Economy: Bank Indonesia (BI) revises down its forecast for the country’s economic growth this year from 4.1-5.1 percent to 3.8 percent citing the enforcement of emergency public activity restrictions (PPKM). “If the emergency PPKM lasts for one month and lowers COVID-19 cases, well, then the economic growth will decline to around 3.8 percent,” BI Governor said at a working meeting with the budget committee of the House of Representatives (DPR). The emergency PPKM will reduce people mobility and consumption, which eventually affect economic growth. However, the government has had to resort to the policy to stem COVID-19 cases, he said.
One of the possible impacts of the emergency PPKM is low household consumption, which should draw further attention considering that public demand has remained low until now. Low public demand will keep inflation rate under control, most likely below 3 percent this year. For Indonesia, at this moment the efforts are not controlling inflation, but pushing demand and economic growth. Signs of national economic recovery can be seen from the first- and second-quarter growth, which was driven by fiscal spending and non-construction investment, he added. Previously, Finance Minister had forecasted that the economic growth in 2021 will be within the range of 3.7-4.5% as the impact of the emergency PPKM enforced in Java and Bali. The government’s earlier growth projection lay in the range of 4.5 to 5.3% percent before the emergency PPKM was imposed due to a recent spike in COVID-19 cases.
State-Owned Enterprises: The government targets to increase dividend payments from state-owned companies to the state to Rp40 trillion next year. This year, the target has been revised downward to Rp30 trillion-Rp35 trillion from Rp40 trillion, according to the SOEs minister during a working meeting with Commission VI of the House of Representatives. Last year state-owned enterprises paid dividends in a higher amount of Rp43 trillion to the state. State-owned companies contribute significantly to the government’s treasuries in the form of dividend payments, taxes, and non-tax state revenue.
Prior to the Covid-19 pandemic, state-owned companies had paid dividends worth Rp377.8 trillion and taxes amounting to Rp1,518.7 trillion to the state during the 2010-2019 period. State capital placement (in state-owned enterprise) over the past decade reached Rp178 trillion in cash and Rp8.16 trillion in non-cash,” according to finance minister. In total, the state capital placement had reached Rp186.47 trillion comprising Rp179.16 trillion for increasing business capacity and Rp7.30 trillion for improving capital structure, she remarked.
Finance: Indonesia’s BCA Digital launched a digital banking app called Blu for Android users, making it the latest addition to a long list of digital banks that operate in the country. Officially called “Blu by BCA Digital,” the new platform is integrated with all digital infrastructure owned by BCA, the parent company of BCA Digital. BCA is the largest publicly listed private bank in Indonesia. Its move into digital banking started when it acquired a local lender, Bank Royal, in 2019 for nearly Rp1 trillion (US$ 68.6 million). Before BCA’s Blu, several other major banks formed their own digital bank subsidiaries, such as Jenius, by Bank BTPN; Digibank, by Bank DBS; TMRW under Bank UOB; and Wokee of Bank Bukopin. Other banks like BRI Agro and QNB Indonesia are also reportedly preparing similar transformations.
BCA has a large customer base. It counted 22 million clients in December 2019. Blu’s release is a move to give its existing clientele services that are available to any Indonesian with a working internet connection. While conventional financial institutions build their web-based capabilities to retain existing clients and lure new customers, neobanks with tech origins offer financial services and tout the convenience that comes with banking without branches. A list of players already operates in this manner, including Bank Neo Commerce, which was created after the acquisition of Bank Yudha Bakti by Alibaba-backed fintech firm Akulaku; Jago, a firm backed by Gojek; Sea Group’s Seabank; and Line Bank by Hana Bank. Moreover, e-commerce unicorn Bukalapak is in the process of obtaining a license to launch a digital banking platform with Standard Chartered Bank.