INDONESIA S BALANCE OF PAYMENTS REPORT

Transcription

1 August 211 kang INDONESIA SS BALANCE OF PAYMENTS REPORT Second Quarter 211 1

2 Contact Address: Balance of Payments Bureau Directorate of Economic and Monetary Statistics Bank Indonesia Sjafruddin Prawiranegara Tower, 16 th Floor Jl. M.H. Thamrin No. 2 Jakarta 135 Phone : (21) Fax : (21) BNP@bi.go.id Website : 2

3 August 211 INDONESIA S BALANCE OF PAYMENTS REPORT Second Quarter 211 3

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5 LIST OF CONTENTS SUMMARY 1 INDONESIA S BALANCE OF PAYMENTS IN Q2/211 AND ITS CONTRIBUTING FACTORS 3 CURRENT ACCOUNT 5 1. Goods Trade Balance Exports of Goods Imports of Goods Services Trade Balance Income Account Current Transfers 17 CAPITAL AND FINANCIAL ACCOUNT Direct Investment Portfolio Investment 2 3. Other Investment 25 RESERVE ASSETS 27 INDICATORS OF EXTERNAL SUSTAINABILITY 29 BOX: INDONESIA - INDIA TRADE PROFILE 31 5

6 LIST OF TABLES Table 1 Developments in Indonesia's Balance of Payments and Economic Indicators Page Page 4 Table 14 Imports (f.o.b) by Classes of Goods 12 Table 2 Trade Balance in Goods Based on BPM5 6 Table 15 Non-oil and Gas Imports by Main Country of Origin Table 3 Goods Export Growth by Sector 6 Table 16 Imports of 1 Leading Non-oil and Gas Commodities by Economic Category Table 4 Goods Exports by Major Destination Countries 7 Table 17 Imports of Industrial Supplies, Processed, by Main Country of Origin Table 5 Developments in Exports of Major Non-oil and Gas Commodities 7 Table 18 Imports of Capital Goods (except Transport Equipment) by Main Country of Origin Table 6 Coal Exports by Major Destination Countries 8 Table 19 Imports of Parts & Accessories for Capital Goods by Main Country of Origin Table 7 Palm Oil Exports by Major Destination Countries Table 8 Exports of Rubber Products by Major Destination Countries 8 Table 2 Imports of Industrial Supplies (Primary) by Major Country of Origin 9 Table 21 Imports of Foods & Beverages (Primary) Mainly for Households by Major Country of Origin Table 9 Exports of Textiles and Textile Products by Major Destination Countries Table 1 Exports of Metal Products by Major Destination Countries Table 11 Exports of Electrical Appliances by Major Destination Countries 1 Table 22 Oil Imports 15 1 Table 23 World Demand and Supply for Oil 15 1 Table 24 Developments in Indonesia's Sovereign Rating Table 12 Oil Exports 11 Table 25 Indicators of External Sustainability 29 Table 13 Gas Exports

7 LIST OF CHARTS Page Page Chart 1 Current Account 5 Chart 17 FDI by Economic Sector 19 Chart 2 Non-Oil and Gas Trade Balance 5 Chart 18 FDI by Country of Origin 2 Chart 3 Oil and Gas Trade Balance 6 Chart 19 Developments in Portfolio Investment 2 Chart 4 Developments in World Coal Prices 8 Chart 2 Changes in Foreigner Holdings of SBIs and Indonesian Government Securities 21 Chart 5 Developments in World Palm Oil Prices 9 Chart 21 Yield on Indonesia Global Bonds and US T- 21 Notes Chart 6 Developments in World Rubber Prices 9 Chart 22 Developments in SBI Rates 21 Chart 7 Developments in World Oil Prices 11 Chart 23 Foreigner Transactions on the IDX and JCI 22 Chart 8 Consumption of Oil-Based Fuels 16 Chart 24 Developments in ASEAN Stock Market 22 Indices Chart 9 Developments in the Services Trade Balance 16 Chart 25 Portfolio Investment by Institutional Sector 23 Chart 1 Developments in Travel Services 17 Chart 26 Developments in Other Investment 23 Chart 11 Developments in the Income Account 17 Chart 27 Other Investment Asset Transactions, 23 Private Sector Chart 12 Workers Remittances 18 Chart 28 Other Investment Liability Transactions 23 Chart 13 Composition of Migrant Workers, Asia-Pacific Region 18 Chart 29 Developments in Public Sector Foreign Loans 24 Chart 14 Chart 15 Composition of Migrant Workers, Middle East and Africa Developments in the Capital and Financial Account Chart 16 Developments in Direct Investment Chart 3 Developments in Private Sector Foreign Loans 19 Chart 31 Reserve Assets

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9 SUMMARY SUMMARY In Q2/211, Indonesia s balance of payments posted a surplus of USD11.9 billion, up significantly from USD7.7 billion in the previous quarter. Spurring this increase was a sharp rise in the capital and financial account surplus that outweighed a decrease in the current account surplus. In response, international reserves at the end of June 211 boosted to US$119.7 billion, equivalent to 6.8 months of imports and servicing of official external debt. The current account remained positive with a surplus of USD.2 billion, buoyed mainly by growth in non-oil and gas exports and natural gas exports. This surplus, however, was down considerably from the USD2.1 billion recorded in the preceding quarter, as a result of growing deficits in the oil trade balance, services and income accounts. These widened deficits were largely attributable to rising consumption of oil-based fuels that had driven up oil imports, mounting numbers of outbound travellers, and higher investment income paid out to foreign investors in line with the massive foreign capital inflows. Declining performance in the current account was offset by a significant rise in the capital and financial account surplus to USD12.5 billion from USD6.4 billion in the preceding quarter. Inflows of foreign direct investment (FDI) expanded further in line with the more conducive investment climate. Portfolio capital inflows also mounted higher, driven by sustained excess liquidity on global financial markets and continuing attractive returns on investments in Indonesia. In addition to that, growing domestic financing needs prompted the private sector to draw on foreign lines of credits and offshore deposits, hence creating a surplus in other investments. 1

