Econmark Mid December 2020-Special Topic On Household Spending - FIN

ECONMARK
Mandiri Group Research | mid December 2020
ECONMARK Special Topic on Household Spending:

Research Team Contributors
To Pull Out Spending Trend from the COVID-19
Andry Asmoro
Dendi Ramdani Pandemic
Teguh Yudo Wicaksono
Leo Putera Rinaldy During the pandemic, the consumption behavior has changed dramatically from
normal or pre-COVID-19. In April and May, consumption dropped drastically because
Handy Yunianto
economic activities were paused to reduce the coronavirus spread. In the second quarter
Adrian Joezer
of 2020 (2Q20), household consumption plunged to 4.04%, which subsequently caused
Imanuel Reinaldo
a deep contraction in economic growth to -5.32%. Fortunately, after the relaxation of the
Faisal Rachman
Large-Scale Social Restriction (PSBB/partial lockdown) in 3Q20, household spending and
Reny Eka Putri some other consumption indicators, along with their proxies, have shown a modest
Rully Arya Wisnubroto rebound.
Andrian Bagus Santoso
We believe consumer confidence is key to support the increase of spending; while
Nadia Kusuma Dewi
social assistance is critical to help the purchasing power of lower income group. For
Mamay Sukaesih
the low-income group, consumption decline is certainly related to their income, which is
Adjie Harisandi
very likely under pressure during the pandemic. The spending contraction in food and
Andrian Bagus Santoso drink, referring to BPS (Badan Pusat Statistik), was quite worrying, as this might indicate
Astari Adityawati the purchasing power. Meanwhile, for the middle-to-top income
Mufti Faisal Hakim groups, their consumption decline was closely related to consumer confidence, which
Haris Eko Faruddin gives their perspective about the upcoming economic prospect. We think this
confidence is mainly affected by the number of new positive COVID-19 cases. If the
number increases, people may worry that the recovery rate will continue at a sluggish
pace; hence, the uncertainty about the economic outlook worsens.
On top of that, the key question in the upcoming months is whether household
spending will recover quickly, as it is essential to increase the aggregate demand.
We believe that consumer confidence is the main answer to push household spending
in the coming months. We can expect an optimistic scenario from the arrival of effective
COVID-19 vaccines and the vaccination program, which could effectively prevent
infections. Still, we think it will take time to execute the vaccination program and improve
consumer confidence. We estimate the recovery will only show its momentum in the
second half of 2020, assuming the vaccination is implemented as planned.
Of course, in 2021, we are still highly dependent on government spending as a

growth engine, particularly the social assistance program in supporting the low-
. We propose that the government improve its
beneficiary database for better targeting; provide direct cash transfer (instead of in-kind
transfer) which we believe is more cost-efficient and create more business activities in
the retail sector.
Please see important disclosure at the back of this report

ECONMARK : To Pull Out Spending Trend from the COVID-19 Pandemic
Mandiri Group Research | mid December 2020 Edition
Household Spending Reallocation

Mandiri Group Research | May 2017ig
After nine months of the COVID-19 pandemic, the impact has widely and
deeply affected the economy. After the first COVID-19 case officially declared by
President Joko Widodo on 3 March 2020, the impact has hit
almost all sectors; some hit only lightly, some severe. The 2Q20 economic growth
suffered the most, as economic activities in many sectors were strictly limited, and
people mobility was rigorously regulated from April to May 2020. As a result,
economic growth contracted by 5.3% in the 2Q20. Additionally, all spending
contracted severely. Household spending which has the largest proportion of GDP
from the spending side, at 57.85% contracted by -5.52%. We suppose that the
uncertainty due to the pandemic and the weakening purchasing power were the
main reasons for the household spending contraction.
Services are the most affected sectors by the pandemic. By sector, we see that
up to 3Q20, the Transportation & storage, Hotel & restaurant, Other services,
Corporation services, and Wholesale & retail trade still suffer from the growth
contraction (Figure 1
However, looking at their qoq growths, they are recovering fairly fast, indicated by
the qoq growth in 3Q20 (Figure 2). We think the qoq growth in 3Q20 was
unsurprising, as economic activities in 2Q20 were very limited due to the
government policy to pause businesses in many sectors and restrict
mobility. Subsequently, the big question is how long the recovery will take to reach
the pre-COVID-19 level.
FIGURE 1. YOY SECTORAL ECONOMIC GROWTH 1Q, 2Q, AND 3Q20 (%)
25
15.3
10.8
10.6
10.6
10.4
9.8
15
7.1
6.0
5.9
5.4
4.6
4.6
3.9
3.8
3.7
3.2
2.9
2.4
2.3
2.2
2.2
2.1
2.0
2.0
1.9
1.6
1.3
1.2
1.1
0.5
0.0
-5
-1.0
-2.4
-2.7
-3.2
-4.3
-4.3
-4.5
-5.0
-5.4
-5.5
-5.6
-6.2
-7.6
-7.6
-15
-11.9
-12.1
-12.6
1Q20 2Q20 3Q20

-16.7
-25
-22.0
-35
-30.8
Real Estate
Jasa lainnya
Transportasi dan Pergudangan
Jasa Perusahaan
Perdagangan Besar dan Eceran; Reparasi
Pengadaan Listrik dan Gas
Konstruksi
Jasa Pendidikan
Industri Pengolahan
Jasa Keuangan dan Asuransi

Pertambangan dan Penggalian
Pengadaan Air, Pengelolaan Sampah,
Informasi dan Komunikasi

Penyediaan Akomodasi dan Makan Minum
Pertanian, Kehutanan, dan Perikanan
Jasa Kesehatan dan Kegiatan Sosial

Administrasi Pemerintahan, Pertahanan
Limbah dan Daur Ulang

dan Jaminan Sosial Wajib
Mobil dan Sepeda Motor
Source: BPS
Please see important disclosure at the back of this report Page 2 of 49

FIGURE 2. QOQ SECTORAL ECONOMIC GROWTH 1Q, 2Q, AND 3Q20 (%)
Mandiri Group Research | May 2017ig 30
24.3
14.8
13.7
10.9
20
8.3
7.9
5.7
5.7
5.6
5.3
5.3
2.6
1.7
1.5
1.1
10
1.0
0.5
0
-0.3
-0.7
-0.7
-1.2
-1.2
-1.4
-2.3
-2.6
-10
-3.5
-3.8
-4.1
-5.7
-6.4
-6.5
-6.7
-6.9
-7.4
-7.9
-8.5
-10.3
-10.4
-20
-14.1
-15.1
-22.3
-30 1Q20 2Q20 3Q20
Transportasi dan Pergudangan-29.2

-40
Pertahanan dan Jaminan…
Real Estate
Jasa lainnya
Pengadaan Listrik dan Gas
Jasa Perusahaan
Konstruksi
Industri Pengolahan
Jasa Pendidikan
Pertambangan dan Penggalian

Jasa Kesehatan dan Kegiatan
Jasa Keuangan dan Asuransi

Penyediaan Akomodasi dan
Perdagangan Besar dan Eceran;
Administrasi Pemerintahan,
Reparasi Mobil dan Sepeda…
Makan Minum
Sosial
Source: BPS
The pandemic has clearly affected household spending behaviors. At least two main
drivers cause the spending behavior changes: economic uncertainty and lower
income. The pandemic creates more uncertainty, which may be worse than in any
economic and financial crises in the last 100 years. We do not know precisely when
the pandemic will be over; consequently, households are postponing their spending
as a preventive measure to prepare for the worst.
FIGURE 3. HOUSEHOLD SPENDING DECREASED IN ALL CATEGORIES OF GOODS AND

SERVICES (%)
10
-5
-10
-15
-20
Mar-11
Mar-18
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-19
Mar-20
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Household Total Spendng Foods & drinks spending (exc. restaurant)

Clothings, shoes dan bodycares spending Hotel & restaurant spending
Source: BPS

The postponed spending was reflected by the decrease in all categories of goods
and services of consumer spending. The latest BPS data shows that the household
total spending has decreased since 1Q20. In particular, the household spending for
hotel and restaurant contracted by -3.31% in 1Q20, -5.14 in 2Q20, and -4.27% in 3Q.
Correspondingly, the household spending for hotel and restaurant contracted by
-16.55% in 2Q20 and -10.9% in 3Q20. Furthermore, we find a worrying indicator that
household spending for foods and drinks contracted by -0.73 in 2Q20 and -0.69% in
3Q20. Our interpretation of the contraction of household spending for foods and
drinks may be that the purchasing power of the household has started to decline.
Meanwhile, we think the contraction of household spending for clothing and shoes
might be caused by the household decision to postpone spending as confidence
declined.
FIGURE 4. CONSUMER CONFIDENCE INDEX DID NOT IMPROVE AFTER AUGUST 2020 (%)
140
130
120
110
121.7
117.7
113.8
100
90
80 86.2 86.9
84.8 83.8 83.4
70 77.8 79.0
60
50
June
March
October
December
April
January
July
August
May
November
September
February
2018 2019 2020
Source: BPS
We think consumer confidence is the key to recover the economy. Bank

Indonesia consumer confidence data shows that the confidence has recovered
from its rock bottom at 77.8 in May 2020. The confidence index reached the highest
point at 86.9 in August but weakened to 79.0 in October 2020. We presume the
weakening confidence in October was closely related to the increase of positive
COVID-19 cases. Consumer confidence can be used as an important proxy for
household spending behavior. Low confidence means people may expect a
worsening economic prospect. Particularly, the uncertain condition implies people
will postpone their spending and put their money in savings. Conversely, if the
consumer confidence is high, people may expect a better prospect, implying they
would be willing to spend their money. In this case, people are optimistic about
economic growth, thus also about their income prospects. In the current COVID-19
pandemic, obviously, consumer confidence is the major factor that supports
economic recovery.

