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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



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
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Corporate News in Brief
Stainless Steel  Report

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

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

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.

With the expanding sugar plantations, production grew. In 2009, production grew 2.8% to 2.85 million tons from the previous year's 2.66 million tons. The increase in the production of sugar was boosted by rising sugar prices that encouraged farmers to grow sugarcane.   Read more>>

Heavy equipment industry recovered strongly in 2010 from deep slump in 2009 when global financial crisis hit almost all sectors including the property and construction sectors, which are among the major users of heavy equipment.

Heavy equipment industry was badly hurt by the global financial crisis resulting in a sharp fall in the country's production of heavy equipment to 1,814 units in 2009 from 5,914 units in 2008. Main producers of heavy equipment in Indonesia including Komatsu, Caterpillar and Hitachi suffered a setback.

The slump in 2009 came after rapid growth  of heavy equipment industry  in 2008 boosted by strong demand for heavy equipment from  various sector notably   coal mining  industry and oil palm plantations . Demands were also strong from the construction and property sectors.  That year delivery had to be delayed for up to six months as demands far exceeded production capacity. Read more>

Fireproof metal furnishing industry with products such as safes, safe deposit boxes, fireproof cabinets  and vault doors  has grown to follow the expansion of the banking and financial sector in Indonesia. The main users of the fireproof furnishings are banks  and big companies.

Other than banks and other financial agencies like multi-finance companies  and pawnshops, major users of fireproof metal furnishings include gold traders, hypermarkets, gas fuel stations  and large retail traders, which have also expanded rapidly in the country as shown by growing number of outlets.

The strong demand for fireproof metal furnishings has prompted many local companies to invest in the industry to produce the fire proof equipment in the country. The  past five years  have seen a rapid growth of the industry marked with the production of major brands  of safe like Chubbsafe, Mosler  and  Solingen. Read more

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The financing business has grown fast in the country in the past three years despite a slow down slightly in 2009. The sluggish growth in 2009 followed the global financial crisis.  The Indonesian Association of Financing Firm (APPI) said the industry has expanded 17.4% annually in the past five years.

The expansion of multi-finance industry is attributable to improved economic condition of the country. The cut in benchmark interest rate of Bank Indonesia (BI Rate) to a record low of 6.5%, which has been maintained since end of multi-finance industry. The expansion has been driven by leasing and consumer finance (credits for the purchases of cars and motorcycles), which account for 95% of the total value of non banking financing business in the country.

Consumer finance and leasing strongly dominated financing industry in the country until 2009. The industry has become part of the motorcycles driving sales of cars, motorcycles and heavy equipment. Almost 80% of the purchases of automotive products are finance with credits largely provided by multi-finance companies. APPI estimated credits for the purchases of brand new cars and motorcycles could reach Rp110 trillion in 2010. The value of transactions with factoring and credit cards are not yet popular in the country.  More>

The improvement in the country's economic condition in 2010 has boosted development of the country's cement industry. Work in a number of infrastructure and property projects, shelved earlier, has been resumed. The residential building projects have been the largest consumer of cement in the country. Many people build and renovate houses with the improvement in the people's welfare.

In 2009, cement industry suffered a setback. Demand for cement was weak amid the global slump followed the crisis late 2008. It was shown in the cement production that shrank 3.6% to 36.9 million tons in 2009 from 38.3 million tons in the previous year despite an increase in production capacity. The country's cement production capacity  was 47.9 million tons per year in 2009, up 9% from 44 million tons in 2008. The cement industry, therefore, had large idle capacity in 2009. More>>

The world's coal consumption as a source of energy surged after the skyrocketing rise in the prices of oil in 2008. Coal trade, which  has increased from year to year since 2004,  was brisker after 2008.

The leapfrogging increase in demand for coal was attributable more too growing demand from fast expanding economies of two Asian giants, India and China. Increase was also recorded in demand in Asean countries using coal as an alternative source of energy to more expensive oil.

In he past five years coal trade surged in volume from 755 million tons in 2004 to 941 million tons in 2009.  Coal consumption was estimated to reach 4,646 million tons in 2004. More>>
Indonesia's banking industry has grown fast in assets, credits and profits, in the past two years. The growth was partly attributable to a 6% growth of the real sector that contributed to credit expansion.

