
2019
2016
2017
2018
% of
GDP*
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Real GDP
5.01
5.01
5.06
5.19
5.06
5.27
5.17
5.18
5.07
5.05
5.02
5.03
5.07
5.17
100
Household spending
4.94
4.95
4.91
4.98
4.94
5.16
5.00
5.08
5.02
5.17
5.01
5.01
4.94
5.05
56.52
Non-Profit
Institutions
8.08
8.53
6.04
5.26
8.10
8.75
8.59
10.79
16.95
15.27
7.44
6.64
6.93
9.08
1.25
Government
spending
2.69
-1.94
3.46
3.80
2.71
5.20
6.27
4.56
5.21
8.23
0.98
-0.14
2.13
4.80
8.36
Investment
4.77
5.34
7.08
7.26
7.94
5.85
6.96
6.01
5.03
5.01
4.21
4.47
6.15
6.67
32.32
Exports
8.36
2.73
16.48
8.42
5.94
7.65
8.08
4.33
-1.86
-1.81
0.02
-1.66
8.91
6.48
18.75
Imports
4.78
0.18
15.40
11.91
12.64
15.17
14.02
7.10
-7.36
-6.73
-8.61
-2.41
8.06
12.04
18.81
Source: BPS
* Proportion in 2Q19
Indonesia’s Household Consumption
Main Indicators
Weakening Consumer Confidence Index (CCI)…
Declining Retail Sales Index (RSI)…
…plummeting number of car sales.
…lower motorcycle sales.
Source: CEIC
Disposable Income
Lower inflation caused disposable income to grow higher in 9M19
•
Indonesia’s nominal disposable income growth showed a declining
trend. However, real disposable income growth picked up in
9M19.
•
The increase was due to notably lower GDP deflator
(inflation).
•
Lower GDP deflator in 9M19 was mainly caused by:
a. Lower inflation for goods and services purchased by the
government.
b. Deflation in export prices due to lower major commodity prices.
c. Lower inflation for imports due to appreciating Rupiah exchange
rate.
•
Risk of inflationary pressure may hike in 2020 due to
adjustment in administered prices, harming disposable income.
GDP deflator significantly fell in 9M19…
Source: BPS
Source: CEIC
GDP deflator
HH deflator
Govt. Spending deflator
Investment deflator
Export deflator
Import deflator
2011
7.47%
7.11%
8.76%
5.85%
7.71%
5.61%
2012
3.75%
6.11%
7.45%
5.36%
1.14%
6.71%
2013
4.97%
5.84%
6.82%
3.08%
3.47%
7.58%
2014
5.44%
5.73%
8.38%
7.83%
8.37%
7.11%
2015
3.98%
4.55%
7.11%
4.79%
-0.38%
-1.01%
2016
2.44%
3.09%
5.30%
2.25%
-1.30%
-2.73%
2017
4.27%
3.43%
2.30%
1.91%
6.39%
6.05%
2018
3.83%
3.21%
3.00%
2.76%
6.51%
12.12%
9M19
1.89%
3.20%
1.27%
2.68%
-5.11%
0.91%
Low and Stable Inflation Supports HH Consumption
Inflation rate in villages has been declining more than in cities
Indonesia’s inflation has been more stable in recent years…
•
Indonesia’s headline inflation has been relatively low and stable.
•
Core inflation (excluding volatile and administered prices) showed an
upward trend in 2018 - 10M19, indicating more supply-demand interactions
(fundamentals).
•
Low inflation aided HH consumption when disposable income growth weakened.
…HH consumption deflator was lower than CPI in 9M19.
Source: BPS
•
Headline and core inflations was based on CPI for urban consumers (82 main cities).
•
HH consumption deflator captured both inflation in cities and villages.
•
In 9M19, HH consumption deflator was already lower than headline inflation
indicating that inflation rate in villages has been declining more than
inflation rate in cities.
•
Lower inflation rate in villages made the social assistance spending
implementation become more effective in supporting consumption spending
as people in village were mostly in a lower income group.