FIGURE 5. INDOMARET MONTHLY REVENUE (IDR TN) FIGURE 6. INDOMARET MONTHLY SALES GROWTH (%)
9.0 30
25.0
7.5
25
20
6.0
15
4.5 10
4.6
5
3.0
0
1.5 -5
-10
0.0 -11.8
-15
July
May
February
March
April
June
December
November
January
August
September
October
Nov-19
Feb-19
Jun-19
Dec-19
Jun-20
Jul-19
Oct-19
Jul-20
Apr-19
Sep-19
Feb-20
Apr-20
Aug-20
May-19
Aug-19
May-20
Jan-19
Mar-19
Jan-20
Mar-20
2018 2019 2020
Source: Indomaret Source: Indomaret
Retail sector has started to recover. We use Indomaret (retail company) as a proxy
for retail sales performance. Its data indicates the retail sector contracted to -11.8%
in June 2020 after reaching the highest growth at 25.0% in February 2020. We see
that the highest growth in February 2020 was due to people stocking up their home
supplies. At the end of February, people started panicking as the rumor about
COVID-19 entering Indonesia emerged. Note that first COVID-19 positive
case was officially announced on 2 March 2020. After reaching the highest growth,
sales plunged to the lowest level in June 2020. In August 2020, sales growth reached
a positive growth of 4.6%. We think the positive growth in August indicated that the
retail sector started to improve from the previous periods. Additionally, the data
also shows that sales revenues in July and August 2020 were already similar to the
pre-COVID-19 level.
However, we identified that Indomaret sales revenue structure has changed

toward a higher proportion of basic foods (sembako), while proportions of non-basic
needs and other supplementary foods & goods got smaller in the total sales
revenue. We think retail growth would certainly recover, as it is compared to the
extreme condition during the Large-Scale Social Restriction (PSBB/Pembatasan Sosial
Berskala Besar). However, the key question is whether the spending and retail sector
will continue to recover in the upcoming months toward pre -COVID-19 level. The
question is valis ad situation worsened as the pandemic spread out, causing more
uncertainty about the economy prospects. Below we are investigating in more
details as to the spending behaviors using a big data set from Bank Mandiri.

Mandiri Group Research | May 2017ig Details about Household Spending

We passed the worst, but recovery may take time. To better understand the
economy during the pandemic, spending i.e., spending indices offers useful
insights about the economy ups and downs. The spending indices also give the most
up-to-date view compared to the official GDP figure. We observe that spending plunged
substantially during the first PSBB, suggesting the containment policy was a heavy shock
to the economy (see Figure 7). It is important to note that this was the nation-wide
spending. However,
presumably, its policy translates into the national level.
FIGURE 7. SPENDING INDEX

120
110
100
90
80
70
60
50
40
26-Jan 26-Feb 26-Mar 26-Apr 26-May 26-Jun 26-Jul 26-Aug 26-Sep 26-Oct
Transaction frequency index Transaction volume index
Source: Bank Mandiri Big Data Analysis
But the increasing confirmed cases held back recovery. When Jakarta reopened its
economy new normal , spending began to improve. But as COVID-19 confirmed
cases continued increasing rapidly in September, local governments in big cities, such as
Jakarta and its surroundings, reverted to stringent measures. DKI Jakarta announced the
second large-scale social distance policy (PSBB II). Between September and mid-October,
spending nosedived.

FIGURE 8. SPENDING INDEX

180
160
140
120
100
80
60
40
20
0
Supermarkets Retail Restaurants Department Stores
Not all sectors were affected equally; retail and restaurant among the hardest hit.
The first round of PSBB significantly restricted economic activities. Shopping malls had
to close, and no restaurant was allowed to have dine-in. This significantly reduced the
spending on those sectors. Figure 8 breaks down the spending data by merchant
category: department stores, restaurants, retail, and supermarkets. Spending indices for
department stores, restaurants, and retail dropped significantly during March-April 2020.
Indeed, spending from department stores dropped well below 20% compared to the
January level.
The second-round PSBB disproportionately hit department stores and restaurants.

Unlike the first PSBB, the second was relatively relaxed in certain sectors, such as
shopping centers, which the Jakarta government allowed to open at 50% capacity.
Meanwhile, a stricter rule was applied to restaurants. Dine-in was not allowed, which
disproportionately hurt restaurants whose revenues mostly rely on dine-in.
Tumbling for a while, but spending on restaurant returned to the recovery path.
Following the announcement of PSBB II, spending on department stores and restaurants
dropped. They had normal operating hours, yet with limited capacity. Still, the falling
spending in department stores was deeper than in restaurants. Meanwhile, supermarkets
appeared to be isolated from the impact of PSBB II. It was not surprising since they
provide day-to-day household needs. However, as Jakarta ended its second-round PSBB,
spending picked up.

FIGURE 9. SPENDING INDICES OF PERSONAL HOBBIES, SPORTS, AND OTHERS

180
160
140
120
100
80
60
40
20
0
Sports Hobbies Gasolines Electronics
Cautious consumers hold spending. Despite reopening, spending took more time to
improve following the second PSBB, unlike the reopening after the first, when spending
immediately went up. The longer period estimated for normal spending may be due to
cautious consumers. As early as November 2020, spending on restaurants began
returning to the January level. On the other hand, spending on department stores
remained well below the January level.

Work-from-home and social distancing measures created new activities and

hobbies. Anecdotal evidence from the media reveals that people have found new
hobbies, sports, and activities during the pandemic. Many urban citizens started home
gardening amid the pandemic.1 Cycling has set a new trend among urbanites, leading to
skyrocketing bicycle prices.2 The behavioral changes are also evident in the spending
indices. The spending index on hobbies dramatically increased after the first reopening.
The spending on hobbies was almost 170% of its January 2020 level. As of November
2020, the spending on hobbies has begun to normalize.
Travel and tourism-related sectors will take more time to recover. Consumers still
hold spending on tourism-related services. Spending on travel mostly related to tourist
destinations has been affected the most since the first PSBB. Despite signs of recovery,
the recovery rate is clearly very slow. We also see a similar pattern in spending for airlines.
On the other hand, in the last few weeks, spending for hotels began to pick up quickly.
Long holidays during October and anxiety over a long period of social distancing have
led to people craving to travel to recreational spots. Hotel occupancy rates have
increased in the last few weeks.3
FIGURE 10. SPENDING INDICES OF TRAVEL AND TOURISM-RELATED SECTORS
120
100
80
60
40
20
0
Travel Transportations Hotel Airlines
Source: Bank Mandiri Big Data Analysis.
1 Jakarta Post, “Urbanites find solace in urban farming amid COVID-19 quarantine", downloaded from
https://www.thejakartapost.com/news/2020/04/12/urbanites-find-solace-in-urban-farming-amid-COVID-19-
quarantine.html
2 Jakarta Post, “Amid pandemic bike boom, invest in wheels of change", downloaded from
https://www.thejakartapost.com/academia/2020/08/01/amid-pandemic-bike-boom-invest-in-wheels-of-
change.html.
3
Jakarta Post, "Recreational spots experience hit and miss during long weekend", downloaded from
https://www.thejakartapost.com/paper/2020/11/02/recreational-spots-experience-hit-and-miss-during-long-
weekend.html

Shopping Center and Restaurant Visits

Spending improved, but the visit rate to stores still affected by PSBB II. Mandiri
Institute conducted live-monitoring activities based on Google Maps data in the two
most affected sectors (retail and restaurants) from July to October.4 The average visit rate
to stores in October reached 52%, declining slightly from 57% yet improving from July
position at 46%. The slipping visit rate stemmed from PSBB II, coupled with the increasing
transmission of COVID-19.
Different recovery rates of store visits reflect local policies and the increases in
COVID-19 confirmed cases. By October 2020, Surabaya ranked first in terms of store
visits (58%), followed by Makassar (57%) and DKI Jakarta (55%). PSBB II has affected
shopping behaviors. At
to a dramatic increase in September visit rate. Yet, as DKI Jakarta reopened its economy,
store visits slightly declined.
FIGURE 11. RATE OF VISITS TO SHOPPING PLACES BY CITY, JULY-SEPTEMBER 2020 (%)
70% 66%
63%
59% 58% 58%
57% 57%
60% 53% 55% 56%
53% 53% 54% 55% 55%
52% 52% 53%
53% 56%
51% 52% 55% 51% 52% 51%
48% 49%
50% 46% 49% 46%
40%
40%
30%
20%
10%
0%
Tangerang Medan Bekasi Bogor Denpasar Jakarta Makassar Surabaya
3-7 July 6-11 August 9-13 September 9-17 October
Note: The percentages above describe the relative visit rates relative to normal visits
Source: Google Maps estimated by Mandiri Institute
Visit rates to stores dominated by shopping malls. The disaggregated data shows that
in October 2020, the visit rate to shopping malls reached 63%, the highest among other
store types, as malls offer various extensive experiences for consumers, including
marketplaces, entertainment, and restaurants. This characteristic explains their relatively
high visit rate. Meanwhile, supermarkets and other shops experienced only minor
declines, considering they are more oriented toward daily household needs. The better
visit rate to shopping malls was also driven by the relaxed work-from-office policy, as
workers are also consumers that frequently visit shopping malls.
4 In October 2020 we collected data from 7,217 stores and 9,362 restaurants and conduct live-tracking on their
visit rates. Live-tracking is based on data from Google Maps.

