Another Milestone for Indonesia!

On Friday 8 July 2011, Jakarta Composite Index (JCI) has made another accomplishment by hitting 4,000 mark for the first time in history as the index has advanced for 8.1% in 2011. This milestone further displays strong interest for Indonesian stocks both from local and foreign investors. Bank Indonesia even mentioned earlier in 4 July that we may surpass the forecasted GDP growth of 6.6%.

This year will be another great year for Indonesia as we are also highly anticipating for the investment grade rating. By the time we hit that grade, I am sure the stock index will fly even higher. Well done Indonesia!

  

Indonesian Infrastructure

For this past year or so, Indonesia has been among the top investment destinations for many global businesses. Many are shifting their manufacturing arms to Indonesia as labor are still relatively cheap while local demand remains high and increasing. But not all who had shown initial interest actually place their investment in this country. One of the main concerns is poor infrastructure.

With almost half of total population lives in Java, most companies wish to build their facilities in this island as well, thus the need of well placed infrastructure is crucial. Recently the government has opened some 70 infrastructure projects for tender. Some of the proposals have been completed, some have been won, whilst some are still in progress. But the expected completion time frame is still yet to be seen thanks to the complicated bureaucracy. It is a public secret that companies have to pay the officials at every stage of the project when dealing with the government. And judging from past experiences, some (almost all) projects just take forever to finish. I know that the corruption level remains high, but for these past several years there have been many actions to fight these corruptions. Thus I will keep my fingers crossed that these projects will be finished on time,or at least not too long.

It All Comes Down to Oil

With all the tumult in the Middle East, and the latest Libya, oil has shot through the roof. Nymex has gone to $105 while Brent has reached its 2.5 year high at $120 today.Some news reported that price is heading north because the world is worried that the crisis from Egypt and Libya could spread to Saudi Arabia, who is arguably the most important figure in the oil industry. If their supply is disrupted, I won't be surprised if $148 in 2008 could be repeated or even surpassed.

But the frightening part of the story is the fact that oil is really the most influential commodity in the world. Any price swing could virtually do some damage to many countries. I mean just these past several days, many stock indexes all over the world are turning red. Dow is red, Indonesia is red, Nikkei is red, FTSE is red, and the list goes on. Companies across various industries are affected by oil in one way or the other, and sometimes the damage can be devastating. So business owners, you better take any precautionary steps as necessary to minimize the upcoming oil damage. Just remember the lesson we learned from 2008 and don't repeat the same mistake.

Your Money Eats Less Now

Food items have been outrageous these days. Rice, sugar, and chili have been the headlines of newspapers for quiet sometime now. Main reason behind this price surge is believed to be the tight supply from the extreme weather from this past year that have disrupt harvests all over the country. Some economists also say that this is caused by increased demand from emerging countries, including Indonesia, related to their rapid economic expansion. In a nutshell, as people earn more, they eat more.

But I personally think that this time is a pretty bad one. Well its not like we are having major food shortage and people are dying of starvation on the streets. But this is Indonesia who probably eats rice more than any other country in the world, and the fact that we have imported some 800k tons of rice from Thailand so far is pretty worrying. Also, I heard that some people actually stole chilis from the farms at night so that they can sell it in the market with the skyhigh price. But nevertheless, I am still very grateful that food are still widely available and that the government is doing something about it. They decided to suspend the food products import duty for a while, so that scarcity of food can be prevented. The government also expect the price rise to soften pretty soon because harvesting season starts around late February until its peak in April.

Well, lets just pray that the harvest will go smoothly and that the price will stabilize itself soon (fingers crossed!)

The New Textile Land?

Indonesia might very well be the next big textile destination for investors from around the world. China has virtually monopolized the industry for the past decade or so. But lately investors have been considering to move out because of their much higher average factory worker salary than countries like Indonesia and Bangladesh. Well the latter actually have been getting lots of orders from brands worldwide for some time. But I personally believe that Indonesia might be the best option for the next best destination.

Some news have reported that investors, mainly from China, have been planning to build factories of sewing machine and garments here. And just fresh from yesterday, expected land acquisition value for factory investments is even higher than 2010. So lets just keep our fingers crossed and hope that its not only for textiles and garments, but for everything!

If you want to see the wage comparison, read this article.