Business Displays Cautious Optimism Since The Second Wave Subsided


The Q4 2021 Composite Business Optimism Index (BOI) stands at 11.27%, a 5.98 percentage point upward adjustment from the previous quarter at 5.29%. The survey concludes a net weighted 5.06% of the respondents are still optimistic that their business will improve in this quarter, slightly higher than the previous quarter at 2.39%, while only 1.22% of them express the opposite and the remaining 93.72% see no change. Compared with the previous survey (q-on-q), two parameters (Inventory and Employment) have sprung into negative territory while Volume of Sales, Net Profit, and New Orders record inclining trend and Selling Price becomes the only parameter that stagnated.

  • - Among other parameters optimism index of Net Profit took the largest percentage increase on q-o-q basis, from 2.33% in previous quarter to 8% in Q4. Around 9% of respondents across all sectors expected inclining their net profit in this quarter while only 1% anticipated decrease and the remaining 90% assumed no change. Wholesale becomes the most favorable sector regarding to this parameter, followed by Services and Construction.
  • – Index of New Orders and Volume of Sales moved in tandem to hikes 4% on q-o-q basis. About 10% of respondents project an increase of both parameters while only 2.3% see lowering and the majority 87.7% expect a stagnant. The hikes of sales and new orders is projected the most in Wholesale, Services, and Construction.
  • – Employment index slightly went down -2.66% (q-o-q) from 2.33% in Q3 to -0.33% in Q4. Lowering workforce is mainly projected in Wholesale. Meanwhile, Inventory levels dropped 1.67% (q-o-q) from 0.67% to -1%. Among other sectors, the most decrease in inventory is seen in Agriculture and Manufacturing.
  • – Selling Price became the only parameter that stagnated on q-o-q basis. The Majority of respondents (99%) across all sectors plan to maintain their selling prices in this quarter while only 1% anticipate price hikes. Respondents in Wholesale and Manufacturing are the most sectors planning for price adjustment.

Indonesia's economy has actually begun to recover since the beginning of 2021. This trend is reflected in the realization of economic growth of 7.07 percent in the second quarter of 2021. Although the government has implemented stricter public activity restrictions since July 2021, the national economic growth is projected to continue to gather momentum which is supported by improved export performance, continued fiscal and non-fiscal stimulus, improved investment, accelerated Covid-19 vaccination program, as well as the opening of priority business sectors. The government projected that national economic growth in the third quarter of 2021 will still be in the positive territory, even though public activity has decreased significantly due to the implementation of Public Activity Restrictions (PPKM). The government still believes that national economic growth will be in the positive zone until the end of 2021 in the range of 3.7 percent to 4.5 percent from the previous projection of 4.5 percent to 5.3 percent.

The second wave of COVID-19 that occurred in the third quarter has weakened Indonesia's economic growth projections this year. The World Bank lowered its projection for Indonesia's economic growth to 3.7%, from 4.4% released last April. On the other hand, the Asian Development Bank (ADB) also corrected the prediction of Indonesia's economic growth within this year to only reach 4.1%. Whereas in the previous report, ADB estimated Indonesia's economy to grow 4.5%. To maintain positive economic growth, the government will continue to focus on efforts to control COVID-19 during the PPKM period, by accelerating the national vaccination program and maintaining the sustainability of the business sectors by providing a series of fiscal and non-fiscal incentives.

Coordinating Minister for Economic Affairs Airlangga Hartarto reported that the National Economic Recovery (PEN) program until October 1, 2021 had disbursed Rp 411.72 trillion or 55.3% of the total Rp 744.77 trillion. Meanwhile, the realization of business incentives has reached Rp 59.08 trillion, equivalent to 94 percent of the total allocation Rp 62.83 trillion.