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11 INDONESIA S BALANCE OF PAYMENTS IN Q2/211 AND ITS CONTRIBUTING FACTORS In Q2/211, Indonesia's balance of payments posted a USD11.9 billion surplus, mainly on a sharp rise in the capital and financial account surplus to USD12.5 billion, up significantly from USD6.4 billion in the previous quarter. This surplus was reflected in all components of the capital and financial accounts. The most important source of the surplus was the surge in foreign capital into stocks and debt securities of both public and private sectors, followed by drawdown on private external borrowings and drawing on private deposits held overseas. Added to this were higher inflows of FDI and non-resident deposits in the domestic banking system. In the current account, the surplus reached USD.2 billion, achieved mainly from high growth in non-oil and gas exports and gas exports. This, however, represents a significant reduction from the USD2.1 billion surplus of the preceding quarter. Such a declining current account surplus was explained by mounting deficits in the oil trade balance, services account and income account. In response to these developments, the international reserves position at the end of the period strengthened to USD119.7 billion. Factors influencing developments in the Indonesia s balance of payments during Q2/211 include: Buoyant volume of world trade and high international commodity prices contributed to strong export performance during the quarter under review; Economic growth in Q2/211 reached a high 6.5%, supported by brisk expansion in household consumption and investment at 4.6% and 9.2%, respectively. Added to the buoyant trend in domestic demand was steady appreciation in the rupiah that promoted growth in non-oil and gas imports; Unplanned shutdown and natural decline in oil wells resulted in a drop in national oil production from the previous quarter's level of.98 million barrels per day (bpd) to.92 million bpd in Q2/211. Diminishing production amid heavy consumption of oil-based fuels necessitated higher imports of oil. Rising oil import volume in combination with the escalation in international oil prices contributed to the increased deficit in the oil trade balance; Combination of domestic pull factors and external push factors spurred heavy inflows of foreign capital into rupiah-denominated instruments, led by Indonesian government securities and private stocks. Conducive economic fundamentals, high returns with relatively stable movement in risk indicators, alongside investor expectations of currency gains are among those pull factors. Meanwhile, push factors were reflected in the uncertainty and sluggish recovery of the debt crisis in a number of Eurozone countries and the United States amid remain high excess global liquidity. This also led to further appreciation in the rupiah against the US dollar from the average Rp8,899/USD in Q1/211 to an average of Rp8,59/USD in Q2/211. 3

12 Table 1 Developments in Indonesia's Balance of Payments and Economic Indicators ITEMS WORLD ECONOMIC INDICATORS UNITS 29 21* 211 Total Q1 Q2 Q3 Q4 Total Q1* Q2** Economic Growth - United States of America % (y.o.y) Japan % (y.o.y) European Union % (y.o.y) f - Singapore % (y.o.y) China % (y.o.y) World Price Commodity ¹) - Crude Oil (OPEC) USD/barel Coal USD/metric ton Copper USD/metric ton 5,15 7,232 7,27 7,243 8,637 7,535 9,642 9,173 - CPO USD/ton , ,251 1,147 - Rubber cent USD/kg International Interest Rates ¹) - United States of America % Japan % European Union % Singapore % China % Inflation ²) - United States of America % (y.o.y) Japan % (y.o.y) European Union % (y.o.y) Singapore % (y.o.y) China % (y.o.y) DOMESTIC ECONOMIC INDICATORS GDP % (y.o.y) CPI Inflation ²) % (y.o.y) Exchange Rates ¹) (Rp/USD) 1,395 9,263 9,118 9,1 8,963 9,84 8,899 8,59 Average Price of Crude Oil Export USD/barel Oil Production mbpd Fuel Consumption mbpy Gas Export (LNG) mmbtu 1, , Gas Export Average Price (LNG) USD/mmbtu BI Rate 1) % (annual) INDONESIA'S BALANCE OF PAYMENTS - Current Account million USD 1,628 1,936 1,49 1,25 1,93 5,643 2, Capital and Financial Account million USD 4,852 5,59 3,697 7,365 9,55 26,21 6,436 12,518 - Total million USD 15,481 7,526 5,16 8,57 1,642 31,844 8,525 12,75 - Net Errors and Omissions million USD -2, , , Overall Balance million USD 12,56 6,621 5,421 6,955 11,289 3,285 7,666 11,876 - Foreign Exchange Reserves million USD 66,15 71,823 76,321 86,551 96,27 96,27 15,79 119,655 Source: Bank Indonesia, CEIC, IMF, World Bank, and other sources ¹) an interest rate policy sets by central bank / monetary authority (calculated as the monthly average ) ²) end-month position of the relevant quarter *) Provisional figures (for Indonesia's Balance of Payments) (for Indonesia's Balance of Payments) f (Consesus forecast estimation) 4

