31 December 2018

The implementation of the 2019 general election is expected to support economic growth. In addition, work on infrastructure projects is expected to continue to accelerate ahead of the presidential election period. However, businesses are predicted to take a wait-and-see attitude during this democratic party period.

The palm oil agro-industry is the main sector in supporting the North Sumatra economy with a share of production reaching 56.1% of the total North Sumatra industry. In addition, the palm oil agro-industry absorbs 26.6% of the total industrial workers of North Sumatra.

“The government's step by implementing 20 percent Biodiesel or B20 last September was right,” said President Director of PT Mahkota Group, Usli Sarsi.

Palm oil, which has many benefits, has been proven to be able to boost Indonesia's economic growth, even becoming the largest contributor to Indonesia's foreign exchange. In 2017, palm oil earnings reached Rp239 trillion. With the government's policy of implementing B20, the potential of palm oil can be further maximized.

“In 2020 the government will increase the use of palm oil by accelerating it to B30,” Usli said. It is believed that economic growth can increase significantly through palm oil, even the most likely to be developed. Because Indonesia has a lot of land that can be planted with oil palm. No wonder in a few years, Indonesia became the largest CPO producer in the world.

Apart from having a large area of land to plant oil palm, it is also supported by adequate technology to produce quality CPO. With the implementation of biodiesel, palm oil can be used for domestic needs. So far, CPO has been mostly exported, so prices are very vulnerable to being manipulated. But by increasing domestic use, prices can be better.

As the world's population continues to grow, energy use is automatically increasing. While the supply of energy from fossils is limited. With the use of renewable or sustainable energy, there is no worry about running out and can even be produced in large quantities.

“I see concerns from outside countries about the government's seriousness in developing palm oil,” Usli said. The concern is well-founded. If the use of palm oil is absorbed more domestically, the need for foreign countries will automatically decrease. So far, exports are quite large and continue to increase.

The use of vegetable oil has not been able to meet the needs of the world community, given the limited oil produced. Unlike oil palm which produces much more oil.

Revenue

Indonesia's potential to produce CPO is wide open. According to Usli, with more than 14 million hectares of oil palm plantations in Indonesia, the resulting harvest is not yet optimal. Currently, the average yield of oil palm is 3-4 tons per hectare, while Malaysia has produced 12 tons per hectare.

By empowering existing plantations, Indonesia can already increase CPO production.

With increased production and high prices due to more domestic use, farmers' incomes increase. This not only benefits farmers, but also other sectors are boosted, so that the economy runs well.

The fear of a political year, according to Usli, is overblown. Indonesia has held several elections and presidential elections. All went well without having a negative effect on the economy.

The wait-and-see move of business actors actually slows down the economy. Instead, businesses should not hesitate to invest.

If you wait for political conditions to stabilize, you will be left behind. By investing now, after the political year, you can improve your business.

MURI Record-Breaking Investment and Capital Market Expert and Chairman of Panin Sekuritas Medan, Darmin, said research conducted by Panin Asset Management on the process and results of the 2019 elections if they occur beyond expectations and the escalation of the trade war between China and the United States is a barrier to economic growth in Indonesia.

Political stability, pro-market economic policies, potential changes in the Fed's interest rate policy are opportunities for economic growth in Indonesia. The simultaneous election system allows whoever is elected, the government will be more stable because the executive and legislative branches become one package.

A stable and solid government will reduce political uncertainty, which will have a positive impact on economic growth and infrastructure development.

“I see that the challenger and the incumbent have similar economic visions. As long as the election runs safely and smoothly, whoever wins will not have a significant impact on the movement of the Composite Stock Price Index (CSPI),” he said.

In addition, the property sector, which has many linkages with other sectors, ranging from building materials, contractors, furniture, property brokers, to bank credit, and employment in 2019, experienced growth.

Bank Indonesia's policy to relax the loan to value ratio (down payment) and accelerate credit disbursement to developers, as well as the plan to increase the PPnBM imposition limit for luxury properties from IDR 20 billion to IDR 30 billion, are indicators that the government is taking pro-market policies.

Economic data shows that in 2020 there are signs of a possible recession in the United States. Therefore in 2019 the potential for an interest rate hike will still exist, but it is not expected to be as aggressive as 2018. Under these conditions, if the exchange rate continues to strengthen and oil prices stabilize, there is a possibility that the BI Reverse Repo Rate could fall in 2019.

At the G-20 meeting in Argentina, the US and Chinese presidents agreed to make a temporary peace regarding the trade war for 3 months. However, the potential for trade war escalation is still possible again in 2019.

Source : http://harian.analisadaily.com/jentera/news/b20-dongkrak-pertumbuhan-ekonomi/670966/2018/12/30