Overview
The ASEAN+3 Macroeconomic Research Office (AMRO) and World Bank project that Indonesia’s economic growth can reach around 5.2% in 2025. Hoe Ee Khor, Chief Economist of AMRO explained that Indonesia’s projected economic growth in 2024 is around 5.1%, making it the fourth best growth prospects in the ASEAN+3 region.
Vietnam is still the country with the best projection in 2025 with 6.6%, followed by the Philippines (6.3%), and Cambodia (5.9%). Khor said that Indonesia’s projected economic growth in 2025 is on par with China, which is also predicted to record a growth rate of 5.1%. In addition, Indonesia’s growth rate will also better than the ASEAN+3 region, China, Japan and Korea with an average projection of 4.2 % in 2024, and 4.4% in 2025. Key drivers for Indonesia’s growth include easing inflation, relaxed monetary policies, and stronger domestic consumption in the next year, supported by policies from the incoming government under President-elect Prabowo Subianto.
There are also several risks that will affect ASEAN+3’s economic growth prospects in the rest of 2024 and throughout 2025. First, a sharp growth slowdown in the US and Europe. Second, the fragile economic recovery in Europe faces the risk of an escalation of global trade tensions and a possible spike in energy and freight costs due to geopolitical conflicts. Third, a protracted adjustment in the property sector could hamper China’s economic growth. If the trend of slower economic growth continues in China, it will affect ASEAN’s trade, investment and tourism. Last, the US presidential election in November, especially if the outcome leads to an escalation of the US- China trade war. Increased tariffs could substantially hamper regional growth prospects to varying degrees by a substantial rate, up to 1%.
Indonesian National Development Planning Agency (Bappenas) is preparing two scenarios with an average growth of 6.9% and 7.7% to meet President-elect Prabowo Subianto’s aggressive target of 8% economic growth and will promote five priority industrial sectors during the next government term from 2025 to 2029. The five sectors comprise the leading natural resource industry, industrial services, skilled labor-intensive industry, basic industry, and technology-intensive industry. For natural resource processing, development is aimed at agro-industries such as palm oil and coconut, nickel, copper, bauxite, and tin mining, and marine resources such as seaweed. For skilled labor- intensive industries, the target is food and beverages, footwear, textiles and textile products. For basic industries, development is aimed at the chemical and basic metal sectors. For technology- intensive industries, more innovation and development is expected in the cosmetics and pharmaceutical industries, semiconductors, machinery and equipment, aerospace, and battery- based electric vehicles.
Latest Update
- PTPP Finishes East Java Multipurpose Terminal Port Project
- State-owned construction firm PTPP has finished the East Java Multipurpose Terminal Port project in Lamongan. The company alongside the East Java Multipurpose Terminal — a subsidiary to the International Container Terminal Services — launched the project in the first week of October 2024. This is a foreign private project worked on by PTPP and has a contract value of IDR 767 billion (USD 49.5 million).
- PTPP said that the construction took place in two phases. The first part includes dredging work with a volume of 1.8 million cubic meters and the construction of a 180-meter-long jetty and a 0.9-hectare container yard for 16 months. The second part — which lasts 18 months — includes the construction of a 120-meter-long jetty and a 0.6-hectare container yard.
- PTPP also applied some innovations in the construction process to overcome the high waves of the Lamongan waters. These innovations enabled the company to finish the project in a timely manner.
- The East Java Multipurpose Terminal project is expected to drive the province’s economic growth. East Java Multipurpose Terminal’s CEO Patrick Chan invited businesses to consider using this The infrastructure and supporting equipment are ready to use. This port also boasts two harbor mobile crane units with the largest capacity in East Java.
- Sinarmas BSD Officially Becomes an SEZ
- President Jokowi officially designated the development project of PT Surya Inter Wisesa (SIW), a subsidiary of PT Bumi Serpong Damai (BSD) to become the Banten Special Economic Zone. The stipulation is contained in Government Regulation No.38/2024 concerning the Banten International Education, Technology and Health Special Economic Zone and takes effect on October 7, 2024.
- The 59.68 Ha SEZ consists of an Eastern area of 28.83 Ha located in Cisauk District, Tangerang Regency, Banten Province and a western area of 30.85 Ha located in Pagedangan District, Tangerang Regency, Banten Province.