Indonesia’s Gross Fixed Capital Formation (Investment)
Main Indicators
Lower cement consumption…
Decreasing capital goods import…
…weakening Prompt Manufacturing Index (PMI).
…flagging commercial & rural bank loan.
Source: CEIC
Source: CEIC
The Need to Increase the Capital Productivity
Incremental Capital-Output Ratio (ICOR) is persistently high
•
Indonesia’s investment or gross fixed capital formation (GFCF) contributed 32% of GDP.
•
Compared to other major emerging markets (EMs) in Asia region, Indonesia had the highest
ICOR in 2018. Indonesia’s ICOR was persistently above 6 in 2013 - 9M19.
•
The higher the ICOR, the lower the capital productivity. High ICOR shows inefficiency with
which capital is utilised.
•
Lower investment growth in 2016 could generate higher GDP growth due to relatively lower ICOR.
•
Higher investment growth in 2017 and 2018 had less impact on GDP growth due to higher ICOR.
•
According to Harrod-Domar model, GDP growth is parallel with APS to ICOR ratio.
•
Hence, in order to accelerate GDP growth:
a. Reducing ICOR. Optimising investments toward the development of priority sectors (labor
intensive and export-oriented), cheaper and sustainable energy resources, skilled human
resources and digitalisation (industry 4.0).
b. Increasing average propensity to save (APS). Higher APS can be obtained only if
disposable income substantially rises. It also can be increased through financial inclusion.
Indonesia’s ICOR was the highest compared to major EMs in Asia…
…GDP growth tended to follow APS to ICOR ratio.
Source: BPS & CEIC
Five main focus on central government spending in 2020
Supporting the implementation of development priorities and the administration of government → Effectively and Efficiently
High quality human
resources
Strengthening Social
Protection Programs
Infrastructure
Development Acceleration
Bureaucracy that is
efficient, serving and free
of corruption
• increasing
human
resource
productivity/competitive
ness
• Accelerating poverty
alleviation.
• Improving data accuracy
and distribution
mechanisms.
• Synergy/synchronization
between programs.
• More targeted and
effective subsidies.
• Increasing investment
and export
competitiveness.
• Supporting
industrialization
(connectivity, food,
energy and water) and
anticipating urban social
problems (clean water,
sanitation, waste
management and mass
transportation).
• Encouraging
ministries/institutions to
adopt creative financing
schemes (PPP: VGF or
AP).
• Encouraging
bureaucratic
effectiveness:
productivity, integrity
and public service.
• Maintaining welfare of
government apparatus
and retirees (anticipating
pension reform).
• Bureaucracy based on
ICT progress.
Social protection budget:
IDR372.5 tn
Infrastructure budget:
IDR423.3 tn
Bureaucracy budget:
IDR261.3 tn
• Education sector →
expanding access to
education,
increasing
skills, entrepreneurship,
improving
ICT
and
supporting
research
activities.
• Health
sector
→
accelerating
stunting
reduction, strengthening
preventive acts and
health promotion, and
continuing the national
health
insurance
program.
Education budget: IDR508.1
tn
Health budget: IDR132.2 tn
Anticipation for
uncertainty
• Economic, security and
political stabilities.
• Disaster risk mitigation,
environmental
preservation and EBT
development.
• Strengthening the fiscal
buffer.
Shortfall in 2019 Tax Revenue
This leads to higher tax revenue growth target in 2020
•
Prognosis for 2019 APBN:
a. There will be a shortfall in tax revenue
around IDR200 trillion.
b. Tax revenue realisation is projected at 89%, and
total revenue realisation is proximately at 90% of
the target.
c. Expenditure realisation is projected around 94%
of the target.
Note:
Data for 2015 - 2018 & 10M19 are realisation data
T to T: Target to Target; & P to T: Prognosis to Target
Source: Ministry of Finance
•
2019 budget deficit will widen to USD365 trillion
or 2.3% of GDP.
•
Assuming 2019 prognosis becomes 2019 realisation,
and there is no adjustment for 2020 APBN, tax
revenue needs to grow by 17.4% to achieve
the next year’s target (vs. 4.2% from 2019 target).