13 CURRENT ACCOUNT In Q2/211, the current account booked a surplus of USD.2 billion on account of positive performance in the non-oil and gas trade balance, the gas trade balance, and current transfers. This surplus, however, was down considerably from USD2.1 billion in the previous quarter, a result of widening deficits in the oil trade balance, services account, and income account. million USD 12, 1, 8, 6, 4, 2, -2, -4, -6, -8, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2** 1. Goods Trade Balance 29 21* 211 Trade Balance Services Income Current Trans. Current Account * provisional figures ** Vey provisional figures Chart 1 Current Account In Q2/211, the surplus of trade in goods reached USD9.7 billion, higher than the previous quarter's USD8.7 billion surplus due to more rapid growth in exports (37.4%, y.o.y) compared to imports (36.4%, y.o.y). The improvement in the goods trade balance was bolstered by strong performance in the non-oil and gas trade balance and a rise in the gas trade surplus that surpassed the increase in the oil trade deficit. The non-oil and gas trade balance posted a Q2/211 surplus of USD1.6 billion, ahead of USD8.6 billion in the preceding period. This surplus was the result of faster growth in non-oil and gas exports (13.2%, q.t.q) compared to non-oil and gas imports (q.t.q). When measured against the same period one year before (y.o.y), non-oil and gas exports again outperformed non-oil and gas imports with growth at 38.6% and 28.4%, respectively. million USD 45, 4, 35, 3, 25, 2, 15, 1, 5, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2** 29 21* 211 Chart 2 Non-oil and Gas Trade Balance million USD Exports Imports Non Oil & Gas Trade Balance (RHS) * Provisional figures 12, 1, 8, 6, 4, 2, The 17.% increase in the gas trade surplus to USD4.1 billion, ahead of the previous quarter, contributed to the overall improvement in the goods trade balance. However, the surplus of trade in goods was prevented from rising further by a widening oil trade deficit that reached USD5. billion in Q2/211 compared to the USD3.4 billion deficit one quarter earlier. The increased oil trade deficit was a result of high oil import volume spurred by escalating consumption of oil-based fuels and declining national oil production, amid upward movement in oil prices. In addition, routine maintenance work at the Balikpapan oil refinery, the second largest in Indonesia, necessitated imports of even more refined fuel products. In response to these developments, the oil and gas trade balance booked a USD91 million deficit during the quarter under review, compared to a surplus of USD57 million one quarter earlier. 5

14 million USD 12, 1, 8, 6, 4, 2, -2, -4, -6, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2** 29 21* 211 Chart 3 Oil and Gas Trade Balance Performance in the trade balance in goods can also be analysed by aggregation into the following five categories of goods: (1) general merchandise; (2) goods for processing; (3) repairs on goods; (4) goods procured in ports by carriers; and (5) non-monetary gold. During the quarter under review, general merchandise accounted for the leading contribution to the goods trade surplus with USD8.8 billion, ahead of the USD7.6 billion recorded in the previous period. In contrast, repairs on goods again posted a deficit of USD28 million. Table 2 Trade Balance in Goods Based on BPM5 1 ) million USD 2,4 2, 1,6 1, ,2 Exports Imports Oil & Gas Trade Balance (RHS) * Provisional figures Trade Balance (million USD) Details 211** 21* Q1* Q2** General Merchandise 29,449 7,633 8,849 Goods for processing Repairs on goods Goods procured in ports by carriers Nonmonetary gold 1, Goods Trade Balance 3,628 8,686 9,728 * Provisional figures Balance of Payments Manual Exports of Goods Exports of goods in Q2/211 totalled USD51.5 billion, contributed dominantly by manufacture (64.%) and mining (31.6%) sectors. Compared to the preceding quarter, goods exports were up 12.3%, driven largely by growth in manufacture products (12.4%, q.t.q) and mining products (11.1%, q.t.q). Confirming the upbeat Q2/211 performance in goods exports was brisk annual export growth at 37.4%, ahead of annual export growth one quarter earlier at 3.6%. Exports of manufacture and mining products were up by 38.1% (y.o.y) and 38.8% (y.o.y), compared to 32.8% (y.o.y) and 27.4% (y.o.y) in the preceding period. Alongside this, exports of agricultural products registered growth at 15.1% (y.o.y), down slightly from the previous 17.4% (y.o.y). Table 3 Goods Export Growth by Sector Share (%) Growth 211 (%) Details 211** q.t.q y.o.y 21* Jan-Jun Q1* Q2** Q1* Q2** Agricultural Products Manufacture Products (including oil & gas) Mining Products (including oil & gas) Other goods (including oil & gas) Total Ekspor o.w. Oil Gas * Provisional figures The more robust export performance during the quarter was reflected in exports to the leading destinations of China, the European Union, and Singapore. Significant growth were recorded in exports to China, driven largely by the nation's growing demand for coal. In contrast, exports to Japan and the United States charted negative quarterly growth at - 1.1% and -.4%, envisaged to be the effect of the 6