The monetary policy adopted by Bank Indonesia maintaining a competitive benchmark interest rate (BI rate) through out 2010 that has attracted large short term funds  from abroad . The inflows of foreign capital have been strong lately that forced Bank Indonesia to be more prudent in dealing with the inflows of short term funds. The central bank has stopped issuing one-month and three-month SBI in favor of SBI having term longer than 6 months.  The central bank encourages the short term foreign funds to be invested in other securities such as 1-year State Securities (SBN) in a bid to keep them longer in the country and prevent. The government even hopes to gain from the strong inflows of short term funds by attracting them to direct investment. The central bank still maintains a liberal policy despite the abolition of short term Bank Indonesia bills (SBI).   Bank Indonesia encourages credit expansion by requiring banks to provide larger minimum reserve requirement (GWM) if their loan to deposit ratio (LDR) is less than 78% or more than 100%. More>>

In 2010, the country's manufacturing industry and exports of manufactured goods began to show signs of recovery after being in the doldrums as a result of the global financial crisis in 2009. The crisis created deep slump in export markets especially in advanced economies which have been the main market destination of manufactured goods from Indonesia. As a result the manufacturing industry which is largely export oriented suffered badly.

In 2009, the country's exports of manufactured goods outside oil and gas sector shrank 16.6% from the previous year.

Exports market as well as domestic market began to revive in 2010 resulting in a strong growth of 33.5% in exports of manufactured goods to US$ 98 billion. The export value was a new record exceeding the previous peak of US$88 billion in 2008.

The revival that followed the recovery of major economies including the United States, Japan and Europe, has given rise to optimism that the healthy growth will continue through 2011. Read more>>

Indonesia has the potential to become the world's third largest producer of pulp and paper.  The country has an advantage in the availability of  wood basic material .  The country has one of the world's largest tropical forests. Currently Indonesia is the 11th largest producer of paper  and the 9th largest producer of pulp in the world.

Indonesia is a tropical country where trees grow three times faster  than in countries non tropical regions like Europe. The country also gains from its strategic geographical location in the fast growing Asia which is a huge market for pulp and paper .

Competition is sharp globally  in the business of pulp and paper  and meanwhile, call for environmental conservation is also strong Countries of destination for exports of timber products are  stricter in their conditions rejecting timber products from illegal source or  countries accused of damaging forests. Official certificates are needed to show the legality of timber products. Read more>>

The performance of Indonesia's metal mining industry has not been up to expectation with shrinking production in the past year because of a number of factors and unfavorable condition. The productivity of some metal mines has been on the decline. Many reserves have been almost depleted after years of intensive exploitations. Heavy rains also contributed to the decline in production in 2010.

Meanwhile, the world's demands for metals are growing although decline has been recorded in the demands for certain metal such as nickel as a result of the earthquake triggered tsunami in Japan in March, 2011. The extent of the damage caused by the tsunami on mining industry in Indonesia, however, has yet to be estimated.

Unlike nickel, demand for copper is expected to rise in the world market. The country's copper production, however, is expected to shrink 36% to 644,098 tons this year. The declining trend is expected to continue through 2012 with one of the major producers PT Newmont Nusa Tenggara (NNT), has been delayed in the expansion program of the US company. Read more>>

Cellular phone telecommunications have grown fast in Indonesia over the past 15 years marked by the number of subscribers. The number of subscribers has increased from year to year. Indonesia is the fourth largest in number of cellular phone subscribers in Asia after South Korea, China and Japan.
Currently, Indonesia has 7 operators of cellular phone using the technology of GSM (Global System for Mobile) and 4 operators with technology of CDMA (Code Division Multiple Access). Based on data at the Pots and Telecommunications Directorate General, in the period of 2006-2010, the number of cellular phone users in Indonesia grew 31% per year. By the end of 2010, the number of cellular subscribers reached 211 million, with GSM operators dominating 95% of the cellular market CDMA having a 5% market share.  Pre-payment dominate 94% of payment system with post payment accounting for only 6%.