FIGURE 12. VISITS TO STORES BY CATEGORY, JULY-OCTOBER 2020 (%)

70% 66%
61% 63%
60% 56% 55%
49% 51% 50% 51% 50%
50% 44% 46%
40%
30%
20%
10%
0%
Shopping Mall Supermarket Other Stores
Social restrictions strongly affected the visit rate to restaurants. The data from
Google Maps showed that restaurants visit rate declined to 47% from 53% in September.
The highest visit rate to restaurants was in Surabaya (52%). Meanwhile, the recovery rate
of restaurant visits appears to be rather slow in Denpasar, Bali. By October, its visit rate to
restaurants was at 44% relative to the period before COVID-19.
The visit rate

to restaurants in DKI Jakarta before PSBB (9-13 September 2020) showed an upward
trend. The September rate was at 54%, up from the figure in August 2020. However, the
recovery rate after PSBB II has been very slow. By October 2020, the visit rate to
restaurants in DKI Jakarta was at 44%. The visit rate in Bogor dropped to 40% in
September, as a quasi-curfew limited the business operating hours. The reopening
increased the visit rate to 51% in October.
FIGURE 13. VISITS TO RESTAURANTS COMPARED TO PRE-COVID-19 LEVEL, JULY-OCTOBER

2020 (%)
80%
68%
66%
62%
70%
58%
55%
55%
54%
52%
52%
51%
51%
50%
50%
60%
49%
49%
48%
48%
47%
47%
46%
46%
45%
44%
44%
50%
40%
39%
37%
36%
36%
35%
34%
34%
40%
30%
20%
10%
0%
Denpasar Jakarta Makassar Medan Bekasi Tangerang Bogor Surabaya

Fast-food restaurants will recover faster. By food category, the visit rate to fast-food
restaurants has been consistently higher than those of other restaurant types. By October
2020, the visit rate to fast food restaurants reached 50%, declining from 62% in
September. On the other hand, the visit rate to specialty restaurants reached 47%.
Specialty restaurants are those offering specific menus, such as Japanese restaurants,
steakhouses, and others. The menus of these restaurants generally attract the upper-
middle class in Indonesia.
FIGURE 14. VISITS TO RESTAURANTS COMPARED TO PRE-COVID-19 LEVEL, JULY-OCTOBER

2020 (%)
62%
70%
55%
54%
54%
53%
53%
53%
52%
52%
60%
50%
50%
49%
48%
47%
47%
45%
50%
39%
38%
38%
37%
40%
30%
20%
10%
0%
General Local Specialty Other Fast food
Restaurants have been on the recovery path, but their business prospect appears
uneven across regions. The disaggregated data by hamlet level i.e., kelurahan
reveals an uneven recovery. As restaurants in DKI Jakarta still struggle to attract
customers after PSBB II, those in the outskirts of Jakarta have recovered faster. To
elaborate, visits to restaurants in Jakarta remained 20-50%. On the other hand, visit rates
to restaurants in Jakarta surroundings, such as Bekasi and Tangerang, reached over
50%. The large number of employees working from home in Jakarta contributed to the
slow recovery of restaurants there. Besides, the more relaxed social distancing policies in
the surrounding urban areas were one of the major drivers for a speedy recovery (Figure
15).
The visit rates to restaurants in Bogor recovered quickly; the recovery occurred in
urban centers and tourist destination areas. In July 2020, Bogor announced a partial
curfew, limiting the operating hours and capacity of restaurants. Following the policy,
visit rates to restaurants dropped well below 50%. In tourist areas, the visit rate was
meager, at 5%. Yet, by October 2020, we saw a dramatic increase in restaurant visits. In
places well-known to tourists, the visit rates reached more than 80%. In the urban center
of Bogor, the visit rates ranged 50-80%.

Residential areas and schools have been the driver for the speedy recovery of
restaurants in Surabaya. In July 2020, the COVID-19 transmission turned Surabaya into
a dark-red zone. As a result, the city government enforced a partial curfew, limiting
business activities. Due to the policies, visits to restaurants dropped to 20-50% (Figure
12b). Meanwhile, in some residential areas such as Keputih and Kalisari visits to
restaurants remained high at 50-80%. We saw the same pattern in areas of local
universities. By October 2020, the recovery in the number of visits to restaurants was
evenly distributed in downtown Surabaya. However, the biggest factors driving the
number of visits still come from residential areas and university locations. The number of
visits to restaurants in these areas exceeded 100% of normal.


FIGURE 15. DISTRIBUTION OF VISIT RATE IN GREATER JAKARTA
July Oct
Source: Mandiri Institute
FIGURE 16. DISTRIBUTION OF VISIT RATE IN BOGOR
July Oct


FIGURE 17. DISTRIBUTION OF VISIT RATE IN SURABAYA
July Oct

Mandiri Group Research | May 2017ig Concluding Remarks

By and large, we observe that household spending has been under pressure
since 2 March 2020, when the first positive COVID-19 was officially announced. The
significant drop in household spending and retail sector can be observed empirically
from BPS official data and Bank Mandiri big data. Our evidence indicates that
household spending is currently in a recovery phase to the pre-COVID-19 level. Up to the
3Q20 data, household spending on foods and drinks still has negative growth but better
than in 2Q20. We expect the positive trend toward full recovery will continue in 4Q20
and 2021. Similarly, household for durable goods, such as clothing, shoes,
hotels, and restaurants, slightly improved in 3Q20 compared to 2Q20, but the
contractions were still deep. Moreover, our big data analysis indicates that the
transaction frequency has already reached the pre-COVID-19 level, but the transaction
volume (amount) was still below the pre-COVID-19 level. It also means that the ticket size
(the average amount per transaction) was smaller than the pre-COVID-19 level. We could
deduct that people might have difficulties in their cash flow, so their spending for each
transaction was reduced to maintain the cash in their account.
Interestingly, based on our big data analysis, we find some interesting evidence that
spending for specific goods were already higher than the pre-COVID-19 level, such as
for hobbies, sports, gasoline, and electronics. Note that these data may generally reflect
the spending behavior of the middle-top income group whose cash is not affected
significantly by the pandemic nor by doing full saving portions.
Further, we observe that spending has started to increase but the consumer confidence
remains flat. We argue that the increase spending looks increasing because our
comparison is to the extreme situation when the PSBB (semi lockdown) was applied in
2Q20. Therefore, we surely find that the spending in the 3Q20 is surely higher than 2Q20.
Another reason may be that the effect of government social spending such as, food aids,
cash transfer and salary subsidy has supported the income of people which subsequently
encourages the household spending.
Conversely, we also find consistent findings from BPS data and our big data analysis
showing that travel and tourism-related spending still contracted and were far below
the pre-COVID-19 level. Interestingly, we see that spending for hotels has recovered to
91% from normal, faster than airline and travel spending. We could argue that traveling
and tourism behaviors have shifted to relatively close destinations, reachable by private
cars. Our anecdotal finding also shows that people like to do staycations in private villas
or hotels with direct access to open air. We think tourism is relatively slow to recover
because it takes time to develop people confidence in traveling. For destinations that
are highly dependent on international tourism, such as Bali, these regions may take
longer to recover their tourism, as they must wait for the global traveling confidence to
improve.
All in all, we think the success in mitigating the number of new positive COVID-19 cases
is key to improve the retail sector and encourage household spending. We believe
consumer confidence will subsequently improve if the number of new positive COVID-
19 cases declines. Of course, effective COVID-19 vaccines can be a game-changer for the
recovery of the retail sector and the economy, as well as in improving consumer

confidence. However, we think the vaccine scenario may take time to develop
confidence, hence the longer recovery. It may need time to ensure the vaccine effectively
creates an antibody to prevent COVID-19 infection. We estimate this process will take
about one semester before significantly improving consumer confidence. Afterward, we
expect substantial progress in economic recovery toward the pre-COVID-19 level. Our
scenario predicts that in 2021, we will still be in a consolidation period to recover toward
the normal or pre-COVID-19 level, which we expect to be achieved in 2022.
On top of that, we see that the social safety net program is still an important policy to
support household spending in 2021. Assuming the economy has not fully recovered yet,
particularly for the low-income group, the social assistance will provide additional
purchasing power for this group basic needs. Note that the government has allocated
a budget of IDR 110.2tn for social protection in 2021, or about half of the 2020 budget
allocation (i.e., IDR 203.9tn).
Furthermore, we think the government should resolve the structural problems in the
social assistance program, namely by building a database of the low-income group and
improving the targeting and allocation mechanisms of the social aid. We know precisely
that a poor database of the low-income group is the main problem of the social aid
allocation from some-years ago to date, which subsequently causes difficulties to find a
right target of beneficiaries.
We also believe the social assistance program should be allocated as a direct cash transfer
to the beneficiaries. We think this mechanism is efficient because it may cost next to
nothing for distribution, and it may create more business opportunities in the trading
sector, particularly retail. So far, the social assistance program has been provided as in-
kind transfer, such as rice, sugar, and cooking oil. We see the distribution of in-kind
transfer is very costly, besides creating a rent-seeking behavior, such as kickback or illegal
fees. In addition, we observe that the in-kind transfer substitutes retail businesses on the
ground.

EconBox 1. Impact of COVID-19 Pandemic on Unemployment and Poverty

The COVID-19 has swiftly changed the spending picture of all Indonesian households. Restricted economic activities due to the
virus containment policy have depressed household incomes. Furthermore, concerns over the spread of the virus have
translated into lower consumer confidence. Changing spending behavior from off-line to on-line shopping has affected
businesses, particularly the small ones that rely on person-to-
unemployment data suggested that the unemployment rate reached 7.07% (BPS 2020). It was estimated that around 29.1
million people were affected by the pandemic, and 2.56 million workers lost their jobs (Figure 19).
FIGURE 18. UNEMPLOYMEN NUMBER AND UNEMPLOYMENT RATE (%)
12 10%
9.77
10
8%
8 7.07 7.1
6%
7.07%
6
5.30% 5.23% 4%
4
2%
2
0 0%
Jan-18 Jan-19 Jan-20
Unemployed (LHS) Unemployment rate (RHS)
Source: BPS. Keadaan Ketenagakerjaan Indonesia Aug-2020
FIGURE 19. IMPACT OF COVID ON EMPLOYMENT
1.77 million were

0.76 million were
temporarily not
out of workforce
working due to
due to COVID-19
COVID-19
24.03 million
2.56 million were
worked at
being
shorter working
unemployed due
29.12 million hours due to
to COVID-19
of workforce COVID-19
are affected
by COVID-19
Source: BPS. Keadaan Ketenagakerjaan Indonesia Aug-2020

The initial impact of the pandemic on the poor was worrying. The poor population percentage in March 2020 was at 9.78%,
increasing by 0.37 percent points from March 2019. Hence, 26.42 million people have been living under the poverty line,
increasing by approximately 1.28 million people from March 2019. It should be noted that the impacts of the pandemic and
the PSBB on economic activity were still relatively limited in March. Therefore, the effect of the pandemic on the poverty figures
was also still relatively limited. However, in reality, the poverty rate has jumped quite drastically.
FIGURE 20. THE NUMBER OF POOR PEOPLE AND THE POVERTY RATE (%)
35 20
30 28.01 27.26 27.77

26.58 25.95 25.67 26.42 16
25.14 24.79
25
12
20
15
8
10
4
5
0 0
Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
Poor (LHS) Poverty rate (RHS)
Source: BPS, Profil Kemiskinan di Indonesia Maret 2020
-year impact on the poor could be staggering.

