Economy: Indonesian Finance Minister predicted that the country’s economic growth in the third quarter would undergo contraction. “The economic growth would also be still under the neutral growth in the fourth quarter because efforts to recover economic activities are still very weak,” the minister told a working meeting with the House of Representatives on 3 September.

Public activities had been increasing since May to June in the hope the consumption would recover gradually, she said, adding that the expectation index from June to July was flat. The minister said the government has set a target of economic growth in 2020 between minus 1.1 per cent and 0.2 per cent. She pointed out that the assumption that the economy could grow 0.2 per cent was based on the prediction that the economy could recover in the third and fourth quarters. The national statistics agency recently announced that the Indonesian economy grew by 2.97 per cent year-on-year in the first quarter 2020, and minus 5.32 per cent in the second quarter.

Finance: PT Bank Rakyat Indonesia (Persero) Tbk has again received a prestigious international scale award. The Asian Banker, a leading economic magazine in Asia, named Bank BRI as The Best Retail Banking in Indonesia. Based on an official release from The Asian Banker, BRI’s selection as The Best Retail Banking in Indonesia is due to the company’s achievement which is still able to record positive performance amidst the challenges of the Covid-19 pandemic through series of breakthrough and innovative business process foundations. On the other hand, BRI is considered able to balance the vision and business execution so that it has a significant impact on the company.

The components of the award assessment criteria include financial performance, strategy and leadership, digital journey, brand, sales, customer experience, process and technology, risk, human resources and achievements during 2019. Bank BRI focuses on supporting MSMEs by keeping the company’s performance growing. On 31 July 2020, BRI restructured credit to save MSMEs has reached Rp 183.7 trillion for 2.9 million debtors. Regarding the company’s performance in the second quarter of 2020, BRI posted a consolidated profit of Rp10.20 trillion with consolidated assets reaching Rp1,387.76 trillion or a growth of 7.73% y-o-y. Despite experiencing considerable challenges this year, BRI’s performance is still growing. “This proves that the strategy designed by BRI in dealing with a pandemic situation can be executed properly,” concluded the President Director of Bank BRI.

Trade: Egypt and Indonesia are currently studying the launch of a joint trade committee and remove all obstacles facing the trade flow between the two countries, according to the Egyptian Minister of Trade and Industry. There is an agreement between the two governments clarifying the importance of establishing the committee to facilitate the movement of trade exchange between the two countries. A bilateral Memorandum of Understanding (MoU) to establish the committee will be signed once the study is completed.

The trade between the two countries have remained relatively stable despite the Covid-19 pandemic. This reflects the keenness of the two sides on developing their bilateral trade relations. The minister stressed the importance of activating the joint Egyptian-Indonesian Business Council’s role in commercial, industrial and investment cooperation and joint production in a number of basic industries. The minister pointed out that Egyptian exports have an excellent opportunity to enter the Indonesian market, especially in the chemical products, fertilisers, iron and steel, tyre and agricultural commodities sectors.

Industry: Indonesia’s manufacturing activity has shown signs of improvement for the first time since February, but risks remain as new COVID-19 clusters emerge in factories and industrial areas and as household spending remains weak. IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) for Indonesia, a gauge of the country’s manufacturing activity, rose to 50.8 points in August from 46.9 a month before. A value above 50 indicates an expansion against the previous month, while a reading below 50 reflects a contraction.

The higher PMI was driven by solid growth in both production volumes and new order inflows in August, as well as revived demand from the gradual reopening of the economy. However, the rise in production has yet to lift factories’ capacity utilization to a level higher than before the pandemic struck, as manufacturers used stocks of goods to meet increased demand, resulting in further layoffs, albeit at an easing rate than in July. The concern is that the recovery stems primarily from the release of pent-up demand brought about by the lockdown measures and could falter after the initial rebound.

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