January 17, 2025 • 8 mins
In this episode, Michelle welcomes listeners and introduces the main topics of discussion. She begins by examining Indonesia's 2024 non-oil export prospects to BRICS countries, with a particular focus on China's influence. The episode then transitions to recent economic trends, highlighting Bank Indonesia's decision to cut interest rates and its implications. Michelle explores the rise of Southeast Asia as a global manufacturing hub, discussing both the opportunities and challenges this presents for the region. The episode concludes with closing remarks and a call to action, encouraging listeners to stay engaged with the evolving economic landscape of Southeast Asia.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to the Southeast Asia MarketsDaily Brief.
I’m your host, AI Michelle.
Here are our top stories today...
First, Indonesia's 2024 non-oil exports to theBRICS founders make up 34% of the total, with
China dominating.
Second, Bank Indonesia announces a rate cut.
Third, the rise of Southeast Asia (00:22):
is it a new era in global manufacturing?
Let's dive into our first story.
Indonesia’s non-oil and gas exports to theBRICS nations, which include Brazil, Russia,
India, China, and South Africa, totaled overeighty-four billion U.S.
dollars in 2024.
(00:44):
This figure represents a slight decline fromthe eighty-five point six billion U.S.
dollars recorded in 2023.
Despite this dip, these exports still accountedfor a substantial thirty-four percent of
Indonesia’s total non-oil and gas exports forthe year.
China remains the dominant player among theBRICS countries, significantly influencing
(01:06):
Indonesia's export landscape.
The continuous strong demand from China forvarious Indonesian commodities, such as palm
oil, rubber, and coal, plays a crucial role insustaining this trade relationship.
This dominance is part of a broader trend whereChina's economic growth and expansive
manufacturing sector drive its demand for rawmaterials from Southeast Asia.
(01:31):
It's important to note that while the overallexport numbers have seen a slight decrease,
Indonesia's total non-oil and gas exports in2024 actually increased, reaching two hundred
forty-eight point eighty-three billion U.S.
dollars, up from two hundred forty-two pointeighty-five billion U.S.
(01:51):
dollars in 2023.
This growth highlights Indonesia's expandingrole in the global market, particularly as it
diversifies its export destinations andproducts.
The dynamics of Indonesia's trade with theBRICS nations underscore significant economic
trends.
There is a growing interdependence betweenSoutheast Asian economies and large emerging
(02:13):
markets, particularly China, which remains apivotal player due to its vast consumer base
and manufacturing capabilities.
This relationship is expected to evolve asgeopolitical and economic shifts occur
globally, influencing trade policies andstrategic economic partnerships.
Now, let's turn our attention to BankIndonesia's recent announcement of a rate cut.
(02:39):
In a surprising move, Indonesia's central bankdecided to lower its key interest rate by
twenty-five basis points, bringing thebenchmark seven-day reverse repurchase rate
down to five point seventy-five percent.
This decision aims to stimulate economic growthand address the weakening rupiah, Indonesia's
national currency.
(02:59):
Bank Indonesia's governor, Perry Warjiyo,highlighted that this is a strategic moment to
lower the interest rate, intending to craft amore robust growth narrative for the country.
This is the first rate cut since September,indicating a notable shift in the central
bank's monetary policy approach.
The rate cut also extended to the centralbank's two other main rates, which were
(03:22):
similarly reduced by twenty-five basis points.
This comprehensive monetary easing reflects abroader strategy to ensure economic stability
and growth in the face of anticipated slowereconomic expansion in 2025 compared to last
year.
The move comes amidst a backdrop of globaleconomic uncertainty and rising inflation,
(03:44):
where Bank Indonesia had previously increasedborrowing costs to defend the rupiah.
This rate cut marks a significant pivot fromthe bank's earlier stance, suggesting a
recalibration of priorities towards boostingdomestic economic activity.
Interestingly, the decision caught many bysurprise, including analysts from London-based
(04:05):
Capital Economics.
Gareth Leather, a researcher at the firm,expressed surprise at the timing of the rate
cut, especially as recent policy measures weregeared towards supporting the currency.
However, he noted that given the subduedinflation outlook, with food and fuel prices
likely to remain stable, inflation may not posea significant policy concern in the near term.
(04:30):
This move by Bank Indonesia underscores thedelicate balancing act central banks must
perform between fostering growth andmaintaining currency stability.
As Southeast Asia continues to navigate complexglobal economic dynamics, such policy shifts
will be crucial in shaping the economiclandscape of the region.
(04:51):
As Southeast Asia rises as a globalmanufacturing hub, it's crucial to understand
the forces driving this transformation and theimplications it has for the region and the
world.