15 tsunami that hit Japan in March and the slowdown in the US economy. However, measured annually, exports to both destinations maintained a positive growth. In the non-oil and gas, exports during the quarter were bolstered by performance in the major commodities with highest contribution including coal, palm oil, rubber products, textiles and textile products, metal products, and electrical appliances. Table 4 Goods Exports by Major Destination Countries Country q.t.q y.o.y Japan 7, China 5, European Union 5, Singapore 4, USA 4, Others 23, Total 51, **) Very provisional figures Value (mill USD) Q2-211** Share (%) Growth (%) Coal Coal is Indonesia's most important non-oil export commodity, accounting for a 15.2% share (in the first semester of 211), with export revenues recorded at USD6.6 billion during the quarter under review. Exports of coal grew by 21.8% over the previous quarter. This growth was explained more by increased export volume that contrasted with lower coal prices during the quarter under review. Coal export volume climbed on the back of heavy demand from China, which grew by 111.5% from the previous quarter, despite economic tightening policy in China. Similarly, demand for coal also escalated from India (26.7%, q.t.q) and Taiwan (27.8%, q.t.q). Coal prices on the international market slipped by 6.96% (q.t.q) to USD12/MTons during Q2/211 from USD MTons in the previous quarter. Lower international market prices for coal have resulted from weak world demand for coal, among other due to lack of recovery in Japan in the aftermath of the tsunami. Table 5 Developments in Exports of Major Non-Oil and Gas Commodities Share (%) Growth q.t.q (%) Growth y.o.y (%) Nominal Real Price Index Nominal Real Price Index 211** * Jan-Jun Q1* Q2** Q1* Q2** Q1* Q2** Q1* Q2** Q1* Q2** Q1* Q2** 1. Coal Palm Oil Rubber Product Textile & Textile Product Metal Product Electrical Appliances Chemicals Coppers Processed Food Papers *) provisional figures **) very provisional figures 7

16 Besides Japan, demand for coal from South Korea also eased, although annual growth in exports to these two countries remained positive. USD/MTon Chart 4 Developments in World Coal Prices Table 6 Coal Exports by Major Destination Countries Besides the positive growth in quarter-on-quarter figures, upbeat performance in coal exports was also reflected in annual growth that soared from 28.3% in Q1/211 to 57.3%. Palm Oil Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source : World Bank Country q.t.q y.o.y China 1, India 1, Japan Taiwan South Korea Others 1, Total 6, **) Very provisional figures Value (mill USD) Q2-211** Share (%) Growth (%) Palm oil exports in Q2/211 soared 78.3% (q.t.q) over one quarter earlier to USD5.2 billion. This rise in exports was explained more by increased volume (up 86.5%, q.t.q) to satisfy mostly demand from India and China. Soaring demand for palm oil from India has placed this country as Indonesia's leading export destination for this commodity. Furthermore, raised exports to India, particularly on palm oil, are alleged to have received a boost from the implementation of the Indonesia-India Free Trade Agreement. The long standing environmental controversy over palm oil in European countries did not affect exports during the quarter under review, as attested by the buoyant performance of palm oil exports to the European Union, with growth at 54.4% (q.t.q.). Similarly, the Food Standards Amendment (Truth in Labelling - Palm Oil) bill before the Australian Parliament did not have any negative impact on Q2/211 exports of palm oil. The bill states that palm oil has a higher fat content than other vegetable-based oils, with possible harmful effects on health. When compared to the same period one year before, palm oil exports charted growth at 121.5% (y.o.y) in Q2/211. Growth in palm oil exports during the quarter was constrained by falling prices. After reaching a high in the preceding quarter, palm oil prices sustained correction in Q2/211. Higher production in Malaysia and predictions of a downturn in the world economy were believed to have triggered decline in palm oil prices. Table 7 Palm Oil Exports by Major Destination Countries Country Value (mill USD) Share (%) Q2-211** Growth (%) q.t.q y.o.y India 1, China European Union Malaysia Singapore Others 1, Total 5, **) Very provisional figures 8

17 USD/MTon 1,4 1,2 1, Source : World Bank Chart 5 Developments in World Palm Oil Prices Rubber Products Exports of rubber products reached USD3.9 billion in Q2/211, up 9.% over one quarter earlier. Export growth was bolstered largely by 9.8% rise in export volume over the previous period. Higher export volume was in response to robust world rubber demand and supported by higher production in conjuction with favorable weather conditions on the onset of the dry season. Prices, however, fell during Q2/211 after the spike in the previous quarter. c/kg Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source : World Bank Chart 6 Developments in World Rubber Prices During the quarter, exports of rubber products were marked by a remarkable 36.8% (q.t.q) rise in exports to India. As a result, India now ranks among the top five destinations for exports of rubber products from Indonesia. Export growth of rubber products to Japan remained positive (6.%, q.t.q), even in the aftermath of the tsunami. However, this represented a modest rate of export growth given the less than optimum use of rubber in the automotive industry that absorp rubber the most. In annual terms, Indonesia's rubber exports also recorded significant growth in Q2/211 at 65.%. Table 8 Exports of Rubber Products by Major Destination Countries Country Textiles and Textile Products q.t.q y.o.y USA Japan European Union China India Others 1, Total 3, **) Very provisional figures Value (mill USD) Q2-211** Share (%) Growth (%) Exports of textiles and textile products in Q2/211 reached USD3.4 billion, an increase of 2.% over the previous quarter. The rising export value of these commodities was explained largely by export prices, which climbed 2.% (q.t.q). Major export destinations for textile and textile product exports during the quarter were the United States, the European Union, Japan, South Korea, and China. Although exports to the United States have suffered from bearish economic conditions (-5.7%, q.t.q), the United States remains the leading market for Indonesia's textiles and textile products. In contrast, textiles and textile products recorded increased exports to the European Union and Japan, with growth at 15.3% and 12.3% (q.t.q), respectively. Taken together, annual growth in exports of textiles and textile products reached 24.4% (y.o.y). 9

