KATADATA ? Indonesia?s economy is slowing. It can be seen from the economic growth from the first quarter 2015, which was only 4.71%, much lower than the same period last year, which was 5.14%.
The lethargic economy is marked by the weakening growth of demand. The people?s and household consumptions which usually contributed 54% to the gross domestic products has fallen gradually since last year. If during the first quarter of 2014 it had a 5.6% growth, during the first three months of 2015 it only had 5% growth.
Thus, the sector that is affected severely by the slow economic growth is the real sector, which is the economy sector that produces goods and have a long-term investment nature; and in that sector, the productions must be cut. For example in the automotive sector, during the first semester of 2015, there has been a 14.5% cut in the production to become 577,507 units compared to the same period last year, which was 675,425 units.
The fall in the productions also shows the fall in demand. This can be seen from the sales data of the Association of Indonesian Automotive Manufacturers (Gaikindo) during the first semester of 2015, which only produce 525,458 units or falling by 18% compared to the same period last year.
?Besides the slow economic growth that affects the automotive industry, another factor that also negatively affect it is the depreciation of rupiah. It has made all of the component price for automotives to be more expensive,? said the Chairman of Gaikindo, Jongkie Sugiarto, when he was contacted by Katadata several time ago.
The weak sales has also made Gaikindo to revise the annual sales target from the previous 1.2 million units to become 1.1 million units. ?And the target of economic growth that is at 5.7% is going to be really hard to achieve,? said Jongkie.
The fall in the automotive sales has also negatively affected the performance of Astra International, the conglomerate that one of its business focus is in this sector. During the first semester of 2015, the nett profit of the company has fallen by 18% to become IDR 8.1 trillion. The fall in the profit growth is the continuity from the gradual drop during the second semester of 2014, which fell by 12%.
Out of six business segments that are managed by Astra, five of them are having a decline in their performance. The automotive sector, the biggest profit contributor, has even experience a drop up to 15% from IDR 4 trillion in 2014 to become IDR 3.4 trillion.
The Head of Public Relations of Astra International, Yulian Warman, said that the car sales of the company has fallen by 21% annually, which means the company can only sell 263 thousand units. While for the motorbike sales it weakened by 24% so that only 3.2 million units sold. Even Astra also does not dare to target an automotive sales by the end of this year. However, they are optimist that Astra?s market would still be maintained to be at around 45% to 55%.
Even though the sales are dropping, the automotive factories have to hold themselves from laying off their employees. Jongkie said that what the companies should do is to cut down the shifts divisions in several factories. ?Actually, we never hope for this to happen,? said Yulian.
Yulian also said that his side is still holding back from laying off any workers. They would only cut down working shifts on Saturday and Sunday. Yulian explained that this is the normal thing to do since Astra is quite sensitive with the current economic condition. ?We have experienced worse things than now. Like in the year 1998, our production was at 367 thousand units, but in 1999, the production fell up to 58 thousand. Back then, there was massive layoffs,? said Yulian.
The effect of the slow economy is also felt in the cement sector. The sale of the basic material of the buildings has fallen by 4% during the first semester of 2015 to become 27 million ton compared to the same period last year. The result is the performance of cement companies have also declining. The nett profit of Semen Indonesia, the biggest national cement producer, has even fallen up to 20.4% to become IDR 2.2 trillion.
The same goes with Indocement Tunggal Prakarsa, which experienced a fall in the nett profit by 8.4% to become IDR 2.3 trillion. ?Indeed we can say that this year is a year of struggle. Not only in the cement industry, but for the all national industries,? said the Main Director of Indoncement Tunggal Prakarsam Christian Kartawijaya.
The fall in domestic demand has even made Indocement to close three factories in Citeureup, West Java, which used to have a total capacity of 1.5 million ton. However, Christian said that the closing of the factories still haven?t hindered the cement production of the company, and that there is still no layoffs being done.
Not only in the real sector, the slow economy has also affected the banking. This can be seen from the increase in the non-performoing loan (NPL) in the first semester of 2015. Several banks have increased the provision fund due to the NPL to anticipate the worst economic condition until the end of the year.
There are three known state-owned banks that have increased the coverage ratio for the NPL. Bank Mandiri?s coverage ratio is at 168% to anticipate the slow economic growth that is predicted to keep on happening until next year. This is because the NPL of the bank with the biggest asset has increased from 2.23% to become 2.43% in the first semester of 2015.
Bank Negara Indonesia (BNI) is strucked harder by the increase in the NPL. By the end of the first semester of 2015, the NPL ratio of BNI has reached 3%, which was increasing compared to the same period of the previous year (2.2%). Due to the raise in the NPL, the Main Director of BNI, Achmad Baiquni, said that the firm has increased the coverage ratio from 129% to be 138.8%. ?This is the cause of the fall in net profits,? said Achmad.
The same also goes for Bank Rakyat Indonesia (BRI). In the first semester of the year the nett profit has only grown by 1.6%, which leads to a nett profit of IDR 11.9 trillion from the previous year?s, which was IDR 11.7 trillion.
The Finance Director of BRI, Haru Koesmahargyo, said that the fall in the profit growth is due to the low loan granted. The economic situation that is not beneficial is also the cause that increases the NPL. Thus, the current coverage ratio over the NPL in BRI is 141%.
Until the end of first semester, the gross NPLratio has increased from 2.33% from previous year to be 1.97%. ?Unfortunatey, the credit doesn?t give back an expected repayment,? said Haru, Friday (31/7). The increase in NPL is primarily contributed by the corporation segment, mainly the agribusiness. This sector is pressured by the slow economic growth as well as the fall in the export demand of Chine due to the slow economic growth there.
The Corporate Director of PT Bank Central Asia Tbk. (BCA), Dhalia Mansor Ariotedjo, said that the fall in credit happens in almost all sectors. There are many firms that have not got the opportunity to disburse their credit funds since they want to delay their investment, including in the infrastructure sector that delayed their development projects. Furtheremore, there has not any single company yet that propose for a funding for the second semester of 2015.
?Since the start of the year, there has been no credit proposals, or probably we can say as little. It is so small, much less an investment. So, if we see from the level of proposals coming in now, looks like we can already forsee the disbursement increase in the fourth quarter of the year,? said Dhalia.
The Finance Minister Bambang Brodjonegoro admitted that the slow economic growth has affected the performance in the real sector, which then affects the banking. However, the government is optimist since the budget absorption in the second semester would increase the loan given by the banks in order to boost the performance in the real sector.