•
Higher tax revenue growth in 2020 may affcet to
disposable income (increasing MPC) like in
2018.
•
However,
social
assistance
spending
was
substantially growing in 2018 (52.5%), making fiscal
multiplier effectively boost GDP growth at that time.
Social assistance spending is targeted to
grow only by 5.5% in 2020.
•
Higher MPC means lower MPS, which may widen
CAD in 2020.
Indonesia’s Government Spending and Export-Import
Main Indicators
Government spending approximately equals to personnel, material and social spending in APBN…
Source: CEIC
Weakening exports…
…imports decelerating more than exports.
Manufacturing and other domestic oriented restors should be accelerated to support
growth in the coming years
Some sectors that will be the main focus in the 2nd term
Aspects
Improvement in the quality of
life of Indonesian people
Developments in healthcare, education,
vocational trainings system and fostering
entrepreneurship
Productive, independent and
competitive economic sectors
Increasing value added from infrastructure
utilization, continuing industrial
revitalization and its supporting
infrastructures and development of new
economic sectors
Impacts
• Commitments to improve people’s health
• Better access to education
• Fostering entrepreneurship and creative
economics
• Acceleration of digital economics
• Down streaming of commodity based industries
• Incentives for investments in manufacturing
industries
• Increase budget for technological developments
• Increase in domestic components utilization
(TKDN)
• Development in tourism
Sectors
• Healthcare
• Education
• Creative economies
• Digital economies
• Agriculture related
• Processing industry
• Maritime industry
• Tourism
• Digital economies
Just and equitable economic
development & improving the
prospect of regional economies
• Social assistance to poor people
• Higher regional government spending
• Manufacturing
Clean, effective and trusted
governance (developments of
professional civil servants)
• Providing affordable properties/housing for civil
servants
• Development of technological working spaces
• Information technology
Provide security for the whole nation
• Strengthening economic diplomacy
• Tourism
• Food and beverages
• Properties/housing
26
Sectoral Growth Performances 9M19
Growth (% yoy)
Sector
Retail1
Automotive2
Property3
Cement4
Heavy Equipment5
Sea
Transport6
CPO6
Coal6
9M19
9M18
Sep-19
Aug-19
Sep-18
2018
2017
Growth Sep19 (%MoM)
Ramayana sales (IDR)
1.5 a)
3.9 b)
-46.9 c)
91.3 d)
-7.0 e)
4.8
-1.0
-45.4 c)
Ace Hardware sales
(IDR)
16.3
23.1
19.8
20.4
30.1
23.3
18.8
3.9
Total car sales (Unit)
-13.4f)
6.6g)
-11.5h)
-17.1i)
5.1j)
6.9
1.4
1.5h)
Commercial vehicle
(Unit)
-15.0f)
19.8g)
-9.0h)
-19.0i)
20.7j)
17.8
17.0
9.2h)
Passenger vehicle (Unit)
-13.0f)
3.1g)
-12.3h)
-16.5i)
1.0j)
3.8
-2.3
-0.9h)
Indicator
Total motorcycle sales
(Unit)
Housing Credit (IDR)
-9.9f)
9.8g)
5.1h)
-11.3i)
2.4j)
8.4
-0.8
13.3h)
23,615n)
26,394o)
11.8k)
12.3l)
13.2m)
13.3
11.1
0.6 k)
Apartment Credit (IDR)
1,722n)