18 Table 9 Exports of Textiles and Textile Products by Major Destination Countries Country Value (mill USD) Q2-211** Share Growth (%) (%) q.t.q y.o.y USA 1, European Union Japan South Korea China Others 1, Total 3, **) Very provisional figures Country Table 1 Exports of Metal Products by Major Destination Countries q.t.q y.o.y Japan USD) Singapore Malaysia Thailand European Union Others Total 3, **) Very provisional figures Value (mill Q2-211** Share (%) Growth (%) Metal Products Exports of metal products during Q2/211 were USD3.1 billion, down 1.1% from the previous period. The reduced exports of this commodity were explained more by falling prices for nickel (-4.8%, q.t.q), copper (-6.9%, q.t.q), and tin (-9.3%, q.t.q) in contrast to the previous quarter when prices reached their highest ever level since 29. Although prices fell down, export volume remained increasing by.4% (q.t.q). This higher volume constrained export revenues to further decline. Metal products were exported mainly to Japan, Singapore, Malaysia, Thailand, and the European Union. Among the metals used in these products are iron and steel, nickel, copper, and tin. Compared to the same period one year earlier, exports of metal products were up 44.3% (y.o.y) during Q2/211, ahead of growth in the preceding period at 29.4% (y.o.y). Electrical Appliances Exports of electrical appliances reached USD2.8 billion during the period under review, an increase of 1.5% (q.t.q). This improvement was explained more by prices, given that export volume contracted by -4.2% (q.t.q). Leading export destinations for Indonesian electrical appliances were Singapore, the United States, Japan, the European Union, and Hong Kong. Country Table 11 Exports of Electrical Appliances by Major Destination Countries Value (mill USD) Q2-211** Share (%) Growth (%) q.t.q y.o.y Singapore USA Japan European Union Hongkong Others 1, Total 2, **) Very provisional figures 1

19 Annually, exports of electrical appliances grew 2.9% (y.o.y) in Q2/211, declined considerably from 13.9% (y.o.y) in the previous period. Oil Exports Oil exports reached USD5. billion in Q2/211, up 2.5% over USD4.9 billion in the previous period. Oil export revenues improved mainly on higher prices, with crude oil prices up 12.% (q.t.q) and prices for refined products mounting 21.5% (q.t.q). Measured by volume, however, exports of crude and refined products were down by -8.3% (q.t.q) and % (q.t.q). Australia, China, Japan, and Korea are among the major destinations for these crude exports, which consist of the Arjuna, Attaka, Belanak, SLC and Duri crudes. A decline in oil export volume was the result of average Q2/211 national oil production slipping to only.92 million bpd from the previous.98 million bpd. Oil production edged downwards due to the failure of a number of oil companies operating in Indonesia to meet production targets because of some technical problems and natural declining. Table 12 Oil Exports Details Q1* Value Volume (mil. USD) (mbbl) Exports 4, USD) 4, Crude Oil 3, , Refinery Products 1, , Sources: BPMigas & PT Pertamina (Processed) *) Provisional figures **) Very provisional figures 21* Price ($/barel) Value (mil. Q2** Volume (mbbl) Price ($/barel) OPEC, WTI and Brent Crude prices maintained an overall upward trend during the quarter, climbing from USD1.6, USD93.7, and USD14.8 per barrel on Q1/211 to USD112.2, USD12.3, and USD117.6 per barrel in Q2/211. Prices increased in response to supply disruptions caused by the ongoing geopolitical conflicts in North Africa and the Middle East. In addition, the failure of OPEC member nations to reach agreement on higher production quotas in the July OPEC meeting also led to higher oil prices. Despite an increase in quarterly average figures for oil prices, in June prices eased in comparison to the previous month, following a decision by the International Energy Agency (IEA) and Saudi Arabia to increase supply. Saudi Arabia's decision was in departure from the resolutions adopted in the OPEC meeting on 8 June 211. Another factor contributing to lower world oil prices by the end of the quarter under review was the expected slackening of demand in line with projections for economic slowdown in the United States and Europe. USD/barel J S N J M M J S N J M M J S N J M M J S N J M M J Source: OPEC, Ditjen Migas Gas Exports SLC Indonesia's Export Price WTI OPEC Chart 7 Developments in World Oil Prices Gas exports were up 16.% (q.t.q) in Q2/211, climbed from USD3.9 billion in Q1/211 to USD4.5 billion. Supporting this performance was growth in exports of LNG and natural gas at 17.4% (q.t.q) and 12.6% (q.t.q) consecutively. The rise in LNG export revenues was explained more by increases in prices, which mounted to USD12.1/million MMBTU during Q2/211 from the previous USD1.3/million MMBTU (up 17.5%, q.t.q). However, LNG export volume was unchanged, presumably due to the Government s decision not to 11