- Banten SEZ has an investment realization target of IDR 18.8 trillion when fully operational and will absorb a workforce of 13,446 people. The new SEZ is hosting Monash University as the 42nd best university in the world, research and digital industry, targeting 100 start-ups, health sector with integrated services, and creative industries.
- Batam International Health and Tourism Officially Becomes SEZ
- Batam International Health and Tourism SEZ, Riau Islands, was inaugurated by President Jokowi through Government Regulation 39 of 2024 on October 7, 2024.
- The SEZ is set to be able to reap investment of IDR 6.91 trillion until 2032 and absorb 105,406 workers for the next 80 It covers an area of 47.17 Ha and is divided into the Sekupang area of 23.10 Ha to and the Nongsa area of 24.07 Ha.
- In the Sekupang area, the business plan covers international hospitals, international nursing academy, medical technology park equipped with MICE (Meetings, Incentive, Convention & Exhibition), as well as doctors’ housing, dormitories, hotels & retail.
- In the Nongsa area, the business plan covers a retirement village, clinic and supporting accommodation in the form of cottages, bungalows, and motels intended for tourists, patients and their families.
- Indonesia Finalizing 6 New Special Economic Zones (SEZ)
- The government of Indonesia will soon approve 6 new SEZs, targeting investments of IDR 1,089.84 trillion and 1.4 million new jobs. The awarding decree will be issued in October 2024.
- The 6 new SEZs are:
- Sidoarjo Halal Industry SEZ, located in Sidoarjo Regency, East Java Province covering an area of 65 hectares, and is expected to be the halal center in the country. The SEZ is proposed by PT Makmur Berkah Amanda with a targeted investment realization of Rp 97.8 trillion by 2054, hiring 317,670 workforces.
- Batuta Chemical Industrial Park (BCIP) SEZ, located in East Kutai Regency, East Kalimantan Province, covering an area of 748.9 Ha, targeted investments from various manufacturing sectors. The developer, PT Batuta Chemical Industrial Park, targeted potential workforce of 432,964 people and investment realization of IDR 61.51 trillion by 2054.
- Patimban SEZ, located in Subang Regency, West Java Province covering an area of 511 Ha for petrochemical downstream, EV batteries, semiconductors, logistics and distribution, and energy The establishment of this SEZ is proposed by PT Wahana Mitra Semesta with a targeted investment realization of IDR 141.6 trillion by 2054 and workforce of 156,154 people.
- Subang SEZ, located in Subang Regency, West Java Province, will focus to attrack manufacturing sector with a total land area of 93 Ha. This SEZ is proposed by PT Aneka Bumi Cipta with an investment realization target of IDR 134.59 trillion and a workforce of 95,139 people. PT BYD Auto Indonesia, an electric car manufacturer, is the anchor investor of Subang SEZ.
- The Mangkupadi SEZ, located in Bulungan Regency, North Kalimantan Province, covers an area of 11,696.53 Ha for natural resources processing, logistics and distribution, and renewable energy development. The SEZ is proposed by PT Kalimantan Alumunium Industri, which is engaged in the aluminum smelter sector with a targeted workforce of 140,796 people and investment realization of IDR 504
- Kawasan Industri Terpadu Batang SEZ (KITB SEZ), located in Batang Regency, Central Java Province covering an area of 2,886.87 Ha that focuses on the development of multi-sector manufacturing, hosting among others KCC Glass Indonesia, Yih Quan Footwear Indonesia, and Wavin Manufacturing Indonesia. As a state-owned economic zone, KITB SEZ has received more support from the government of Indonesia. The investment realization is targeted to reach IDR 3 trillion, opening new job for 325,651 people.
- Makassar Waste-to-Energy Plant US$ 200 Million Collaboration with China
- Waste management in Makassar City, has entered a new phase after the cooperation between the Makassar City Government and Shanghai SUS Environment Co. Ltd, one of the ten most influential enterprise for China’s solid waste This cooperation is part of the Belt and Road Initiative between Indonesia and China.
- Chinese company, Shanghai SUS Environment Co., Ltd. and its subsidiary, PT Sarana Utama Synergy cooperate with the Makassar City Government to build a Waste-to- Energy Processing Plant for an investment project worth US$ 200 million on September 24, 2024. Through this agreement, the groundbreaking of the project is planned to be carried out at the end of this year with operation target in 2026.