Telkomsel, with 94 million subscribers, had the largest share or 44.5% of cellular market in 2010. Cell phone market has reached rural areas  even isolated areas in the country . Telkomsel service has covered    all kecamatan district areas in Indonesia since 2008. Read more>>

In 2010, automotive vehicles (which includes passenger and commercial vehicles) market was brisker following the recovery of the world's economy from previous year's slump. Automotive sales rose to 764,710 units in 2010 or an increase of 58.1% from 2009. Automotive sales in 2010 hit a new record well above the previous record of 603,774 units in 2008.

The crisis in 2009 adversely affected the country's automotive industry. Based on a report issued by the Association of Indonesian Automotive Industries (Gaikindo) the country's automotive production and sales shrank in 2009. Production fell to 464,816 units in 2009 from 600,628 units in 2008 and sales dropped 19.9% to 483,548 units.

The decline in sales was partly caused by the falling value of the rupiah that caused an increase in the price of cars, forcing many consumers to postpone or cancel plan to buy new cars.

In 2010, the condition improved and the country's automotive production and sales surged. Automotive production rose 51.1 % to 702,508 units. Read more>>
The country's electricity sector has grown over the past years although not as fast as the leapfrogging increase in demand for power. In the past five years, power production of the state electricity company PT Perusahaan Listrik Negara (PLN) as the power procurement agency totaled 133,109 GWh in 2006, up to 160,786.21 GWh in 2010.
Meanwhile, the country's power requirement has increased 7% a year on the average. Shortages in power supply both in Java and other islands have caused frequent blackouts especially outside Java. The government has taken a big step to cope with the problem by launching crash program building power plants with a total capacity of 10,000 megawatts. The program succeeded in reducing blackouts notably in Java. According to plan, new power plants with a total capacity of 2,400 MW were to be completed in 2010 bringing the additional capacity to 4,300 MW from the coal-fired power plants on stream by that year to be built under the program.  Read more>>

In 2009, another foreign retail company, the Lotte Group, from South Korea began operation in Indonesia after acquiring Makro from SHV Holding of the Netherlands at a price of US$ 223 million. The name of Makro was changed with Lotte Mart. The Lotte Group, which started retail business in 1979, operates more than 90 outlets in various countries such as China, Russia, Vietnam, and India.

Competition in retail business is getting sharp after 40% of the shares of Carrefour Indonesia, the largest hypermarket in the country were acquired by CT Corporation, a subsidiary of the Para Group at a price of US$ 350 million in 2010. The Para Group, which is owned by Chairul Tanjung, an Indonesian business tycoon, already has big units in various business areas such as television, banking, insurance and financing sectors. Read More>>
Indonesia crude palm oil (CPO) industry has grown fast in the past years. In 2010, the country CPO production  totaled  21.0 million tons from 19.4 million  tons in the previous year. In 2011, the  production is forecast to rise further 4.7%  to 22 million  tons. Meanwhile, exports totaled 15.65 million  tons in 2010 to rise to an estimated 18 million tons in 2011. Indonesia has become the world’s largest producer of  CPO with production reaching 21.0 million tons in 2010. Only 25% or 5.45 million  tons of the production is predicted to be disposed of on the domestic market. The country is still seeking to expand its export market for the commodity and increase sales such as to Pakistan, Bangladesh, and East Europe and China. 
The country’s CPO production has grown from year to year  as lands are available for the expansion of its oil palm plantations reaching 7.5 million  hectares  in 2010. The government encourages development of the industry  by supporting in the development of infrastructure. The government is building industrial clusters  for palm oil-based industries in the northern coats of Java, eastern coast of Sumatra , East Kalimantan , Sulawesi  and  Merauke. Read more>>

Business in cold storage service offering place to keep goods fresh serves to support a number of business in other sectors such as food processing industry, fishery industry, retail chains, restaurant chains and importers of meat, etc. Cold storage facilities are generally part of an integrated business but there are also ones operating as independent units for rent.  The Greater Jakarta area has around 40 cold storage companies. Some 28 of them have a total capacity of 75,056 tons.