The Ministry of Finance estimated, under the worst scenario, the new poor figure would reach up to 5.71 million; meaning, the
poverty rate would be at 11.3%. Nevertheless, the figure appears relatively lower compared to other estimates. SMERU
projected, as the economy grew by only 1%, the poor people percentage will be around 12.37%. Based on our growth forecast
of -

EconBox 2. Some Ideas to Improve the Social Assistance Program

The COVID-19 pandemic highlights the importance of a reliable and up-to-date database of beneficiaries. Such data would
targeted to the poor at the bottom 40% of the population. These programs have used the Integrated Social Welfare Database
the Central Statistics Agency (Badan Pusat Statistik/BPS) in 2015. It had served well for social assistance aimed at the poor.
However, as the data management, including updating the beneficiaries, was transferred to local governments, the new or
vulnerable households were possibly excluded from the database. With such a high exclusion error i.e., households that are
eligible but excluded from the program the social assistance disbursement has caused confusion among local government
officials and communities. It even created conflicts in certain areas.
We think decentrali
decision to delegate data management to local
governments was correct. This increase
process must come with the necessary resources and technical assistance. The central government needs to support local
governments in capacity building and budgeting to establish a reliable welfare recipient database. Particularly, the resources,
technical capacity, and staff widely varied across provinces and districts. To address the unevenness and improve data
management, the government could start by targeting certain provinces and districts with very low capacity but high welfare
recipient percentage. This effort is critical to establish expanded social assistance programs.
On the other hand, third- could complement the

-subsidy
program would be innovative. The employment data has the potential to be integrated with the existing welfare recipient
database. Additionally, third-party data, such as banking data, can also be integrated for MSME support programs. The
integrated database could help the government design targeted and better policies.
We propose digital technology be utilized to set up the welfare recipient database and disburse social assistance support.
Recently, the government has experimented with financial technology as another mechanism for disbursing social assistance
programs. Most social assistance programs have been channeled through card-based methods, in which social transfers are
only need to visit merchants or points of services where face-scanning

experiment of using face recognition and fintech worked well with the 3 kg LPG subsidy.
FIGURE 21. FINTECH AS THE DISBURSEMENT MECHANISM FOR TARGETED LPG SUBSIDY
Note: 1) the recipient brings 3 KG gas cylinder to designated merchant; 2) the merchant scans the beneficiary face to verify the recipient and checks the subsidy
balance; 3) the subsidy credit will be deducted by the amount of LPG price, and; 4) the recipient can check the transaction invoice and balance through the
merchant cellphone or their own.
Source: TNP2K

FIGURE 22. SAVINGS FROM REFORMING LPG SUBSIDY FIGURE 23. THE INTERNET ACCESS AND THE USE OF THE
Mandiri Group
PROGRAM Research
(IDR TN) | May 2017ig
INTERNET AMONG WELFARE BENEFICIARIES (%)
35.0%
30.0%
Potential saving: Potential saving: 30.0% 25.9%
40 IDR32.5 trillion IDR21.5 trillion 25.0%
20.0% 18.2%
30
49.4 15.0%
20
10.0%
28.3 5.0% 2.4%
10 0.5%
16.9
0.0%
0
Budget Allocation Household Farmers,
2020 fisherman and
SMEs
Note: If the LPG subsidy were well-targeted for eligible households, the
program would save IDR 32.5tn. Meanwhile, by adding farmers, fishers, and
SMEs as eligible beneficiaries for the program, the saving would be IDR 21.5tn.
Source: TNP2K Source: 2019, BPS, Mandiri Institute estimate
Further, utilizing digital financial technology is more cost-effective and efficient than card-based social transfers. Based on a
recent study, the National Team for Accelerated Poverty Reduction (TNP2K) estimated that the cost-saving from using fintech
instead of card-based disbursement for the 3 kg LPG subsidy could reach up to IDR 1.01tn. Besides, the saving from the
untargeted to targeted subsidy would be around IDR 21.5tn-32.5tn. The recent pilot conducted by the TNP2K suggests a
promising direction, with a success rate of 85.2%.
i.e., the internet but

they heavily underutilize internet-based banking services. From above, it clearly describes the underutilization of internet-
based financial services. Around 30% of the welfare beneficiaries use the internet. Furthermore, almost 26% use it for
entertainment, such as streaming videos, games, etc., whereas only 0.5% use it for internet banking. It means there is an
opportunity for banking services to cater the demand from welfare recipients. Evidence from other countries, such as India,
provides a stronger case that banking financial services could complement fintech as a payment method.
Expanding digital financial services for social program disbursement may encourage welfare recipients to use more banking
services. The lesson from India suggests that the utilization of fintech for social disbursement can encourage people to use
banking services. Since 2013, India has undertaken a significant reform in its cooking gas subsidy program, known as PAHAL.
The program uses fintech for disbursement, and the reform is considered a success considering the increased availability of gas
and the reduced black-market diversion for cooking gas. Moreover, the PAHAL program evidently became a catalyst for the
welfare recipients to use more banking services.


Rupiah movement remained solid, supported by positive vaccine development, omnibus law
approval, and ample global liquidity. The trade balance also continued its large surplus trend,
while inflation was manageable amid modest economic recovery. Despite the benign rupiah,
BI kept its policy rate unchanged at 3.75%, partly due to the potential increase of inflation
expectation next year.
Portfolio flows support the rupiah. The rupiah remained solid at IDR14,125/USD as of
16-Dec-20, appreciating by 3.6% quarter-to-date, better than average ASEAN peers,
which strengthened only by 2.2% on average. Specifically, the benign rupiah
performance was supported by capital inflow, reaching USD 2.8bn and mostly from the
bond market (USD 2.8bn). Going forward, we believe the rupiah trend will remain solid
due to positive vaccine development, omnibus law approval, and ample global liquidity.
Modest inflation increases. The Consumer Price Index (CPI) increased by 0.28% MoM in
Nov-20, bringing the annual inflation to 1.59% YoY from 1.44% in Oct-20. Food price had
the largest contribution, at 0.22 ppt, driven mainly by higher chicken price (0.08 ppt),
contribution to total inflation amid price normalization after the discount period, in our
opinion. Meanwhile, wholesale price inflation (1.62% YoY) exceeded consumer inflation
(1.59%) for the first time since 2018.
Low YE2020 inflation. We reiterate our view that the YE2020 inflation will be below our
baseline estimate of 2.0%. The seasonal transportation inflation seems to be lower than
to reduce the year-end holiday period from 11 days to only 8. It plans to conduct some
restrictions in Jakarta, West Java, Central Java, and Bali. Food prices will also be
manageable amid the La Nina condition, in our view. For next year, the inflation trend
will start to pick up amid the economic recovery cycle (demand-pull) and higher WPI
inflation (cost-push).
Another large surplus. The trade balance registered another significant surplus of USD
2.6bn in Nov-20 (vs. USD 3.6bn in Oct-20), with both export and import showing
improving trends. Export increased by 9.5% YoY in Nov-20 from -3.5% in Oct-20, driven
by CPO, coal, and iron & steel. Besides the price factor, we think export was also
supported by better external demand since the export volume has persistently increased
on a monthly basis since Sep-20, reaching 12.9% MoM in Nov-20. On the import side, its
contraction narrowed to -17.5% YoY in Nov-20 from -26.9% in Oct-20, with capital goods
improving the most. We need to see the trends further on trade and other data points to
ensure the demand is sustained not only a year-end seasonality.
Manageable FY20 CAD. We maintain our view that the FY2020 current account deficit
(CAD) will be below our initial forecast of 1.5% of GDP. Export is expected to continue its
positive trend amid higher commodity prices and external demand recovery, especially
from China. We also believe iron and steel will support the figure as a result of the natural
resource downstream program. On the flip side, the import improvement is estimated to
remain modest amid the gradual domestic economic recovery. We see the higher import
trend will be more sustained entering 2H21 on the back of a rising investment cycle,

assuming positive development on the COVID-19 curve, vaccination process, and clarity
Budget deficit reached -4.7% of GDP in 10M20. Government revenue contracted

further to -15.4% YoY in 10M20 from -13.7% in 9M20. In detail, tax revenue declined by -
15.6% YoY as a consequence of the subdued domestic economy and the higher
proposed incentives and restitutions. On the spending side, the realization grew by
continued to improve, accelerating by 86.3% YoY to IDR170.9tn in 10M20 (97% of target).