Countries like Vietnam, Thailand, and Indonesiaare stepping into the spotlight, attracting
multinational corporations keen on diversifyingtheir supply chains and reducing reliance on
(05:15):
traditional manufacturing giants like China.
This shift is underpinned by several keyfactors.
Competitive labor costs are a significant drawfor manufacturers, allowing companies to
maintain profitability while accessing askilled workforce.
Additionally, Southeast Asia's strategicgeographic location, nestled between major
(05:37):
global markets, provides logistical advantagesthat are hard to overlook.
Government support plays a pivotal role in thistransition.
Many Southeast Asian nations are implementingpolicies and incentives to bolster industrial
development.
For instance, Indonesia is leveraging itsabundant nickel reserves to become a key player
(05:58):
in the electric vehicle supply chain, aimingfor a twenty percent electric vehicle
penetration by 2025.
Infrastructure advancements and the adoption ofsmart manufacturing technologies are further
solidifying Southeast Asia's position as aglobal manufacturing powerhouse.
With a projected manufacturing sector value ofover seven hundred billion U.S.
(06:20):
dollars by 2025, the region is on a path ofcontinued growth.
Each country in Southeast Asia excels indifferent sectors.
Vietnam is leading in electronics, Indonesia inmetals and chemicals, and Thailand in
automobiles and electric vehicles.
This diversification not only strengthens theregion's manufacturing capabilities but also
(06:44):
attracts significant foreign direct investment.
The backdrop to this rise is a global landscapemarked by geopolitical uncertainties and supply
chain disruptions.
Companies are increasingly looking to SoutheastAsia as a reliable manufacturing alternative,
supported by its competitive labor costs andgrowing digital transformation initiatives.
(07:07):
While China remains a dominant force in globalmanufacturing, the shift of operations to
Southeast Asia by many manufacturers indicatesa broader trend of diversification.
This move is partly driven by the need tomitigate potential tariff threats and ensure
supply chain resilience.
The region's future as a manufacturing hub ispromising, but challenges remain.
(07:30):
Addressing infrastructure gaps and ensuringsustainable growth will be key to maintaining
momentum.
However, Southeast Asia's blend ofopportunities and strategic importance makes it
a central player in the global manufacturinglandscape.
As we continue to witness significant foreigndirect investment and export growth in the
(07:50):
region, it's clear that Southeast Asia is morethan just an alternative; it's emerging as a
pivotal hub in global manufacturing.
Companies, governments, and investors shouldseize this moment to invest in the region's
promising future.
Alright that's a wrap for this episode.
If you enjoyed this brief, and would like tostay updated on latest episodes, don’t forget
(08:12):
to click ‘Follow’ in your podcast app.
Thanks again for listening, and hope to catchyou next time.
Welcome back to the Southeast Asia MarketsDaily Brief.
I’m your host, AI Michelle.
Here are our top stories today...
First, Indonesia's 2024 non-oil exports to theBRICS founders make up 34% of the total, with
China dominating.
Second, Bank Indonesia announces a rate cut.
Third, the rise of Southeast Asia (00:22):
is it a new era in global manufacturing?
Let's dive into our first story.
Indonesia’s non-oil and gas exports to theBRICS nations, which include Brazil, Russia,
India, China, and South Africa, totaled overeighty-four billion U.S.
dollars in 2024.
(00:44):
This figure represents a slight decline fromthe eighty-five point six billion U.S.
dollars recorded in 2023.
Despite this dip, these exports still accountedfor a substantial thirty-four percent of
Indonesia’s total non-oil and gas exports forthe year.
China remains the dominant player among theBRICS countries, significantly influencing
(01:06):
Indonesia's export landscape.
The continuous strong demand from China forvarious Indonesian commodities, such as palm
oil, rubber, and coal, plays a crucial role insustaining this trade relationship.
This dominance is part of a broader trend whereChina's economic growth and expansive
manufacturing sector drive its demand for rawmaterials from Southeast Asia.
(01:31):
It's important to note that while the overallexport numbers have seen a slight decrease,
Indonesia's total non-oil and gas exports in2024 actually increased, reaching two hundred
forty-eight point eighty-three billion U.S.
dollars, up from two hundred forty-two pointeighty-five billion U.S.
(01:51):
dollars in 2023.
This growth highlights Indonesia's expandingrole in the global market, particularly as it
diversifies its export destinations andproducts.
The dynamics of Indonesia's trade with theBRICS nations underscore significant economic
trends.
There is a growing interdependence betweenSoutheast Asian economies and large emerging
(02:13):
markets, particularly China, which remains apivotal player due to its vast consumer base
and manufacturing capabilities.
This relationship is expected to evolve asgeopolitical and economic shifts occur
globally, influencing trade policies andstrategic economic partnerships.
Now, let's turn our attention to BankIndonesia's recent announcement of a rate cut.
