'Presidents' Club', economic data, Microsoft, dual citizenship, and Mt Ruang eruption
This week in Five Things You Should Know About Indonesia:
đď¸ Prabowo proposes âPresidentsâ Clubâ
đ BPS releases positive economic data
đť Microsoft to invest US$1.7 billion in Indonesia
 đ Indonesia mulls dual citizenship
đ Mount Ruang erupts forcing residents to flee
đď¸ Prabowo proposes âPresidentsâ Clubâ
Prabowo Subianto made headlines this week, when his official spokesperson Dahnil Anzar Simanjuntak announced that the president-elect intended to establish a âPresidentsâ Clubâ, comprising living former Indonesian presidents: Jokowi, Megawati Sukarnoputri, and SBY. Sorry VPs, youâre not invited.
According to Simanjuntak, the club would operate as in informal advisory body, allowing former presidents to discuss national matters and provide Prabowo with advice on running the country. That's all the information that has been revealed so far.
While it might be hard to imagine Megawati and SBY in the same room together, PDI-P and Partai Demokrat have already expressed their support for the idea. Jokowi also endorsed the idea and even suggested that it could meet every two days!! Thatâs one eager beaver.
The 'Presidentsâ Club' could serve as a platform for Prabowo to establish, and strengthen, and maintain ties with Indonesia's former presidents. It could also play a role in mediating conflicts and improving relations between the former presidents, especially considering the strained relationships between Megawati, SBY, and Jokowi. Ultimately, the purpose and effectiveness of this club is unclear, but the likely beneficiary from its establishment would be Prabowo.
đ BPS releases positive economic data
While the rupiah continues to slide against the US greenback, Indonesiaâs Central Bureau of Statistics (âBPSâ) released some relatively positive inflation and tourism data this week.
Inflation reached 0.25% for April, representing a year-on-year total of 3%, while inflation for the calendar year sat at 1.19%. Transportation saw the largest increase at 0.93%, driven by the demand for public transport during Ramadan. In contrast, rice prices appear to have stabilised by dropping 2%, which is largely attributed to the governmentâs surge in imports of the commodity.
The annual projection for this yearâs inflation as of April is 3.08%, slightly higher than the estimate in March of 3.06%. The BPS attributed this minor rise to the increased demand for goods and services over Ramadan. Despite this slight increase, 3.08% is significantly lower than the YoY inflation rate at this time last year, which was 4.33%.Â
In other economic updates, the BPS announced that over three million tourists visited Indonesia in Q1, reflecting a 25% surge compared to the previous year. The result marked the highest quarter for incoming tourists in four years. Malaysians accounted for the largest share of tourists at 15.4%. It shouldnât surprise anyone that Bali airport emerged as Indonesia's busiest port, receiving 44.5% of the country's total tourists. Soekarno-Hatta Airport, Jakartaâs main airport, ranked distant second at 15.45%.Â
The increase in tourist numbers should put a smile on the faces of Indonesian policymakers, as the country continues to push for tourism to return to the pre-pandemic level of 5% of GDP.
đť Microsoft to invest US$1.7 billion in Indonesia
On the back of a recent visit by Appleâs Tim Cook, Microsoftâs CEO Satya Nadella was in Jakarta this week to announce US$1.7 billion of investments in AI, cloud services, education, and infrastructure over the next four years. As part of the investment, Nadella said the company would offer an AI skilling program targeting 840,000 Indonesians as part of a larger regional education program. The investment is the largest by Microsoft in Indonenisa since entering the market 29 years ago.Â
Nadella met with Jokowi at the Presidential Palace before delivering a keynote speech on AI. During their meeting, Jokowi boldly asked Nadella to build Microsoftâs new facilities in Bali or Nusantara âIndonesiaâs new capital. Nadella also met with Luhut Pandjaitan, during which the coordinating minister for deal-making bluntly told the Microsoft CEO that the government would provide the company with incentives should Microsoft invest more in Indonesia, remarking âWhat incentives you get in India, Thailand, we can give you better". Now, thatâs a sales pitch.
Major tech giants, such as Apple and Microsoft, are keen to invest in Indonesia due to its anticipated economic growth, which is forecasted to remain at approximately 5% until at least 2026. Additionally, the expanding middle class in Indonesia is creating a goriwng demand for tech products offered by these companies, presenting a lucrative opportunity to establish a foothold in the market.
 đ Indonesia mulls dual citizenship
During Satya Nadella's keynote speech in Jakarta this week, Luhut Pandjaitan casually revealed the government's plan to provide dual citizenship to former Indonesian nationals residing abroad as a hedge against brain drain hindering the country's economic aspirations.
Under Indonesian law, Indonesian nationals are not permitted to hold dual citizenship. Nevertheless, that hasnât stopped many Indonesian nationals from hiding their second nationality from the relevant government agencies. For Indonesians born with one parent holding foreign nationality, these individuals have until 18 years old to register their preferred citizenship with the government.
Although Luhut didnât provide any further details about the plan, the move aims to stem a brain drain in Indonesia, where the best and brightest are leaving the country for higher salaries and opportunities in other nearby markets, such as Singapore, Australia, and New Zealand. Sebastian Strangio from The Diplomat broke down the factors driving this brain drain:
The unemployment rate for those aged 15-24 currently sits at an alarming 19.4 percent according to the government statistics agency, compared to 5.3 percent for the population as a whole. In Indonesia, official statistics showed that the average monthly salary of Indonesian graduates in 2022 was 4.3 million rupiah ($286), while comparative salaries in Singapore in 2023 were more than 10 times higher.
Itâs not hard to see that the overall picture for graduates isnât great in Indonesia and why many graduates remain abroad after completing studies overseas.
Indonesia hopes that its demographic dividend will take the economy to new levels of prosperity. However, if the best and brightest individuals continue seeking opportunities elsewhere, this trajectory could be derailed. By changing the dual citizenship rules, the government hopes to proect itself by leaving the door open for its citizens to return to Indonesia rather than permanently settle abroad.
đ Mount Ruang erupts forcing residents to flee
On Monday, Mount Ruang, a volcanic island in North Sulawesi, erupted shooting ash, rocks, and lava that were reportedly thrown as high as two kilometers. The eruption destroyed several villages on the islands and forced its residents to flee. There are some pretty terrifying images of the damage caused here.
In response to the disaster, Jokowi held an emergency meeting with military and government ministers to coordinate the evacuation of 9,800 people living on the island. Jokowi told the press that these individuals would be permanently relocated due to the damage caused by their homes and the ongoing threat of eruptions.
All opinions are my own.