Going forward, we believe there is a potential conversion from sub-optimum stimulus to
cash-basis programs, which are easier to be disbursed.
Stimulus outlook and potential stimulus rollover. The government also mentioned
that the PEN stimulus realization is expected to reach 90% of target this year, possibly
leaving IDR66.7tn to be rolled over to 2021. As of 25-Nov-20, its disbursement has
touched IDR 431.5tn or 62% of target, with the social safety net and SME support clusters
reaching 89% and 85% of target, respectively. For the rest of 2020, the government seeks
to realize IDR197.1tn of stimulus, in which the biggest share will be in the form of state
injection to SOEs. Meanwhile, the rolled-over IDR
vaccine-related spending, amounting to IDR31.8tn (on top of IDR18tn already allocated
for the 2021 PEN stimulus), and; 2) other stimulus and/or incentives, amounting to
IDR34.9tn.
BI held its policy rate. BI kept its policy rate unchanged at 3.75% in its Dec-20 governor
meeting after the 25 bps cut last month. Interestingly, the central bank shows a tone
change in its statement, now emphasizing the need to maintain stability ahead. This is
supporting the national economic recovery, while controlling inflation as well as

maintaining rupiah exchange rate stability
to its upbeat economic outlook, in which BI sees the 4Q20 GDP to return to positive
territory (vs. our estimate at -1.0%) and continue further to 4.8-5.8% growth in 2021 (vs.
our estimate at 4.4%). Meanwhile, the central bank has completed fiscal financing
support through debt monetization amounting to IDR397.6tn.
Our view: flat policy rate ahead. We think BI will maintain its policy rate at 3.75% ahead
and observe the recovery progress, portfolio dynamics, and monetary policy
transmission. The central bank has emphasized the risk from rising inflation expectation
in 2021 amid the economic recovery and higher commodity prices. We calculate the
inflation could increase to 3% in YE 2021 from 1.4-1.6% in YE 2020, considering the
BI will focus more on rate cut transmission to lift loan growth from its contraction of -
1.4% YoY in Nov-20. For information, the lending rate only declined by 77 bps as of Nov-
20, while the deposit rate dropped by 157 bps.

FIGURE 24. INFLATION BREAKDOWN (% YOY) FIGURE 25. TRADE PERFORMANCE

Mandiri Group Research | May 2017ig 60% 4
Consumer price index (%)
9.0 Headline 30.0 3
40%
Core
8.0 25.0 2
Administered - RHS
7.0 Volatile - RHS 20.0 20%
Energy - RHS
1
6.0
15.0
5.0 0% 0
10.0
4.0
5.0 -1
3.0 -20%
2.0 0.0 -2
1.0 -5.0 -40% Balance (US$ bn, RHS) Export (%, yoy) -3
0.0 -10.0 Import (%, yoy)
Mar-17
Mar-15
Mar-16
Mar-18
Mar-19
Mar-20
Nov-14
Nov-15
Nov-16
Nov-17
Nov-18
Nov-19
Nov-20
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
-60% -4
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Nov-18
Nov-19
Nov-20
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Source: CEIC Source: CEIC
FIGURE 26. BENCHMARK RATE (%) FIGURE 27. BUDGET DEFICIT (% OF GDP)
Government fiscal deficit (% GDP)

9.0
BI Rate (%) 0.0%
7-DRRR (%)
8.0 -0.5%
Deposit facility rate (%)
Lending facility rate (%) -1.0%
7.0 JIBOR (%, monthly avg.)
-1.5%
-2.0%
6.0
-2.5%
5.0 -3.0%
-3.5%
4.0
-4.0%
-4.66%
3.0 -4.5%
-5.0%
Feb
Jun
Jul
Apr
Sep
Mar
Aug
May
Dec
Oct
Nov
Jan
2.0
Apr-19
Apr-15
Apr-16
Apr-17
Apr-18
Apr-20
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Aug-14
Aug-15
Aug-16
Aug-17
Aug-18
Aug-19
Aug-20
2017 2018 2019 2020
Source: CEIC Source: CEIC

FIGURE 28. MACROECONOMIC INDICATORS AND FORECAST

2013 2014 2015 2016 2017 2018 2019 2020F 2020 Nowcastiing 2021F
National Account
Real GDP (% yoy) 5.56 5.01 4.88 5.03 5.07 5.17 5.02 -2.21 -1.77 4.43
Real Consumption: Private (% yoy) 5.43 5.15 4.96 5.01 4.94 5.05 5.04 -2.36 4.80
Real Consumption: Government (% yoy) 6.75 1.16 5.31 -0.14 2.13 4.80 3.25 2.57 5.17
Real Gross Fixed Capital Formation (% yoy) 5.01 4.45 5.01 4.47 6.15 6.67 4.45 -4.60 4.00
Real Exports (% yoy) 4.17 1.07 -2.12 -1.66 8.91 6.48 -0.87 -7.99 2.69
Real Imports (% yoy) 1.86 2.12 -6.25 -2.41 8.06 12.04 -7.69 -10.46 3.53
GDP (IDR tn) - nominal 9,546.00 10,570.00 11,526.00 12,401.73 13,589.83 14,838.31 15,833.94 15,600.64 16,697.74
GDP (USD bn) - nominal 915.28 890.77 860.85 932.31 1,015.58 1,042.22 1,119.24 1,058.04 1,172.14
GDP per capita (US$) - nominal 3,667.70 3,531.64 3,369.80 3,601.98 3,877.29 3,932.21 4,191.94 3,920.61 4,297.30
External Sector
Exports (% yoy) - Merchandise -2.81 -3.73 -14.93 -3.12 16.9 7.01 -6.79 -8.12 1.07
Imports (% yoy) - Merchandise -1.35 -4.51 -19.75 -4.39 16.2 20.58 -8.85 -16.64 6.89
Trade Balance (US$ bn) 5.83 6.98 14.05 15.32 18.81 -0.23 3.51 13.24 5.17
Current Account (% of GDP) -3.19 -3.09 -2.04 -1.82 -1.59 -2.94 -2.72 -1.49 -2.40
Current Account (US$ bn) -29.11 -27.51 -17.52 -16.95 -16.20 -30.63 -30.42 -15.76 -28.13
IDR/USD (period average) 10,439 11,875 13,394 13,305 13,384 14,247 14,141 14,745 14,246
IDR/USD (year end) 12,170 12,385 13,788 13,473 13,568 14,390 13,866 14,296 14,296 14,177
Other
BI rate (% year end) 7.5 7.75 7.5
BI 7 days reverse repo rate (% year end) 4.75 4.25 6.00 5.00 3.75 3.75 3.75
Headline Inflation (% yoy, period average) 6.40 6.40 6.40 3.50 3.81 3.20 3.03 2.25 2.52
Headline Inflation (% yoy, year end) 8.08 8.36 3.35 3.00 3.61 3.13 2.72 1.95 1.20 2.92
S&P's Rating - FCY BB+ BB+ BB+ BB+ BBB- BBB- BBB BBB BBB
S&P's Rating - LCY BBB- BBB- BBB- BBB- BBB- BBB- BBB BBB BBB
Source: Mandiri Group estimate


We see a slight improvement in sectoral sales performance in October 2020. Some sectors
recovered slowly based on a month-on-month growth in October, such as retail, automotive,
and cement. Some recovered slightly faster, such as air transport, CPO, and coal. Conversely,
catalyst for positive growth, mainly the good news regarding the COVID-19 vaccine
distribution. An effective vaccine can be a game-changer for sectoral and economic recovery,
in our view.
FIGURE 29. SECTOR PERFORMANCE CHART
Growth (% YoY) Growth

Sector Indicator Oct-20
10M20 10M19 Oct-20 Sep-20 Oct-19 2019 2018
(%MoM)
Ace Hardware
Retail1 -7.0 15.0 -7.2 -17.3 4.0 13.0 23.3 2.4
sales (IDR)
Total car sales
-50.5 -11.6 -49.0 -47.9 -9.4 -10.5 6.7 1.0
(Unit)
Commercial
-46.0 -13.1 -40.4 -36.7 -5.8 -11.6 17.6 1.1
vehicle (Unit)
Automotive2
Passenger
-51.9 -11.1 -51.8 -51.4 -10.5 -10.2 3.6 1.0
vehicle (Unit)
Total motorcycle
-42.2 3.5 -46.8 -33.1 -2.0 1.6 8.4 -16.5
sales (Unit)
Housing Credit
5,085a) 30,068 b) 2.05 c) 3.40 d) 10.34 e) 7.8 13.3 -0.4 c)
(IDR)
Property3 Apartment
112 a) 2,056 b) 2.06 c) 3.21 d) 21.21 e) 12.0 29.0 -0.1 c)
Credit (IDR)
Total 5,197 a) 32,125 b) 2.05 c) 3.39 d) 10.78 e) 8.0 13.9 -0.4 c)
Domestic sales
Cement4 -9.8 -1.0 -15.2 -9.2 2.0 0.3 4.8 0,9
(Ton)
Total domestic
-47.5 -26.4 -15.8 -43.4 -30.5 -28.0 25.2 34.3
sales (Unit)
UT Agro
-49.5 -54.0 155.1 277.7 -93.4 -55.0 28.2 -28.5
segment (Unit)
Heavy UT Construction
-45.1 -8.2 50.4 -49.4 -51.9 -22.4 29.6 95.6
Equipment5 segment (Unit)
UT Forestry
-40.6 11.7 -58.3 -67.0 89.7 1.8 9.2 33.8
segment (Unit)
UT Mining
-59.1 -47.6 -17.5 -0.4 -83.1 -51.6 33.0 -44.5
segment (Unit)
Loading and
unloading
activities in the -23.2 17.6 -8.5 -2.5 3.6 17.0 -7.8 -5.5
five main ports
(Ton)
Sea Transport6
Passenger
departures and
arrivals in the -69.4 78.6 -71.9 -70.6 72.4 76.2 3.6 -14.9
five main ports
(Passenger)
Domestic
Air Transport6 Loading -10.5 -26.3 11.2 10.9 -24.1 -25.2 2.0 3.9
activities in the