- Three documents were signed on this occasion:
- A cooperation agreement related to the project definition, partnership, and
- A cooperation agreement on the Provision of Infrastructure which includes the utilization of land assets of the Tamangapa Landfill (TPA) covering an area of 1 Ha along with the claw back value.
- A term sheet related to the land and factory, whereas the project will be built in Tamalanrea area covering 6.1 Ha land for 30-year utilization.
- The Waste-to-Energy Plant will be able to manage 1,300 tons of waste per day. The project will also be equipped with two combustion lines with a capacity of 2×650 tons per day, and a steam generator unit with a capacity of 1×35 MW.
- MPTC & Singapore’s GIC Finalize US$ 1 Billion Deal for Indonesian Toll Stake
- A consortium between Metro Pacific Tollways Corp. (MPTC), a major toll-road operator in ASEAN and also the largest toll road developer and operator in Phillipines, with Singapore’s GIC Pte. Ltd – a global institutional investor owned by Singapore Government, has finalized their investment cooperation valued at US$1 billion or IDR 15 trillion for the acquisition of a 35% stake in PT Jasamarga Transjawa Tol (JTT) in Indonesia.
- MPTC’s acquisition of JTT’s toll roads marks a significant milestone in expanding its presence in Indonesia’s toll road market, boosting its portfolio to 1,130 kilometers and connecting key economic zones in both the Philippines and Indonesia.
- This investment is also significant to Jasa Marga, as by bringing in MPTC, a leading international toll road operator, and GIC, a highly experienced global infrastructure investor — as new and value-adding partners — Jasa Marga can maintain full control over JTT’s strategic infrastructure assets and solidify for the quality of its service and would allow the company to raise funds, and continue expanding the toll road networks across Indonesia.
- Update on Probolinggo-Banyuwangi Toll Road
- PT Jasa Marga released the latest development of the Probolinggo-Besuki Phase 1 construction. The construction of the Probolinggo-Banyuwangi Toll Road has reached 55.27%, and land acquisition has reached 99.87% as of September 2024.
- Jasamarga manages the Probolinggo-Banyuwangi Toll Road through its subsidiary PT Jasamarga Probolinggo Banyuwangi (PT PJB). This project is divided into 3 construction work packages, namely Package 1 (Gending-Kraksaan), Package 2 (Kraksaan-Paiton) to Package 3 (Paiton-Besuki).
- Overall, the 175.78 km Probolinggo-Banyuwangi Toll Road is divided into two stages of development. Phase I connecting Probolinggo-Besuki along 49.68 km, and Phase II connecting Besuki – Banyuwangi along 126.10 km.
- The Phase I development will have three Toll Gates and 3 Interchanges , namely Kraksaan, Paiton, and Besuki If land acquisition is on target, construction work for the Gending-Kraksaan Segment is targeted to be completed in November 2024, and for the Kraksaan-Besuki Segment is targeted to be completed in 2025.
- Medco’s Strategic Move in the Acquisition of Singapore’s Senoko Energy
- Indonesian energy giant PT Medco Energi Internasional Tbk is reportedly in exclusive talks to acquire a majority stake in Senoko Energy, Singapore’s largest power company accounting for approximately 20% of the nation’s electric The acquisition value is estimated at US$ 1 billion or equivalent to IDR 15 trillion.
- According to Bloomberg sources that is familiar with the acquisition process, the acquisition deadline was due at the end of September 2024. However, the process is still ongoing.
- Previously, Senoko’s majority shareholders considered selling their shares at a valuation of US$3 billion or IDR 45 trillon, according to a Bloomberg report in However, due to deteriorating market conditions, the valuation dropped significantly.
- The company currently has three subsidiaries, namely Senoko Energy Supply Pte Ltd (SES), Senoko Services Pte Ltd (SSPL), and Senoko Gas Supply Pte Ltd (SGS). Senoko Energy has the largest and only power plant in northern Singapore with a capacity of 2,644 megawatts (MW).
- BEST Collaborates with Chinese Investor to Build an IDR 350 billion AC Factory in Indonesia
- PT Berkat Elektrik Sejati Tangguh (BEST), a manufacturer of BESTLIFE brand air conditioners, signed a cooperation and investment agreement with Chinese company MBO Group, which is the 6th largest and one of the fastest growing aircon manufacturers in China.