1,832o)
25.3k)
25.2l)
26.7m)
29.0
19.5
1.5k)
Total
25,336n)
28,226o)
12.3k)
12.8l)
13.7m)
13.9
11.4
0.6k)
-1.8
4.9
-0.5
-3.2
7.5
4.9
7.4
6.6
Total sales (Unit)
-26.8f)
33.6g)
-31.3h)
-56.9i)
-1.4j)
28.8
73.7
15.6h)
Agro segment (Unit)
-39.3f)
46.7g)
-55.5h)
-72.8i)
-6.9j)
30.0
158.3
6.0h)
Construction segment
(Unit)
-0.8f)
26.8g)
-20.7h)
-4.3i)
11.4j)
27.4
-8.4
-13.3h)
Forestry segment (Unit)
7.4f)
-5.4g)
71.7h)
-60.8i)
47.9j)
9.5
45.9
246.8h)
Mining segment (Unit)
-39.5f)
42.6g)
-55.7h)
-68.5i)
-13.0j)
33.3
185.3
-11.8h)
Loading and unloading
activities in the five
main ports (Ton)
19.4f)
-2.3g)
6.9h)
8.4i)
-10.8j)
-7.8
4.1
-2.1h)
Volume of exports (Ton)
3.0f)
-3.9g)
-9.9h)
-3.4i)
-4.7j)
2.0
20.2
-1.9h)
Value of exports (USD)
-17.7f)
-11.5g)
-23.1h)
-21.5i)
-13.1j)
-10.7
28.9
-1.2h)
Volume of exports (Ton)
8.5f)
12.2g)
10.5h)
2.2i)
-0.7j)
10.1
5.4
-7.8h)
Value of exports (USD)
-7.9f)
24.9g)
-13.8h)
-18.1i)
15.9j)
17.1
40.8
-9.3h)
Domestic sales (Ton)
Notes: a) Jan-May 2019 change in IDR Bn; b) Jan-May 2018 change in IDR Bn; c) May 2019; d) Apr 2019; e) May 2018
Sources: 1) ACE Hardware and Ramayana; 2) CEIC and Gaikindo; 3) OJK; 4) CEIC; 5) United Tractor; 6) BPS.
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Positive news: Portion of Income allocation to consumption is still high...
Consumer’s Income allocation
80.0
%
70.0
68.2
60.0
Konsumsi
Sumber Bank Indonesia
Cicilan pinjaman
68.8
64.4
63.0
50.0
40.0
Tabungan
30.0
20.0
19.4
10.0
11.6
0.0
...drives sales of FMCG
Retail Cycle in Indonesia
Traditional Market
(1960-1970)
Department Store
(1980s)
Supermarket
(1980s)
Value of Sales growth of 58 FMCG Products (%, yoy)
1H19
1H18
Indonesia
Hypermarket
(1990s)
Minimarket
(2000s-now)
Specialty Store
(next)
The contribution of channel of FMCG sales
including cigarettes* (%)
2018
1.8
1.7
-5.8
Super/Hyper -2.4
1.0
-4.3
68.7
74
74.2
74
73.9
72.5
71.6
8.5
8.1
7.4
6.9
6.6
7.4
17.5
17.7
18.6
19.2
20.9
21
24.3
2014
2015
2016
2017
2018
1H18
1H19
8.7
Modern Trade Channel
5.1
4.2
-3.8
Traditional (General) -0.9
Trade Channel
-1.4
14.8
Minimarket
8.5
7.8
Minimarket
*Based on FMCG categories tracked by Nielsen
*Traditional trade channel mencakup pasar tradisional dan warung/kios kelontong
Sumber: Aprindo, PT Sumber Alfaria Trijaya Tbk, AC Nielsen
29
7.0
Super/Hyper
Traditional Stores/General Trade
Property Demand:
Tapping the Millenials market
Proporsi Millenials di Indonesia, 2035
Pengeluaran Bulanan Millenials (%)
Jumlah Penduduk Usia
15-35, 2030
(juta orang)
Investasi, 2
Cicilan Hutang, 3.3
China
333
Sumbangan, 5.3
Indonesia
Telepon, 6
82
Sumber: LDUI (Bonus Demografi dan Human Capital di Era Digital),
UNDESA, Toposophy
Prioritas Utama Millennials di Masa Depan (%)
Internet, 6.8
Filipina
Asuransi, 6.8
42
Hiburan, 8
Vietnam
Tabungan, 10.7
Kebutuhan Rumah
Tangga, 51.1
Sumber: IDN Millennial Report 2019
30
Sumber: IDN Millennial Report 2019
26
31
Sumber: Sakernas 2016
160
131
Kalsel
Kalteng
39
46
Gorontalo
Sulbar
40
Malut
49
68
Maluku
Pabar
82
Sulut
80
96
Sultra
Papua