five main
Mandiri Group Research | May
airports (Ton)2017ig
International
Loading
activities in the -30.3 6.2 -17.0 -26.3 -12.6 2.7 -6.5 15.6
four main
airports (Ton)
Domestic
Passenger
departures in
-56.3 -20.1 -65.3 -69.2 -14.1 -17.8 3.8 18.7
the five main
airports
(Passenger)
International
Passenger
departures in
-77.6 4.1 -97.5 -97.7 7.9 4.7 9.5 15.4
the four main
airports
(Passenger)
Tourist inbound
Foreign Tourist6 -72.5 2.7 -88.3 -89.0 4.9 2.9 13.3 3.1
(million visit)
Volume of
-9.5 0.3 -6.7 -17.2 -11.3 1.3 2.0 7.7
exports (Ton)
CPO6
Value of exports
14.7 -17.0 27.2 9.6 -15.9 -11.5 -10.7 12.6
(USD)
Volume of
-14.1 7.4 -21.6 -24.6 1.4 7.0 10.1 13.7
exports (Ton)
Coal6
Value of exports
-26.5 -8.9 -35.9 -38.4 -15.0 -9.3 17.1 13.1
(USD)
Notes: a) Jan-Sep 20 change in IDR Bn; b) Jan-Sep 19 change in IDR Bn; c) Sep 2020; d) Aug 2020; e) Sep 2019
Sources: 1) ACE Hardware; 2) CEIC and Gaikindo; 3) OJK; 4) ASI and CEIC; 5) United Tractor; 6) BPS.
due to its Boom Sale event. Sales dropped by -7.2% YoY in October 2020. It was better
than the September 2020 sales, which fell by -17.3% YoY. However, it should be noted,
the sales improvement in October 2020 was thanks to a shift in its Boom Sale period from
September last year to October this year. Thus, ACES sales growth in October 2020
seemed to have increased considerably. In cumulative, the 10M20 sales contracted by -
7.0 % YoY or was relatively stable compared to the 9M20 sales. ACES posted -9.7% YoY
same-store sales growth (SSSG) in October 2020, improving from -19.4% YoY SSSG in
September 2020. Nevertheless, the cumulative 10M20 SSSG was -9.0% YoY, slightly
worse than in 9M20 at -8.9% YoY. It was influenced by the re-enforcement of Jakarta
strict large-scale social restriction (PSBB) from 14-Sep to 11-Oct, so the Boom Sale could
not optimally translate to the overall 10M20 SSSG improvement. By region, Jakarta
experienced the lowest SSSG in October 2020 (-16.1% YoY), followed by Ex-Java (-13.0%
YoY) and Java ex-Jakarta (-3.8% YoY). We expect ACES performance to continue to
recover, boosted by its year-end sale. ACES management still maintains its guidance for
flat to single-digit negative YoY 2020 SSSG. Furthermore, we see that retail sales
performance will be tough this year due to weak demand amid the COVID-19 pandemic.
We predict household consumption to contract by -2.5%,
growth will approximately fall between -2.2 and -1.5% in 2020. Aprindo (Asosiasi
Pengusaha Ritel Indonesia or the Indonesian Retail Business Association) predicts that
the national retail sales will grow by only 1.5-2% this year.

Automotive: Car sales in October 2020 showed a slight increase of 1% MoM. Car
sales have continued increasing from May until October 2020. Based on the data by
Gaikindo (Gabungan Industri Kendaraan Bermotor Indonesia or the Association of
Indonesian Automotive Industries), car sales (wholesale) were at 49,043 units in October
2020. In more details, commercial vehicle sales increased by 1.1% MoM, at 14,190 units,
and passenger vehicle sales increased by 1.0% MoM, at 34,853 units over the same
period.
However, car sales in October still showed an annual decrease by -49.0% YoY (vs. -9.4%
YoY in October 2019; -10.5% in FY2019). In detail, passenger car sales contracted by -
51.8% YoY (vs. -10.5% YoY in October 2019; -10.2% in FY2019) and commercial car sales
contracted by -40.4% YoY (vs. -36.7% YoY in October 2019; -11.6% in FY2019).
Cumulatively, the total car sales in January-October 2020 (10M20) contracted by -50.5%
YoY (vs. -11.6% YoY in 10M19), with total sales of 421,089 units in 10 months. To
elaborate, in 10M20, passenger car sales contracted by -51.9% YoY (vs. -11.1% in 10M19;
-10.2% in FY2019), at 313,093 units, and commercial car sales (wholesale) contracted by
-46.0% YoY (vs. -13.1% YoY in 10M19; -11.6% in FY2019), at 107,996 units. As a result of
the COVID-19 pandemic, not only car sales outlook dropped sharply, but also motorcycle
sales . Motorcycle sales dropped by -46.8% YoY in October 2020 (vs. -2.0% YoY in October
2020), at 317,830 units. Cumulatively, the 10M20 motorcycle sales contracted by -42.2%
YoY (vs. 3.5% in 10M19; 1.6% in FY2019) with sales of 3,191,939 units. Nevertheless,
motorcycle sales in October showed a decrease by -16.5% MoM.
We think that the sales in the last two months of this year will lean upward due to some
reasons. The launch of the latest car models, such as the Toyota Innova and Fortuner,
Hyundai electricity cars (Kona and Iqonic), Hyundai Palisade, and year-end discount
programs from all car brands may raise the sales figures until the year-end. The Office of
Chief Economist estimates car sales to contract by -49.9% YoY, with a total sale of 520k
units, and motorcycle sales by -35.3% YoY, with a total sale of 4.2mn units.
Property: The ship sinks even deeper. According to the data from the OJK (Otoritas
Jasa Keuangan ), the 3Q20 mortgage only grew
by 2.05% YoY (vs. 10.78% YoY in 3Q19). This achievement was also lower than in August
2020, which still grew by 3.39% YoY. The current condition is actually in-line with our
prediction that the particular sector will keep sinking. No surprise there. However,
property was one of the many important sectors that still grew, even though contracting
on a month-on-month basis.
It is hard to expect mortgage performance to rise significantly in the coming years. Even
assuming the pandemic subsides, the Office of Chief Economist of Bank Mandiri believes
the lowest growth might come early next year before gradually bouncing back to the
normal trend. We believe mortgage growth will range 0.8 1.8% YoY in 2021 and 4.2 5.2
% YoY in 2022.
Cement: Domestic cement sales in October 2020 increased from the previous
month. The Indonesia Cement Association data showed that domestic cement sales
recorded 6.23mn tons in October 2020 or grew by 0.9% compared to September 2020
(6.18mn tons). However, domestic cement sales on a yearly basis in October 2020 still
contracted by -15.2% (vs. 2% YoY in October 2019). For information, the highest domestic

cement sales in 2019 occurred in October, at 7.35mn tons, while the lowest was in June,
at 3.76mn tons. Cumulatively, the domestic cement sales in January-October 2020
(10M20) contracted by -9.8% YoY (vs. -1.03% YoY in 10M19). The growth rate in 10M20
was the lowest in the last 10 years for the same period. By island, most had positive
growths on a monthly basis, except Bali-Nusa Tenggara and Kalimantan. The highest
domestic cement sales occurred in Maluku-Papua, at 12.6% on a monthly basis and
24.3% on a yearly basis, followed by Sumatera, Sulawesi, and Java, which grew by 2.2%
MoM, 1.2% MoM, and 0.8% MoM, respectively. However, on a yearly basis, cement sales
growths in Java still contracted by -19.2% YoY, Kalimantan -16% YoY, Sumatera -5.5%
YoY and Sulawesi -16.0% YoY. Meanwhile, the monthly and yearly cement sales in Bali-
Nusa Tenggara and Kalimantan both had negative growths, respectively, of -7.3% MoM
and -0.9% MoM, or -24.9% YoY and -14.1% YoY.
Cement exports contracted in October 2020. On a monthly basis, cement exports in

October 2020 contracted by -8.7% MoM. Volume export decreased from 1.17mn tons in
September 2020 to 1.07mn tons in October 2020. Nevertheless, cement export on a
yearly basis grew by 62% (vs. 43.4% YoY in October 2019). Cumulatively, cement exports
in January-October 2020 were at 49.6% YoY (vs. 15% YoY in January-October 2019). The
Office of Chief Economist of Bank Mandiri estimates domestic cement sales in 2020 will
contract by -8.5% to -11.6%. Meanwhile, the domestic cement sales up to October 2020
contracted by -9.8%. We estimate cement sales in November-December will slightly
improve, in-line with increasing economic activity, including in the construction sector,
mainly due to accelerated government spending.
Heavy equipment: Total heavy equipment sales growth slowed in October 2020.
UNTR's heavy equipment sales reached 154 units in October 2020 or increased by 4.1%
MoM. This MoM growth was slower than September growth of 41.0% MoM. Two of the
four segments experienced positive MoM growths, namely construction and forestry.
The construction segment's sales surged from 37 units to 72 units or increased by 95.6%
MoM. Moreover, sales from the forestry segment increased by 33.8% MoM. On another
front, sales in the agro and mining segments contracted by -28.5% MoM and -44.5%
MoM.
Nevertheless, UNTR's heavy equipment sales performance in 2020 was substantially

lower than the 2019 level. Cumulatively, from January to October 2020, UNTR's heavy
equipment sales were only 1,345 units, dropping by -50.8% YoY. UNTR also reported that
its domestic heavy equipment market share in October was at 30%, slightly lower than
September performance of 31%. With that market share data, the overall domestic
heavy equipment sales in October were approximately 4,483 units, far lower than the
same period last year that reached 8,544 units. Low capital expenditure realization from
commodity producers, especially coal producers, caused the heavy equipment sales to
contract significantly.
From now on, heavy equipment sales in 4Q20 will still be under pressure. Positive MoM
growth is still possible in 4Q20, but the year-on-year performance will still be
substantially lower. Many mining companies are lowering their CAPEX realization to
conserve cash amid the COVID-19 pandemic. There is no sign of mining companies
increasing their CAPEX in 4Q20. Meanwhile, in 2021, we predict better performance for
heavy equipment sales. The rebound in commodity prices, such as for coal, nickel, and