20 extend sales contract in order to fulfil domestic demand. Similar to LNG, higher natural gas exports was attributed more by a 16.7% (q.t.q) price increase from USD12/million MMBTU in Q1/211 to USD14/million MMBTU in Q2/211. Table 13 Gas Exports Details Exports 3,87 4,49 - LNG 2, , LPG Natural Gas 1, , * Provisional Figures 1) LNG and Natural gas in million mmbtu, LPG in thousand Metric Ton 2) LNG and Natural Gas in USD/million mmbtu, LPG in USD/thousand Metric Ton Source: BPMIGAS 1.2. Imports of Goods 211 Tw. I* Tw. II** Value Value Vol 1) Price 2) (mil. USD) (mil. USD) Vol 1) Price 2) During the period under review, imports of goods (f.o.b. value) mounted 12.4% over the previous quarter to USD41.7 billion. The steepest rise was recorded in oil imports at 2.3% (q.t.q), followed by non-oil and gas imports at 1.1% (q.t.q). Disaggregated by broad economic category (BEC), import growth was led by raw materials/auxiliary goods, which climbed 16.9% during the quarter. Meanwhile, imports of capital goods and consumption goods were up by 1.6% and 1.4% (q.t.q). The more rapid expansion in the raw materials/auxiliary goods was explained by heavy imports of raw materials for industrial supplies and imports of crude oil to supply domestic fuel needs. Measured annually, goods imports registered buoyant growth in Q2/211 at 36.4%. Accelerated import growth took place in raw materials/auxiliary goods (39.1%), consumption goods (36.%), and capital goods (25.5%). This was consistent with the real 6.5% growth in the domestic economy underpinned by real growth in household consumption and investment at 4.6% and 9.2%. Table 14 Imports (f.o.b) by Classes of Goods Share (%) Growth 211 (%) Details 211** q.t.q y.o.y 21* Jan-Jun Q1* Q2** Q1* Q2** Consumption goods (including oil & gas) Raw materials/auxiliary goods (including oil & Capital ) goods Other goods Import Total o.w. Oil Gas * Provisional figures Non-Oil and Gas Imports Non-oil and gas imports reached USD31.4 billion (f.o.b) during Q2/211, an increase of 1.1% over one quarter earlier. Brisk growth in non-oil and gas imports was also reflected in the high rate of annual growth at 28.4%. Import growth was led by the raw materials for industrial supplies. The leading sources of Indonesia's non-oil and gas imports were China (21.3%), Japan (13.5%), Thailand (8.2%), and Singapore and the United States with almost equal share of 8.1% each. China and Japan consistently retained the top positions as sources of imports, while Thailand since the last quarter has secured the third position of leading countries of origin. Indonesia's sizeable imports of foods from Thailand were the main reason for the high volume of imports from that country. Table 15 Non-oil and Gas Imports by Main Country of Origin Q2-211** Country Value Share Growth (%) (mill USD) (%) q.t.q y.o.y China 6, Japan 4, Thailand 2, USA 2, Singapore 2, Others 12, Total 31, ** Angka Sangat Sementara 12

21 Table 16 Imports of 1 Leading Non-Oil and Gas Commodities by Economic Category Share (%) Growth (%) Descriptions 211* (q.t.q) (y.o.y) 21 Jan-Jun Q1'11* Q2'11** Q1'11* Q2'11** Industrial supplies, processed Capital goods (except transport equipment) Parts and accessories for capital goods Industrial supplies, primary Parts and accessories for capital goods Other transport equipment, industrial Food and beverages, primary, mainly for industry Food and beverages, processed, mainly for industry Foods and beverages, processed, mainly for household Semi-durable consumer goods * Provisional Figures ** Very Provisional Figures Industrial Supplies (Processed) Industrial supplies (processed) maintained their front position in total non-oil and gas imports, representing a 43.4% share during the quarter. Imports of these commodities reached USD13.6 billion, an increase of 15.6% over the preceding quarter and 32.% over the same period one year before. Major commodities driving the high rate of import growth included iron & steel and textiles and chemical products. Table 17 Imports of Industrial Supplies (Processed) by Main Country of Origin Country Q2-211** Share Growth (%) (%) q.t.q y.o.y China 2, Japan 1, South Korea 1, Singapore 1, Thailand Others 6, Total 13, Value (mill USD) By country of origin, imports of industrial supplies (processed) were dominated by commodities from China (19.3% of the total), followed by Japan (11.%), South Korea (8.8%), and Singapore (7.6%). Leading in quarterly growth were imports from China and Thailand, while imports from Japan and Singapore were down for the quarter despite their sustained positive annual growth. Capital Goods (except Transport Equipment) During Q2/211, rising foreign direct investment inflows and real investment in Indonesia were reflected in substantial growth in imports of capital goods (except transport equipment). Imported capital goods, comprising machinery for specialised and general industry and telecommunications equipment, grew by 3.% over the quarter and in annualised measures by 26.2%. The major countries of origin for these commodities were China (46.4% shares), Japan (19.%), and Singapore (8.2%). Measured annually, imports from Germany, China, and the United States accounted for the highest growth of 53.5%, 3.%, and 28.1% respectively during the quarter. 13

22 Table 18 Imports of Capital Goods (except Transport Equipment) by Main Country of Origin Country Q2-211** Share Growth (%) (%) q.t.q y.o.y China 1, Japan Singapore Germany USA Others Total 4, Value (mill USD) Parts & Accessories for Capital Goods In Q2/211, imports of parts and accessories for capital goods recorded annual growth of 16.5% and quarterly growth of 11.9%. This imports were driven by investment needs and ongoing business processes. Leading imported commodities included electrical equipment parts, general machine parts, specialised industrial machinery, and telecommunications spare parts. Imports of parts and accessories for capital goods were predominantly sourced from China (2.5%), Japan (19.1%), and Singapore (14.9%). Spare parts imports from Japan were down from the same period one year before, possibly due to the impact of the recent earthquake in that country. Table 19 Imports of Parts & Accessories for Capital Goods by Main Country of Origin Country China Japan Singapore USA Hongkong Others 1, Total 4, Value (mill USD) Q2-211** Share Growth (%) (%) q.t.q y.o.y Industrial Supplies (Primary) During the period under review, raw material imports for industrial supplies (primary) charted significant annual and quarterly growth at 73.7% and 42.3%. The leading countries of origin for these imports were the United States (23.4%), India (11.5%), Australia (7.4%), and China (6.2%). The most important commodities driving accelerated growth in this category were cotton (textile manufacturing), raw materials for the metal industry, and corn (food production). Table 2 Imports of Industrial Supplies (Primary) by Major Country of Origin Country USA India Australia China United Kingdom Others Total 1, Value (mill USD) Q2-211** Share Growth (%) (%) q.t.q y.o.y Foods and Beverages (Primary), Mainly for Industry Non-oil and gas imports in the category of food and beverages (primary), mainly for industry (representing 3.4% of total non-oil and gas imports) recorded brisk annual and quarterly growth in Q2/211 at 42.9% (y.o.y) and 2.9% (q.t.q), reaching USD1.1 billion. Leading import commosities in this category included wheat and raw materials for vegetable-based oil production sourced from Australia, the United States, and Canada. 14