Demand for cold storage facility could be estimated from the consumption of meat, fruits, vegetables, frozen potatoes, fish, shrimps, etc. In the Greater Jakarta areas. Consumption of the food products in the Greater Jakarta area in 2009 totaled around 441,000 tons/month with 25.8% or 114,000 tons of which needing cold storage. Realization, however, is that only 73,800 tons of them used cold storage facility that year including 9,600 tons of beef, 25,600 tons of fresh fish/frozen shrimps, 9,473 tons of fruits, 5,985 tons of vegetables, 2,364 tons  of frozen potatoes and other fresh products. The demand estimate is based on assumption that only 80% of imported meats in the Greater Jakarta area need cold storage facility for 30 days before they are sent to the end. Based on the assumption, 9,600 tons of the total consumption of 12,000 tons of meat in the Greater Jakarta area  are put in cold storage  for 30 days . Read more>>

Steady growth has been recorded for Indonesia's shampoo industry to follow the growing population of the world's fourth most populous country. The country's population was estimated at 238 million in 2010.  The expansion of the industry also followed the trend of the country's economic development.  The country's shampoo production rose from 31,000 tons in 2005 to 33,000 tons in 2009. The country's production capacity for shampoo, however, remained unchanged from 32,000 tons annually in 2005-2009 periods. 

Currently, the country's shampoo industry is dominated by PT. Unilever Indonesia Tbk with its brands of Sunsilk and PT. Procter & Gamble with its brand of Pantene. The two big producers are known as consumer goods producers with products including personal care, skin care, home toiletries, etc.    Read more>>
The year 2011, was marked with the revival of the country's manufacturing sector, as indicated by the growing exports of manufactured goods and the contribution of the sector to the country's economic growth. A fairly strong growth was recorded in 2011 after long period of slump.  The manufacturing sector grew at a snail's pace that observers said the country' was heading for de-industrialization the manufacturing sector has not fully recovered from the regional monetary crisis of 1998. The annual growth of the sector averaged only less than 5% since that year. A fairly strong growth was recorded only in 2011 when the country's GDP grew 6.2% and exports surged 24.6% on-year.

In entering the year 2012, the optimism among industrialists was still high that the country's manufacturing industry would grow further despite potential stumbling block with the planned increase in energy prices oil fuels and electricity. In addition demand for the country's export commodities including manufactured products is expected to decline in the crisis hit Europe and the United States. Read more>>

Currently steel supply in the world market has declined as many producers in various countries cut their production on fear of oversupply amid the market slump as a result of the global economic slowdown in major market such the United States and Europe. According to the World Steel, steel producers in Europe slashed their production by 30%. In Australia the production was cut by 50% and in China by 25%. In India, however, demand for steel remains strong helping push up the price of that material in the world market.

The market prospects are encouraging for steel industry with brisk development of construction, property, infrastructure and automotive industries. In 2011, the country's production of hot rolled coil (HRC) y grew 12.44% to 2,295,000 tons from 2,041,000 tons in the previous year. The production of hot rolled plate increased 3.66% to 849,000 tons from 819,000 tons and the production of Cold Rolled Coil/Sheet grew 5.06% to 872,000 tons from 819,000 tons.  Read more>>

There has been a structural shift in demand of steel products during the last decade. The intensity of demand has shifted in favor of emerging markets including Indonesia. This is mainly due to the fact that GDP growth in these countries is substantially high in comparison to developed nations. 

The ongoing debt crisis in Europe had no significant impact on the Asian steel market but eventually depressed international prices. Nonetheless, steel demand in Indonesia remained strong last year and is expected to continue growing in 2012, triggered by the country's economic growth which is estimated to reach 6.5% this year. The demand growth is derived mainly from significant expansion of steel related sectors such as construction and automotive industry.

Hot rolled plate ( HRP) , one of strategic intermediate steel products,  has experienced   a significant market growth in Indonesia in the last four years. This is  due to strong growth of demand from several sectors such as power generation and distribution, heavy equipment industry, shipbuilding and steel fabrications and structures. Read more>>

The length of roads in Indonesia is not proportional with the number of the road users. The growth of 3.3% a year in road  length is much short of requirement. Every year the number of  motor vehicles in the  country grows  by more than 15% on the average.  Road infrastructure is vital to support the country's economic development  and facilitate the public activities. New roads have continued to be built and come on line  but the additional roads are not enough to  keep pace with the fast growing users. Therefore, inadequate road infrastructure has hampered efforts to accelerate economic development in many areas.

In order to cope with the condition, high way development planned by the government  is made part of the expansion of national connectivity in the program for territorial and strategic area development formulated in the Master Plan for Acceleration and Expansion of Indonesian Economic Development (MP3EI). Read more>>