CPO, will stimulate the mining and agriculture sector activities, which will lead to more
heavy equipment needs from those sectors. Furthermore, the restart of a government
project in 2021 will increase the construction sector heavy equipment needs.
decreased by -8.5% YoY in October 2020. That number was lower than in the same
period last year, which recorded an increase of 3.6% YoY. The decrease in October 2020
was caused by the decreasing growth in
activities by -16.8% YoY, followed by Balikpapan Port at -0.3% YoY and Makassar Port at
-17.2% YoY. Meanwhile, 2 ports had positive growths: Belawan Port at 2.2% YoY and
Tanjung Perak Port at 2.6% YoY. On a monthly basis, there was a decrease in October
2020 by -5.5% MoM. On the other hand, the number of sea transport passengers
decreased by -71.9% YoY in October 2020 due to the decreases at Belawan Port (-51.8%
YoY), Tanjung Priok Port (-87.3% YoY), Tanjung Perak Port (-67.2% YoY), Balikpapan Port
(-68.3% YoY), and Makassar Port (-73.4% YoY). On a monthly basis, there was a decrease
in October 2020 of -14.9% MoM. This showed the inconsistent growth in this new normal
era. In the future, we hope the vaccination will reduce the number of infections and
encourage economic growth, thereby increasing mobility.
Air transport: The number of domestic passengers decreased in October 2020. The
number of domestic passengers at 5 main airports in Indonesia in October 2020
decreased by -65.3% YoY (vs. -14.1% YoY in October 2019). The number of international
passengers decreased by -97.5% YoY (vs. 7.9% YoY in October 2019). On another front,
the decrease in air freights in October 2020 occurred for international flights, at -
17.0% YoY, with the highest drop in cargo for domestic flights occurring at Ngurah Rai
Airport, at -44.7% YoY. In comparison, the increase in air freights in October 2020
occurred for domestic flights, at 11.2% YoY, with the highest increase in cargo for
international flights occurring at Hasanuddin Airport, at 83.4% YoY. On a monthly basis,
all domestic and international passengers and freights increased. Domestic passengers
increased by 18.7% MoM, international passengers by 15.4% MoM, domestic cargo by
3.9% MoM, and international cargo by 15.6% MoM. We hope the increase in the air
transport sector will be consistent, albeit slowly. The public's expectation of a successful
vaccine will determine the level of public confidence in traveling in this new normal
period.
For the past 7

months, everything goes as expected: stagnant at 150k 160k arrivals every month. In
October 2020, the total number of foreign visitors to Indonesia hit 158,190 visits or was
slightly higher than September 2020 figure at 153,500 visits. The pandemic is still here,
and the government has not implemented any new policies due to health protocols. Our
stand remains the same: it is impossible to recover anytime soon since the government
has already extended the no-tourist policy until the end of 2020. The Office of Chief
Economist confidently adjusts our prediction regarding the total tourist visits in 2020 to
4.0mn 4.1mn from the previous forecast, which was 0.1mn higher.
Despite all the above, we are aware the government is serious about reviving the tourism
sector next year. The government has stated that the tourism sector will have IDR 14.4tn
in RAPBN 2021. That significant budget is necessary to continue the super priority
projects: Toba Lake, Borobudur, Labuan Bajo, Mandalika, and Likupang.

CPO: Indo
Indonesia CPO export volume continued its monthly increase, at 7.7% MoM in October
2020. Cumulatively, Indonesia export volume in January-October 2020 (10M20) still
contracted by -9.5% YoY, indicating that global demand for CPO has not yet recovered
to the pre-COVID level. Furthermore, Indonesia CPO export volume to India and the
European Union (EU) in 10M20 grew by 9.8% YoY and 3.4% YoY, respectively. However,
the monthly export trend to India has been declining since June 2020 because the India-
Malaysia relation is recovering; hence, India CPO import is shifting to Malaysia.
Conversely, CPO export volume to China still contracted by -34.2% YoY in 10M20.
However, on a monthly basis, it was gradually increasing and reached 0.46mn tons in
October, or already reaching the average export volume to China in 2019 at 0.43mn tons.
On the other hand, Indonesia CPO export value increased by 14.7% YoY in 10M20 due
to higher CPO price in 2020. The average CPO price in 10M20 was USD 625/ton, higher
than in 10M19 at USD 500/ton. Furthermore, on 4 December, CPO was traded at USD
897/ton or increased by 20.7% YTD, and has reached its pre-COVID level, which was also
its highest price in 6 years. We see that the declining supply and recovering demand
simultaneously create short-term undersupply.
Furthermore, the Indonesian government has released a new regulation on CPO export
levy. The old export levy, at USD 55/ton for any CPO price, is now the minimal levy for
CPO price under USD 670/ton. The new levy scheme gradually increases for every USD
25/ton CPO price hike. In detail, the CPO levy is set at USD 60/ton if the reference price is
USD 670-695/ton. When the CPO price is higher than USD 695/ton, the levy gradually
increases by USD 15/ton to a maximum tariff of USD 255/ton when the price is above
USD 995/ton. The current price reference is at USD 871/ton; hence, the levy for
December export is set at USD 180/ton. This new regulation is aimed to improve
biodiesel program. We see this as a positive step for a sustainable biodiesel
incentive in Indonesia. Overall, we predict the average CPO price in 2020 will be around
USD 646/ton and increase to USD 697/ton in 2021.
Coal: Indonesia's coal export growth has returned to a positive level in October
2020. According to the data from the BPS (Badan Pusat Statistik or the Indonesia
Statistical Bureau), coal export volume and value increased by 13.7% and 13.1% MoM,
respectively, in October 2020. These positive performances in October reversed the trend
of negative MoM growth since July. In more detail, from Indonesia's 4 largest coal export
destination countries, 3 recorded positive export volume growths in October: China by
67.6% MoM, India by 3.0% MoM, and South Korea by 5.2% MoM. Meanwhile, Japan
posted a decrease of -2.0% MoM in October.
Overall, Indonesia's coal export performance in 2020 is still below the 2019 level. In
October 2020, the BPS reported that Indonesia's coal export volume and value declined
by -21.6% and -35.9% YoY. Cumulatively from January to October, Indonesia's coal export
volume and value decreased by -14.1% and -26.5% YoY.
As we advance, we predict Indonesia's coal export performance will recover, as coal

prices have started to recover in 4Q20. We expect coal export volume in 2021 to reach
396.8mn tons, an increase of 2.5% from 2020 estimate at 387.2mn tons.


Banking Industry Updates: September 2020
Banking industry loans grew barely positive in Sep-20. The banking industry loan growth in
Sep-20 slowed significantly to 0.12% YoY (vs. 1.5% YoY in Jul-20), the lowest growth in more
than 18 years as the economy experiences a recession. On the other hand, the deposit growth
accelerated to 12.7% YoY (vs. 11.6% in Aug-20), the highest since Aug-15. Loans this year (Jan-
Sep) contracted by 1.5% YTD (vs. positive growth of 4.3% YTD during the same period last
year) while deposit growth increased more than twice from 4.6% to 10.9%. LDR fell to 83.2%
in Sep-20 (vs. 85.1% in Aug-20), the lowest in more than 8 years.
Loan growth still dominated by the largest banks. Loans in the largest banks, or BUKU
4 category (banks with paid-in capital of >IDR 30tn), grew by 4.4% YoY in Sep-20 (vs. 5.2%
YoY in Aug-20). Meanwhile, loans in BUKU 3 and 1 contracted by 7.8% and 36.1% YoY in
Sep-20, respectively (vs. 6.6% and 28.6% YoY contractions in Aug-
slowed to 0.3% YoY (vs. 0.8% YoY in Aug-20). On a monthly basis, BUKU 4 bank loans
grew positively by 0.3% MoM in Sep-20 after 3 months of monthly contractions. At the
same time, BUKU 3 bank loans contracted by 0.2% MoM, while BUKU 2 and 1 bank loans
grew positively, by 0.2% and 0.7% MoM.
Liquidity eased across all bank groups as loan growth decelerates. BUKU 4 bank
deposits grew by 19.3%, relatively the same with the Aug-20 growth, while BUKU 3 bank
deposits grew by 3.0% YoY in Sep-20 (vs. -0.9% YoY in Aug-20). Deposit growth in BUKU
2 banks decelerated to 8.6% YoY (vs. 9.7% in Aug-20). Liquidity eased for all bank groups,
Sep-20 (vs. 81.3%, 95.6%, 82.8%, and 81.1% in Aug-20).

and 7.4% YoY (vs. 15.9% and 6.5% YoY
in Aug-20).
BUKU 4
-20 (vs. 60.1% in
Dec-19). Deposits in BUKU 4 banks have risen by IDR 490.6tn (13.9% YTD) from January
third-party funds this year. In the same period, BUKU 1 TPF decreased by IDR 11.8tn, while
PFs only rose by IDR 85.8tn and IDR 64.5tn each.
Bank placements at OMO instruments reached IDR 696.0tn. As of 26-Nov, bank

placements at BI Open Market Operation (OMO) instruments were at IDR 696.0tn,
increasing by IDR 505.0tn compared to the end of last year. We expect liquidity in the
continues to be very accommodative. BI stated that as of 17-Nov-20, it had injected

liquidity in the banking system as much as IDR 680.9tn through lowering reserve
requirement and monetary expansions, each by IDR 155tn and IDR 510.1tn.
NPL ratio decreased as banks continued loan restructuring. Banking industry NPL
decreased to 3.14% in Sep-20 (vs. 3.22% in Aug-20) as banks accelerated their loan
restructuring. The OJK stated that NPL in Oct-20 was relatively stable at 3.15%. We
estimate loan at risk increased to 24.1% in Sep-20 (vs. 24.0% in Jul-20). Restructuring for
loans affected by the COVID-19 pandemic reached IDR 932.4tn in Sep-20 for 7.5mn bank
debtors. The OJK has confirmed that the loan restructuring period will be extended until