23 Table 21 Imports of Foods and Beverages (Primary) Mainly for Industry by Major Country of Origin Country Oil Imports Q2-211** Share Growth (%) (%) q.t.q y.o.y Australia USA Canada India Malaysia Others Total 1, Value (mill USD) Oil imports in Q2/211 totalled USD1. billion, an increase of 2.3% (q.t.q) over one quarter earlier, mainly as a result of higher volume of crude oil imports at 29.4 million barrels compared to the previous 2.8 million barrels. The combination of falling oil production, higher consumption of oil-based fuels, and high oil prices pushed oil imports to higher levels. These growing imports provided the intake for the Cilacap, Balongan, and Balikpapan refineries, the major installations supplying domestic fuel needs. The imported petroleum consisted of ALC (Arab Light Crude) and Nile Blend from the Middle East, in addition to other crudes from Brunei, China, and Malaysia. At the same time, routine maintenance works at the Balikpapan refinery during May also necessitated higher imports of refined fuels. The Balikpapan facility has the second largest refining capacity after Cilacap. Table 22 Oil Imports Details Value Volume (mil. USD) (mbbl) Imports 8, USD) 9, Crude Oil 2, , Refinery Products 6, , Sources: BPMigas & PT Pertamina (Processed) *) Provisional figures **) Very provisional figures 21* Q1* Q2** Price ($/barel) Value (mil. Volume (mbbl) Price ($/barel) Table 23 World Demand and Supply for Oil Details (in mbpd ) * Q1 Q2 Q3 Q4 Total Q1 Q2 Oil Demand Northern America China Western Europe Others Total Oil Demand Oil Supply OPEC Non OPEC Total Oil Supply Net Supply - Demand Source: OPEC Oil Monthly Report - April 211 *) Provisional figures National oil production slipped from an average of.98 million barrels in Q1/211 to about.92 million barrels during the quarter under review. This decline was the result of multiple factors including an unplanned shutdown and natural decline. In contrast to the stagnant, deteriorating condition of supply, demand for oil spurred by the rising consumption of fuels climbed further during Q2/211. During the period under review, consumption of oil-based fuels was recorded at million barrels, up from consumption in the previous period (18.6 million barrels). The sustained vibrant growth in economic activity and ever growing numbers of motor vehicles were among factors spurring high levels of fuel consumption. Analysis by user sector indicates that the rise in fuel consumption resulted from the high volume of fuel used in the transportation sector (6%), manufacturing sectors (22%) and electricity (14%). Growing fuel consumption for electricity are in line with mounting demand for electrical power in support of increased domestic production amid the programme for conversion to non-oil energy sources that has yet to be fully implemented. On the other hand, household consumption of oil-based fuels steadily declined. 15

24 Million Kilolitre 2 Electricity Household Industry Transportation Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2** Source : Pertamina (processed) * Provisional figures 29 21* 211 Chart 8 Consumption of Oil-Based Fuels 2. Services Trade Balance During Q2/211, the services trade balance posted a USD3.6 billion deficit, representing an increase over the USD2.3 billion deficit in the previous quarter. The rise in the deficit was explained primarily by a reversal in travel and financial services trade balance from a surplus to a deficit during the period under review. An added contribution to the rising deficit came from the increased deficit in transportation services from higher outflows of passenger transportation services. million USD Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2** 29 21* 211 Transportation Travel Other services Services, net * provisional figures Chart 9 Developments in the Services Trade Balance After posting a USD.2 billion surplus in the previous period, travel services slipped back into deficit at US.1 billion. The travel services deficit contributed partly to the school holiday period, a seasonal factor prompting more rapid growth in outbound travellers compared to the rise in inbound travellers visiting Indonesia. Besides numbers of travellers, an added contribution to the travel services deficit came from the seasonal trend of reduced spending by inbound travellers during Q2/211 compared to the previous quarter, even slipping below the levels recorded for outbound travellers spending during the same period. Indonesia recorded a total of 1.85 million outbound travellers in Q2/211, up 11. percent from 1.67 million one quarter earlier. The increase in outbound travellers was also accompanied by stronger imports of travel services, up from USD1.7 billion in the preceding quarter to USD1.8 billion in the period under review. Similarly, numbers of inbound travellers climbed 9. percent in Q2/211 to 1.9 million, compared to the previous quarter's level of 1.74 million. Despite this, the higher numbers were not matched by increase in revenues on travel services, which narrowed to USD1.7 billion compared to USD1.9 billion in the preceding period. A number of international tourism events were organised to attract foreign travellers to Indonesia. The Tour de Singkarak 211 international cycling race held in West Sumatra in June 211, attracting racing cyclists from 13 countries, was one example of an international scale sports tourism event. The one-month 33rd Bali Arts Festival from 11 June to 9 July 211, with seven artist groups participating from five countries, was another example of an international event during the period under review. Other international events during the quarter included the Global Spa Summit (GSS) in May 211 at Nusa Dua, Bali, attracting 296 participants from 38 countries, and the World Culture Forum (WCF) that met in Bali in June 211. As in past quarters, neighbouring countries were again the leading source of travellers to Indonesia. Ranking first were travellers from Singapore (22% share), followed by Malaysia (15%) and Australia (13%). 16

