DISCLAIMER

This research report is prepared by PT MINNA PADI INVESTAMA Tbk for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. The report has been prepared without regard to individual financial circumstance, need or objective of person to receive it. The securities discussed in this report may not be suitable for all investors. The appropriateness of any particular investment or strategy whether opined on or referred to in this report or otherwise will depend on an investor’s individual circumstance and objective and should be independently evaluated and confirmed by such investor, and, if appropriate, with his professional advisers independently before adoption or implementation (either as is or varied).

Minggu, 30 November 2014

November in Review

Cutting the Subsidies

President Joko Widodo personally announced the reduction of fuel subsidies on November 18th. The government has decided to raise the price of gasoline by Rp2,000 per liter to Rp8,500 per liter, while the price of diesel fuel was raised to Rp7,500 per liter from Rp5,500 per liter. The subsidies cut has met criticisms as well as praises, but according to Jokowi, the subsidies will be rechanneled to more productive sectors such as building infrastructures (toll road, docks, roads, etc.) as well as for education and healthcare.

Preemptive Strike

In response to the cut in fuel subsidies, Bank Indonesia has decided to raise its key interest rate (BI rate) to 7.75% from 7.50%. Lending facility was raised by 50 basis points to 8.00% while the deposit facility has been maintained at 5.75%. Post-subsidies cut, the central bank now expects the inflation may reach around 8%
(year-on-year) at the end of 2014. Its previous inflation target at 3.5%-5.5% this year may be pushed up by 2.5% to factor in the fuel price hike. The impact of the government’s move may last for at least three months.

Diposting oleh di 13.08
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