[Kabar-indonesia] JP: Inflation falls to 14.9%, exports up 16.4% [+US$43 million for rice imports]

[Joyo at aol.com]

also: Govt allocates US$43 million for rice imports

The Jakarta Post 
Saturday, September 2, 2006

Inflation falls to 14.9%, exports up 16.4%

Urip Hudiono, The Jakarta Post, Jakarta

Indonesia's economic engine may not have revved up to full gear yet, but its 
gauges of inflation and exports are clocking better speeds, indicating chances 
of higher growth ahead.

On-year inflation in August continued to taper off to 14.9 percent, despite 
above-average increases in education-related costs, processed food and clothing 
prices, the Central Statistics Agency (BPS) reported Friday, opening up more 
room for further interest rate cuts.

Indonesia's exports until July, meanwhile, also extended their record-high 
levels, growing by 16.4 percent to US$55.7 billion from the same period last 
year, on the recent rise in the global prices of mining and plantation 
commodities.

BPS chief Rusman Heriawan said that on a month-to-month basis, consumers in 
the country had to pay 0.33 percent more on average for goods and services in 
August than in the previous month.

Inflation, however, was lower than July's 0.45 percent monthly consumer price 
index rise, and its 15.1 percent year-on-year inflation rate. To date from 
January until August, inflation in the country has increased by 3.67 percent.

Last month's inflation was driven mainly by a 7.35 percent increase in 
education-related expenses, with costs for recreation and sports making up 0.28 
percent of the increase.

---------------------------------------

2006 Inflation trend (% yoy): ---------------------------------------

January..........................17.03%
February.........................17.92%
March............................15.74%
April............................15.40%
May..............................15.60%
June.............................15.53%
July.............................15.15%
August...........................14.90%

---------------------------------------Source: Central Statistics Agency 
(BPS) ---------------------------------------

"We saw the new academic year in August, so there were more expenses for 
admission fees and text books," Rusman said.

The public also had to spend more on housing and utilities, and processed 
foods -- the prices of the two commodity groups increased by 0.35 percent, and 
contributed to a combined 0.14 percent increase in August's inflation rate. 
Staple foodstuffs, particularly spices, were down by 0.34 percent, lowering last 
month's average inflation by 0.12 percent.

Core inflation, which excludes volatile prices like food and regulated prices 
such as fuel, stood at an on-year rate of 9.68 percent and at 0.78 percent 
month-on-month -- slightly higher than in July, flashing a warning to the 
government to increase efforts to stabilize food and fuel prices.

But lower headline inflation in August will support the central bank's recent 
rate cuts and help accelerate growth, which has been waning due to high 
inflation and interest rates.

Bank Indonesia (BI) cut its key rate half a point last month to 11.75 
percent, after previously hiking it to 12.75 percent, to contain inflation surging to 
17 percent from last year's fuel price hike.

Analysts believe inflation may continue slowing as the effects from the 
January fuel price hikes wear off by October.

BI's board of governors is scheduled to hold their next policy meeting on 
Sept. 5.

Meanwhile, regarding the country's export performance, Rusman said Indonesia 
had in July managed to add another $8.8 billion to its export balance, a 4 
percent increase on the previous month.

Total exports amounted to $55.7 billion for the January to July period, 16.4 
percent higher than last year's total.

Non-oil and gas exports, meanwhile, grew 15.6 percent to $43.3 billion, on 
five commodities -- rubber (which in July reached $1.2 billion in exports), 
mineral fuels (Rp 994 million), copper ($463 million), crude palm oil and its 
derivatives ($415 million), and paper products ($300 million). Oil and gas exports 
grew by 19.2 percent.

Indonesia's January-July imports rose to $34.2 billion, with the country 
enjoying a $21.5 billion surplus in its trade balance.

"There is positive growth in imports of raw materials and capital goods, 
which signals positive growth prospects ahead for the processing and manufacturing 
industries," Rusman said.

Exports and government spending supported growth during the second quarter -- 
clocking in at an on-year 5.2 percent -- as consumption and investment 
remained slow.

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The Jakarta Post 
Saturday, September 2, 2006

Govt allocates US$43 million for rice imports

The Jakarta Post, Jakarta

The government has decided to allocate Rp 390 billion (US$43 million) from 
this year's state budget to import rice to cope with a possible shortage due to 
natural disasters.

Speaking to reporters after attending a Cabinet meeting here Friday, 
Coordinating Minister for Economic Affairs Boediono said that the government would 
import some 210,000 tons of rice this year.

"This is to secure rice stocks in view of the natural disasters that have hit 
many parts of the country recently," he was quoted as saying by Antara news 
agency.

The government's decision came two months before the celebration of Idul 
Fitri, which will be later followed by Christmas and New Year, as well as the 
Chinese New Year early next year. The demand for food, including rice, usually 
increases at that time.

According to him, the imported rice will not affect the price of rice in the 
local market as it will be held in reserve at the National Logistics Agency 
(Bulog) and only be used when there is a shortage.

He said that the government would determine the importers of the rice through 
a tender. "We're currently finalizing the necessary requirements and 
procedures of the tender. Hopefully, we can do the tender next week," he noted.

Trade Minister Mari Pangestu said that it was not certain whether Indonesia 
would import the rice from Vietnam as it had done before.

"But the imported rice will be kept in reserve in case of a shortage in 
supply due to natural disasters or increasing demand during the upcoming religious 
festivities," she said.

Agriculture Minister Anton Aprianto noted that actually Indonesia has been 
self-sufficient in rice since 2004. "It is true that a country can be considered 
self-sufficient if it can fulfill 90 percent of local demand. But actually, a 
more moderate definition of self-sufficiency is 95 percent," he said.

He added that according to the Central Statistics Agency (BPS) Indonesia's 
imports of rice had decreased from 1.4 million tons in 2003 to 236,870 tons in 
2004 and 173,570 tons last year.

Meanwhile, the secretary-general of the Indonesian Farmers Federation (FSPI), 
Henry Saragih, said that the FSPI was against the government's plan to import 
the rice, saying that Indonesia had a surplus of rice production this year.

He cited the BPS's forecast this year that Indonesia's rice surplus would 
reach 1.1 million tons. "This has been indicated by the fact that many regions 
right now are harvesting or are going to harvest," he said.

He said that if Bulog did not have enough stock, it did not mean that the 
country was experiencing a shortage. "if Bulog does not have enough stock it is 
because it does not want to buy rice from farmers at the current prices," he 
added. 

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Joyo Indonesia News Service
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