(02:39):
In a surprising move, Indonesia's central bankdecided to lower its key interest rate by
twenty-five basis points, bringing thebenchmark seven-day reverse repurchase rate
down to five point seventy-five percent.
This decision aims to stimulate economic growthand address the weakening rupiah, Indonesia's
national currency.
(02:59):
Bank Indonesia's governor, Perry Warjiyo,highlighted that this is a strategic moment to
lower the interest rate, intending to craft amore robust growth narrative for the country.
This is the first rate cut since September,indicating a notable shift in the central
bank's monetary policy approach.
The rate cut also extended to the centralbank's two other main rates, which were
(03:22):
similarly reduced by twenty-five basis points.
This comprehensive monetary easing reflects abroader strategy to ensure economic stability
and growth in the face of anticipated slowereconomic expansion in 2025 compared to last
year.
The move comes amidst a backdrop of globaleconomic uncertainty and rising inflation,
(03:44):
where Bank Indonesia had previously increasedborrowing costs to defend the rupiah.
This rate cut marks a significant pivot fromthe bank's earlier stance, suggesting a
recalibration of priorities towards boostingdomestic economic activity.
Interestingly, the decision caught many bysurprise, including analysts from London-based
(04:05):
Capital Economics.
Gareth Leather, a researcher at the firm,expressed surprise at the timing of the rate
cut, especially as recent policy measures weregeared towards supporting the currency.
However, he noted that given the subduedinflation outlook, with food and fuel prices
likely to remain stable, inflation may not posea significant policy concern in the near term.
(04:30):
This move by Bank Indonesia underscores thedelicate balancing act central banks must
perform between fostering growth andmaintaining currency stability.
As Southeast Asia continues to navigate complexglobal economic dynamics, such policy shifts
will be crucial in shaping the economiclandscape of the region.
(04:51):
As Southeast Asia rises as a globalmanufacturing hub, it's crucial to understand
the forces driving this transformation and theimplications it has for the region and the
world.
Countries like Vietnam, Thailand, and Indonesiaare stepping into the spotlight, attracting
multinational corporations keen on diversifyingtheir supply chains and reducing reliance on
(05:15):
traditional manufacturing giants like China.
This shift is underpinned by several keyfactors.
Competitive labor costs are a significant drawfor manufacturers, allowing companies to
maintain profitability while accessing askilled workforce.
Additionally, Southeast Asia's strategicgeographic location, nestled between major
(05:37):
global markets, provides logistical advantagesthat are hard to overlook.
Government support plays a pivotal role in thistransition.
Many Southeast Asian nations are implementingpolicies and incentives to bolster industrial
development.
For instance, Indonesia is leveraging itsabundant nickel reserves to become a key player
(05:58):
in the electric vehicle supply chain, aimingfor a twenty percent electric vehicle
penetration by 2025.
Infrastructure advancements and the adoption ofsmart manufacturing technologies are further
solidifying Southeast Asia's position as aglobal manufacturing powerhouse.
With a projected manufacturing sector value ofover seven hundred billion U.S.
(06:20):
dollars by 2025, the region is on a path ofcontinued growth.
Each country in Southeast Asia excels indifferent sectors.
Vietnam is leading in electronics, Indonesia inmetals and chemicals, and Thailand in
automobiles and electric vehicles.
This diversification not only strengthens theregion's manufacturing capabilities but also
(06:44):
attracts significant foreign direct investment.
The backdrop to this rise is a global landscapemarked by geopolitical uncertainties and supply
chain disruptions.
Companies are increasingly looking to SoutheastAsia as a reliable manufacturing alternative,
supported by its competitive labor costs andgrowing digital transformation initiatives.
(07:07):
While China remains a dominant force in globalmanufacturing, the shift of operations to
Southeast Asia by many manufacturers indicatesa broader trend of diversification.
This move is partly driven by the need tomitigate potential tariff threats and ensure
supply chain resilience.
The region's future as a manufacturing hub ispromising, but challenges remain.
(07:30):
Addressing infrastructure gaps and ensuringsustainable growth will be key to maintaining
momentum.
However, Southeast Asia's blend ofopportunities and strategic importance makes it
a central player in the global manufacturinglandscape.
As we continue to witness significant foreigndirect investment and export growth in the
(07:50):
region, it's clear that Southeast Asia is morethan just an alternative; it's emerging as a
pivotal hub in global manufacturing.
Companies, governments, and investors shouldseize this moment to invest in the region's
promising future.
Alright that's a wrap for this episode.
If you enjoyed this brief, and would like tostay updated on latest episodes, don’t forget
(08:12):
to click ‘Follow’ in your podcast app.
Thanks again for listening, and hope to catchyou next time.
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