- In October 2024, MBO Group has completed their third factory in Anqing City, China, which has a Smart Factory concept that uses full robotic technology without human labor. MBO Group’s next target is to build a factory in Southeast Asia with a local partner and that choice is with BEST in Indonesia.
- The investment value for the new production plant in Indonesia is estimated at IDR 350 billion (USD 59 million). The JV targets a construction completion in 2026 with a production capacity of 1 million sets of aircon per year, which will also be exported to US and Europe.
- Inalum to Build IDR 30 trillion Giant Aluminum Smelter in West Kalimantan
- PT Indonesia Asahan Aluminum (Inalum) plans to build an aluminum smelter with a capacity of 600,000 tons in Mempawah, West The project is estimated to require an investment of around US$2 billion or IDR 30 trillion.
- The smelter will be integrated with the Mempawah Smelter Grade Alumina Refinery (SGAR) built by PT Borneo Alumina Indonesia (PT BAI), Inalum’s joint venture company with Antam, which started back in 2020, and was inaugurated by Jokowi for its phase I initial bauxite injection in September 24, 2024, with a production capacity of 1 million tons of alumina per year or 3,000 tons per day starting from February 2025, and an ultimate production capacity of 2 million tons per year when the phase II smelter is finished as part of Indonesia’s massive movements to stop its export of raw materials and accelerate industrialization in the country.
- In the future, the aluminum smelter will absorb alumina produced by SGAR
- The final investment decision (FID) for the aluminum smelter project is targeted to be completed by the end of this year, with the FID for the SGAR Mempawah Phase II project. If all is according to plan, the aluminum smelter project will be finished in 2028.
- Establishment Plans for the National Investment Fund by Prabowo-Gibran
- The idea of establishing a National Investment Fund or DIN (Dana Investasi Nasional) by president and vice president-elect Prabowo Subianto-Gibran Rakabuming Raka is
- DIN aims to manage state investments for strategic projects inside and outside the country. DIN will follow the model of Saudi Arabia with its Public Investment Fund (PIF) or Singapore’s Temasek.
- As a reference, PIF manages US$925 billion in funds, creates more than 1.1 million direct and indirect jobs in Saudi Arabia and abroad, established 95 companies, and manages 13 strategic sectors. Meanwhile, Temasek, a Singapore state-owned enterprise established in 1974, owns and manages a net portfolio of 389 billion Singapore dollars as of March 31, 2024.
- The DIN concept is considered to collide with the Indonesia Investment Authority (INA) under the Ministry of Finance, which currently manages IDR 160 trillion in funds. INA was established in 2021 based on Presidential Regulation 74/2020 concerning Investment Management Institutions to manage central government investments.
- As of mid of October 2024, there are 3 possible First, focusing INA as a semi- state-owned enterprise under the Ministry of Finance, whereas it will continue to receive state injections. Second, differentiating the business focus of each institution – DIN and INA. Third, canceling the establishment of DIN and leveraging INA’s roles.
- Johor Singapore SEZ Threatens Indonesia
- Competition to attract foreign investors in the Riau Islands SEZ is tighter with the presence of the Johor Singapore SEZ (JS-SEZ). JS-SEZ offers more attractive pro- investment policies, especially for the manufacturing industry, such as an income tax rate of 5% for up to 20 years (10+10) and an industrial building allowance incentive of 10%.
- Riau Islands Chamber of Commerce and Industry is concerned that the tax difference between JS-SEZ (5%) and Batam (21%) will reduce investor interest in Batam, askingthe government to review tax incentives in Batam and speed up the bureaucratic process of licensing which has been considered slow and complicated.
- Batam Apindo emphasized the importance of the central government to support the SEZs and Free Trade Zones (FTZs) in Batam, as well as delegating licensing authority to FTZ managers and local governments to make the process faster and more efficient. If the government does not adjust immediately, there is a great risk that investors will move to Johor, which could lead to a sharp decline in investment in Batam.
- Indonesia Books $8.3 Billion Business Deals with South, Central Asia
- Jakarta hosted the Indonesia-South and Central Asia Business Forum (Inasca) on October 7, 2024. It marked the first time a forum had specifically linked Indonesian entrepreneurs with businesses from South and Central Asia, resulting to new deals worth over US$8 billion (IDR 125.82 trillion).