105
Sulteng
Sulsel
39
Kalut
298
192
155
Kalbar
Kaltim
158
118
399
292
214
152
171
NTT
NTB
Bali
Jatim
Jateng
Jabar
Jakarta
Yogyakarta
Banten
Sumut
Sumsel
Sumbar
296
197
Lampung
Riau
165
51
114
55
192
Kepri
Babel
Jambi
Bengkulu
Aceh
690
800
996
1,316
1,864
Property Demand:
Residential market penetration
Jumlah Pegawai (26 – 35 tahun) yang Potensial Menjadi Nasabah KPR/KPA (000 jiwa)
Digital Economy in Indonesia
UND ERLYING D RI VERS
D I GI TAL MARKET SI ZE 1)
(USD B)
>260M
Social Media
Population
>133M Active
Internet Users
58%
Smartphone Users
4 Hours per Day
Avg. Use of Internet
~1.2%
GDP
~13.0x
Infrastructure
Development
Declining Telco Data
Price
Affordable
Smartphone
~6.4%
GDP
160
12
2017
2027E
Note: 1) based on market size of e-money, e-travel, and e-commerce as proxy
Source: McKinsey, Morgan Stanley
Accelerated growth presents abundant opportunities
Accelerated growth presents abundant opportunities
TECH CO MPANIES
The shift in consumption patterns towards e-commerce has also participated,
facing problems that are still relatively small. The potential of e-commerce going
forward is quite large.
E-commerce Share of Total Retail Sales in Indonesia
(%)
E-commerce Retail Sales in Indonesia
(USD Bn)
4.4
16.48
3.9
14.42
3.1
12.34
10.37
2.2
8.59
7.06
1.4
5.78
0.8
2016
2017
2018F
2019F
2020F
2021F
2022F
2014
2015
2016F
2017F
42.1
43.9
14.3
39.2
15.7
11.8
31.6
10.6
28.1
9.5
24.9
Source: Statista
15.2
13.1
35.5
2017
2019F
Digital Penetration Buyer in Indonesia
(%)
Number of Digital Buyers in Indonesia
(Million People)
2016
2018F
2018F
2019F
2020F
2021F
2022F
2016
2017F
2018F
2019F
2020F
2021F
2022F
The biggest e-commerce sales for fashion and
Bank transfers still dominate e-commerce payment methods
4.0%
100%
3.8%
2.6%
0.4%
Maluku & Papua
Penetration of e-commerce in Indonesia by Region, 2018
(%)
Bali & Nusa Tenggara
20.7%
products
Kalimantan
E-commerce Retail Sales by Product Category in Indonesia
(%)
electronic
100%
13.5%
17.0%
18.4%
75.8%
8.5%
Composition of e-commerce Payment Methods in Indonesia, 2016
(%)
3%
3%
Bank transfer
8%
eWallet
28%
Credit card
11%
Cash on delivery
Debit card
Charge & deferred debit card
13%
18%
16%
Source: Statista, Katadata Insight Center
Pre-paid
Other
Total
Sulawesi
Sumatera
Jawa
Total
Toys, Hobby & DIY
Furniture &
Appliances
Food & Personal care
Electronics & Media
Fashion
35.5%
Indonesia's largest and highest e-commerce market and growth in Southeast Asia
Comparison of e-commerce retail sales
in Southeast Asian Countries, 2016
(USD Billion)
Growth of E-commerce Retail CAGR in Several Countries
2018-2022
India
19.9%
Indonesia
17.7%
Afrika Selatan
Indonesia
5.29
13.7%
Mexico
12.6%
Turki
12.0%
China
12.0%
Argentina
11.4%
Saudi Arabia
11.3%
Thailand
2.89
Singapura
Brazil
2.13
10.7%
Global
9.6%
Spanyol
9.1%
Malaysia
Australia
Perancis
8.5%
AS
8.3%
Canada
Korea Selatan
Jerman
Jepang
UK
Source: Statista
1.97
8.8%
7.9%
Vietnam
1.71
7.0%
6.5%
6.2%
5.8%
Filipina
0.05
The average expenditure for shopping online is IDR 100,000-500 thousand.