25 Destinations most favoured by international visitors to Indonesia were again concentrated in three areas: Bali (38%), Jakarta (26%), and Batam (17%). The highest numbers of inbound travellers visiting Bali came from Australia, followed by China and Malaysia. On the other hand, the most popular destinations for outbound travellers were countries in the Asia- Oceania region, particularly Singapore (33%), Malaysia (31%), and China (8%). million USD J FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ * 211** ,. Inflows Outflows Travel Balance * Provisional figures Chart 1 Developments in Travel Services In keeping with the growth in outbound travellers, imports of passenger transportation services also mounted during Q2/211, with the transportation services deficit rising from USD1.8 billion one quarter earlier to USD2.4 billion. An added contribution to the increased transportation services deficit also came from imports of freight services, up from USD2. billion to USD2.4 billion alongside the growing volume of merchandise imports. 3. Income Account The income account deficit in Q2/211 reached USD6.9 billion, up from the USD5.3 billion deficit in the previous period. The widening of this deficit was explained mainly by the increased direct investment income deficit, a result of a rise in interest payments between affiliated companies from USD3.7 billion to USD4.6 billion during the quarter under review. A further contribution to the enlarged direct investment income deficit came from increased repatriation of profits by FDI companies. During the quarter under review, portfolio investment income also recorded an enlarged deficit at USD1.3 billion, compared to the previous USD1.2 billion. This increase was primarily the result of higher dividend payouts to foreign investors. At the same time, with declining foreign holdings of Bank Indonesia Certificates (SBIs), interest payments on debt securities eased during the period under review. Interest payments on government and corporate external loans were up in keeping with seasonal patterns. This increase prompted a rise in the other investment income deficit during the quarter from USD.3 billion one quarter earlier to USD.9 billion. millionusd -1, -2, -3, -4, -5, -6, -7, -8, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2** 29 21* 211 Income, net Inv. Income DI Income PI Income OI Income * Provisional figures Chart 11 Developments in the Income Account 4. Current Transfers In Q2/211, the current transfers posted a surplus on par with the previous period at USD1. billion. The current transfers, like before, were bolstered by receipts of worker remittances, which remained largely stable compared to the preceding period at about USD1.7 billion. At the same time, outward remittances by expatriate workers in Indonesia were largely unchanged from one quarter earlier at USD.5 billion. 17

26 million USD Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2** 29 21* 211 Indonesian Workers Foreign Workers Workers Remittance, net * Provisional figures Chart 12 Workers Remittances concentrated in Malaysia (77.5%), Hong Kong (7.%), and Taiwan and Singapore (5.8%). During the same period, Saudi Arabia remained the leading destination for Indonesian migrant workers in the Middle East and Africa with an 83.5% share, followed by the United Arab Emirates (7.6%) and Jordan (3.5%). Taiwan, 5.8% Hongkong, 7.% Brunei, 1.1% Singapore, 5.8% South Korea, 1.1% Japan, 1.% Others,.8% Migrant worker deployment in Q2/211 reached 13 thousand, ahead of thousand in the previous quarter, mainly from greater deployment of formal sector labour. The added deployments of migrant workers were mainly for Hong Kong, Saudi Arabia, and the United States. Although Taiwan saw an overall reduction in worker deployment, more workers were dispatched for employment in the formal sector. Compared to the same period one year before, migrant worker deployment in Q2/211 was down by 11.9%. This was linked to government policy for stricter requirements on migrant worker deployment and a moratorium on worker deployment to Jordan and Kuwait. Worker deployment in the United States and Europe remained stable and was focused on the services sector (hotels, health care, and cruise ships). These developments led to relative equilibrium in migrant worker deployment in the Asia-Pacific region and Middle East and Africa region at 49% of the total respectively. At the end of June 211, the total number of Indonesian migrant workers deployed overseas reached 4.1 million, down from the end-march 211 position of about 4.2 million due to high numbers of returning workers. Within the Asia Pacific region, the majority of Indonesian migrant workers at end-june 211 was Source : Ministry of Manpower and Transmigration, BNP2TKI Malaysia, 77.5% Chart 13 Composition of Migrant Workers, Asia-Pacific Region Oman, 1.2% Jordan, 3.5% Others,.8% Qatar, 1.8% Bahrain,.5% Kuwait, 1.1% UAE, 7.6% Source : Ministry of Manpower and Transmigration, BNP2TKI Saudi Arabia, 83.5% Chart 14 Composition of Migrant Workers, Middle East and Africa In other developments, receipts of government grants during the period under review reached USD44 million, ahead of the previous period (USD6 million). Grants received in Q2/211 included aid for environmental conservation targeting reductions in carbon emissions (REDD+) and for bio-ethanol, textiles and cement in the manufacturing sector. In the aftermath of the tsunami, Japan has pledged to continue granting aid to Indonesia. 18