- Some of the signed deals: state-run pharma Kimia Farma signed a marketing agreement with Sri Lankan pharmaceutical importer Yaden International, whereas the deal would enable Kimia Farm’s finished pharmaceutical products to be marketed in Sri Lanka. East Java’s herbicide manufacturer Pandawa Agri Indonesia also inked a MoU with Oneemto (Pvt) Ltd to have their chemical products distributed in Sri Coconut processing company Natural Indococonut Organik also agreed to partner with Sri Lanka’s Industrial Stainless Steel Fabrication Pvt Ltd.
- Minister Bahlil Discusses Renewable Energy Investment with ACWA Power
- Minister of Energy and Mineral Resources, Bahlil Lahadalia, received a courtesy visit from Marco Arcelli, CEO of Saudi Arabia power firm ACWA Power, on October 4, 2024. The meeting focused on discussing plans for the development of renewable energy, power generation, and green hydrogen projects in Indonesia.
- Minister Bahlil emphasized the government’s full support for ACWA Power’s investment initiatives, which aim to strengthen Indonesia’s energy infrastructure and contribute to national energy security while reducing carbon emissions.
- ACWA is planning to expand business to Indonesia including in the development of Saguling 60- MWp floating power plant in West Java, investment in green electricity in new capital Nusantara, Singkarak floating power plant in West Sumatra and green hydrogen project.
- Indonesia’s Purchasing Managers Index September 2024
- Indonesia’s manufacturing industry recorded a contraction for three consecutive months, July-September 2024. Weak domestic and foreign demand caused production to fall.
- Indonesia’s manufacturing Purchasing Managers Index (PMI) in September 2024 was 49.2, a slight improvement compared to August 2024 of 48.9.
- Other ASEAN region also found itself in a contraction zone, Singapore (48.3), Malaysia (49.5), Vietnam (47.3) and Myanmar (45.5). Only the Philippines remained in the expansionary zone with its September PMI reached 53.7, even higher than 51.2 of August 2024.
- Indonesia’s First LFP Production Facility in Kendal
- Coordinating Minister for Maritime Affairs and Investment, Luhut, inaugurated the commencement of the first phase of production and the expansion plan for the Lithium Iron Phosphate (LFP) cathode production facility of PT LBM Energi Baru Indonesia on October 9, 2024. This project was realized through a strategic investment partnership between the Indonesia Investment Authority (INA) consortium and China’s Changzhou Liyuan New Energy Technology Co., Ltd., one of the world’s largest LFP producers and suppliers.
- The facility, located at the Kendal Industrial Park in Central Java Province with Special Economic Zone status, is projected to become the largest LFP cathode producer outside of The joint investment, estimated at approximately US$ 200 million, aims to increase production capacity from 30,000 tons in Phase I, currently in pilot production, to 90,000 tons in Phase II, expected to begin in 2025. In addition to its economic benefits, the factory also has a significant impact on the local community with the creation of over 2,000 jobs, 92% of which are filled by local workers.
- LFP is one of the two main chemicals in lithium-ion batteries, alongside Nickel Cobalt Manganese (NCM). Known for its cost-effectiveness, LFP is well-suited for EVs and energy storage systems. According to a Bain study on the EV battery ecosystem, global battery demand is expected to grow about fourfold between 2023 and 2030, driven by increasing EV adoption, positioning LFP to play a crucial role in meeting this demand. By 2030, NCM is projected to represent about 50% of the lithium-ion battery demand, while LFP is expected to account for around 35%, with both remaining central to the growth of the battery industry in the future.
- By 2030, Indonesia is expected to serve a market valued at around $10 billion in LFP cathode active materials, contributing significantly to the global transition to clean energy.
- Fire Incident in PT Freeport Indonesia New Smelter in East Java
- A fire broke out at the sulfuric acid plant in PT Freeport Indonesia’s (PTFI) new copper smelter in East Java on Monday (14/10) at 5.45 pm local time. There were no casualties but PTFI has temporarily suspended production for further investigation in collaboration with PT Chiyoda International Indonesia, the EPC contractor.
- The company will also re-evaluate its production processes. “We need to temporarily halt production, as the copper cathode production generates sulfur gas that must be captured and cleaned in the gas cleaning plant before being converted into sulfuric acid,” Tony Wenas, PTFI President Director told the media. The fire incident will affect the copper cathode production, which is targeted to reach full capacity of 750,000 tons by end of 2024.
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