While logistics is still a major issue of e-commerce effectiveness.
Average Spending on Online Shopping
Average Spending on Online Shopping
Source: https://dailysocial.id/post/e-ecommerce-di-indonesia-2018
Online retail sales/capita
Indonesia in 2018 is where China was in 2011/12
Online retail sales as a % of total organized retail sales
Online retail sales/capita
(USD million)
2000
40
(%)
35.8
1799
1800
35
1600
30.8
1536
30
26.9
1400
1291
24.3
25
1200
1064
20.6
1000
20
889
15.4
15
14
15
11.9
10.4
India
China
Indonesia
6.1
8
8.5
7.9
7.7
2.1 3.5
China
US
3.7
2.6
2014
2013
1.5
India
6.2
5.2
5.9
2012
1
5.8
2010
0.4
5.6
2008
0
0.3
4.8
2007
77
4.1
2005
63
23CL
50
22CL
39
21CL
29
20CL
2018
2017
2013
2012
2011
2010
0
2016
5 21 10 27 11 36 14 48 21
5
127
82
85
2015
54
200
19CL
142
181
2014
200
240
2006
303
309
6.9
4.5
2.7
2.9
2017
373
2009
397
400
12.9
9.4
2015
10
2011
468
12.5
11.3
2016
586
600
2018
763
800
Indonesia
• In terms of online retail sales/capita and online retail sales as a share of total organised retail sales, Indonesia is where China was in
2011/12. Internet retail sales hit an inflection point in China in 2010 and we see much of the subsequent years’ playbook being replicated
in Indonesia over the next five, especially as the mainland’s internet giants are major shareholders in most of the Indonesian leaders. This
year we expect the country’s online retail sales to catch up with those in India and in all likelihood to surpass it in 2020.
• Growth in the Indonesian online retail market is being spearheaded by the two market leaders, Tokopedia and Shopee Indonesia, and
also by Bukalapak, Lazada Indonesia, JD.id and Blibli. These companies are taking share from other smaller C2C and B2C players, as well
as social media, which used to dominate online commerce.
Source. CLSA, Euromonitor, China NBS, US Department of Commerce
2019P&2020P: OCE Forecast
Sumber:BPS
Proportion of Economic Size
4.51
2020P
Economic Growth
17.57
2,2%
1H2019 -11.42
2.94
6.99
Maluku-Papua
1H2018
2020P
2019P -0.70
2018
3.79
4.9
1H2018
1H2019
5.14
2020P
2.68
3.73
5.89
4.65
21,3%
2019P
2018
2017
2016
3,1%
4.89
7.45
2016
2015
10.45
4.58
4.50
4.73
4.58
4.54
1H2019
1H2018
2020P
2019P
2018
2017
2016
2015
1H2019
1H2018
2020P
2019P
8.19
6.65
6.76
6.67
6.58
6.65
6.99
7.42
5.68
5.72
5.83
5.70
5.72
5.61
2017
2018
5.59
5.47
2016
2015
Jawa
2017
6.35
1H2019
1H2018
2020P
2019P
2018
4.30
4.29
3.53
59,1%
2015
1H2019
5.5
4.30
2019P
3.29
3.91
2018
2017
2016
2015
Sumatera
1H2018
4.33
2017
2.01
1.37
8,0%
2016
2015
Several provinces could grow way above national level
Economic Contribution and Growth by Island (%)
Sulawesi
6,3%
Bali-Nusa Tenggara
Kalimantan
Macroeconomic forecast
2019
Economic growth
5,06%
2020
5,14%
Inflation
3,41%
3,54%
BI-7DRRR
4.75%
4.75%
USDIDR
14.248
14.296
Thank You