Mar-22 but with stricter requirements to anticipate the impact when the relaxation
expires. The OJK stated a few major points regarding the relaxation extension, including
criteria for relaxation extension, building up loan-loss provisions, and regular stress
testing for restructured loans.
Major industry NPL decreased. The NPLs of the wholesale and retail sales industry
(17.0% of total loans) and the processing industry (16.6%) decreased to 4.6% and 4.5% in
Sep-20 (vs. 4.8% and 4.7% in Aug-20), while loan growth to those sectors contracted to
6.1% and 0.1% YoY (vs. -5.0% and 0.1% YoY in Aug-20).
Stable NPL across provinces, but loan growth continued to decelerate. NPLs were
broadly stable across many provinces, including in the largest provinces, such as the
Special Capital Region of Jakarta (contributing 49.6% to total loans), East Java (8.7%), and
n Aug-20), while its loans
contracted deeper to 1.7% YoY (vs. contraction of 0.04% in Aug-
to 3.84% (vs. 4.22% in Aug-20); its loans contracted to 3.1% (vs. contraction of 2.9% in
Aug- -20 was stable at 3.45% in Sep-20 (vs. 3.46% in Aug-20),
while its loans decelerated to 1.2% YoY (vs. 1.3% YoY in Aug-20).
Loan growth is expected to be weaker than many anticipated. We estimate loan

growth to remain weak, while NPL will be stable in the coming months as banks continue
to restructure loans. We expect loan growth to improve gradually next year along with
loans to grow by approximately 1.0% this year (vs. 6.1% in 2019), weaker than our
previous projection of 1.5%.
With three months remaining in 2020, loans are likely to continue worsening. In our
most optimistic scenario, considering the current economic situation, loans will only be
growing by 1.0% this year, the lowest annual loan growth in the past 20 years. Loan
growth will likely remain subdued in the first few months next year, and then it will start
to accelerate in the second semester though not reaching the normal pre-pandemic level
yet by the end of next year. As the economy will recover gradually, we forecast loan
growth to remain limited at 5.0% next year. Banks will remain cautious and will focus on
asset quality.

FIGURE 30. LOAN, DEPOSIT GROWTH, AND LIQUIDITY INDICATORS

Source: OJK
FIGURE 31. LDR BY BUKU SEP-20 (%) SECURITIES OWNERSHIP BY BUKU (IDR TN)
92%
90%
88%
86% 85 1
84%
BUKU IV
82%
80% 317 BUKU III
78% BUKU II
76%
746 BUKU I
74%
72%
BUKU IV BUKU III BUKU II BUKU I
Source: OJK

FIGURE 32. DEPOSIT GROWTH BY NOMINAL TIERING (%YOY) FIGURE 33. DEPOSIT GROWTH BY BUKU (% YOY)
25.0 30
20.0 20
17.4
19.3
15.0
10 8.6
10.0 10.0 3.0
0
5.0 4.8
-10
0.0
-20
-5.0
Sep-16
Sep-15
Sep-17
Sep-18
Sep-19
May-20
Sep-20
May-16
May-17
May-18
May-19
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
-30
-33.9
-40
<100 mn 100 mn - 1bn 1.01-2 Billion
-50
Jun-18
Jun-19
Sep-19
Jun-20
Dec-19
Sep-17
Dec-17
Mar-18
Sep-18
Dec-18
Mar-19
Mar-20
Sep-20
2.01-5 Billion > 5 Billion
BUKU 1 BUKU 2 BUKU 3 BUKU 4
Source: LPS Source: OJK
FIGURE 34. LOAN GROWTH AND NPL BY INDUSTRY (%)
Source: OJK

FIGURE 35. PLACEMENT AT BI OPEN MARKET OPERATION INSTRUMENTS AND OMO INSTRUMENT RATES
Source: Bloomberg and Mandiri Group Estimate, as of Oct 27, 2020


FX Market Review: Maintained Rupiah Stability
At the end of November 2020, the Rupiah managed to strengthen to a level of 14,120 against
the USD after experiencing considerable fluctuations throughout March-October 2020. The
downward trend in the USD index supports the strengthening of the rupiah exchange rate
against the USD. The combination of external and internal sentiment led to a stronger rupiah.
The USD as a safe haven currency tends to decline in value against major currencies after the
US Presidential Election and since the outlook for global economic growth has improved.
With the assumption that vaccine progress increases investor confidence and the impact of
COVID-19 will gradually subside towards the end of 2020, we see that there are still
opportunities to strengthen the rupiah. We have not changed the rupiah projection that we
have targeted since early 2020. We estimate that the projection of the rupiah at the end of
2020 will be at the level of 14,296 per USD (an average of 14,745 throughout 2020).
The rupiah continued to strengthen to the level of 14,120 per USD. In trading as of
December 11, 2020, the rupiah opened up at the level of 14,100 per USD or strengthened
by 0.14% compared to the end of November 2020 (depreciation 1.68% ytd). The
strengthening trend in the rupiah is still supported by inflows of funds into the capital
market and the support of fairly good economic data, such as a consecutive surplus on
the trade balance, controlled inflation, and the position of foreign exchange reserves that
remains high. In addition, the development of vaccines, which are currently waiting for
permission to use, has also become a positive catalyst for the rupiah. External sentiment
related to hampered US stimulus and the rising unemployment rate in the US has made
the downward trend in the USD index continue. The USD index is currently at the level of
90.7, the lowest since 2018. The strengthening of the rupiah also coincided with the
strengthening of the majority of regional currencies against the USD.
Vaccine developments influence global forex movements. In an effort to suppress

the COVID-19 case, currently countries in the world such as the US, Canada, Japan have
placed orders for vaccines and some of these types of vaccines still have to go through
stage 3 clinical trials. Vaccine development is indeed one of the keys to reducing the
pandemic. For Indonesia, 1.2 million COVID-19 Sinovac vaccines for the first phase have
arrived in Indonesia and are still awaiting permission for use by the Food and Drug
Supervisory Agency (BPOM). Vaccine optimism is sufficient to support the strengthening
of the rupiah. Rupiah volatility has declined and has tended to move sideways in recent
weeks in line with relatively improving global indicators. From several global indicators,
Indonesia's 5-year CDS level is still monitored to decline to level 69 from level 245 at the
peak of the COVID-19 pandemic in March 2020. Likewise, VIX is at level 22.5.


FIGURE 36. RUPIAH VS CAPITAL INFLOW
16900 4000
1st quarter 2019 2nd quarter 2019 3rd quarter 2019 4th quarter 2019 1st quarter 2020 2nd quarter 3rd quarter 2020 4th quarter 2020
Net capital inflow: Net capital inflow: Net capital inflow: Net capital inflow: Net capital 2020 Net capital Net capital
USD6.85 bn USD5.37 bn USD1.71 bn USD3.48 bn outflow: Net capital outflow: inflow:
16400 Rupiah Rupiah Rupiah Rupiah USD10.37 bn inflow: USD2.25 bn USD1.96 bn
14,241/USD 14,128/USD 14,195/USD 13,866/USD Rupiah USD5.97 bn Rupiah Rupiah 3000
(appreciated (appreciated (appreciated (appreciated 16,310/USD Rupiah 14,880/USD 14,090/USD
1.04% ytd) 1.82% ytd) 1.36% ytd) 3.64% ytd) (depreciated 14,265/USD (depreciated (depreciated
15900 17.63% ytd) (depreciated 7.31% ytd) 1.62% ytd)
2.88% ytd)
Rupiah appreciation As USD Index increased, USD Index decreased 2000
in 4Q19 due to Rupiah tends to and COVID-19 vaccine
trade war tension depreciate against USD progress are support
15400 decreased in February - March stronger rupiah against
2020 due to USD
COVID-19 outbreak 1000
14900
0
14400
-1000
13900
13400 -2000
May-19
Dec-19
May-20
Mar-19
Jul-19
Sep-19
Mar-20
Jul-20
Sep-20
Dec-20
Feb-19
Jun-19
Nov-19
Feb-20
Jun-20
Aug-20
Nov-20
Jan-19
Aug-19
Apr-19
Oct-19
Jan-20
Apr-20
Oct-20
Capital flow in stock market (USD mn, rhs) Capital flow in bond market (USD mn, rhs) USDIDR Currency (lhs)
Source: Bloomberg, as of Dec 11, 2020
The prospects for economic growth in 2021 are improving. This can be realized with
a record of the availability of an effective vaccination program and a disciplined COVID-
19 protocol. Policy steps and policy response strategies must also be continued, such as:
1) opening up productive and safe sectors, 2) accelerating fiscal stimulus (budget
realization), 3) increasing credit from the demand and supply side, 4) monetary stimulus
and macroprudential policies, and 5) economic and financial digitization, especially
MSMEs. The Bank Mandiri economic research team estimates that economic growth can
grow by 4.43% in 2021, supported by increased export performance, private and
government consumption, and investment. Economic recovery has the potential to
maintain the stability of the rupiah exchange rate in 2021.
Synergy of monetary policy and fiscal stimulus to promote national economic

recovery. As an effort to encourage national economic recovery in the pandemic era,
Bank Indonesia continues its commitment to funding the 2020 State Budget through the
purchase of SBN from the primary market. As of 17 November 2020, Bank Indonesia has
purchased SBN on the primary market through a market mechanism of IDR 72.49 trillion,
including the main auction schemes, Green-shoe Option (GSO) and Private Placement.
Meanwhile, the realization of funding and burden sharing for funding of Public Goods in
the APBN by Bank Indonesia through the SBN purchasing mechanism reached IDR270.03
trillion. Bank Indonesia has also realized the burden sharing with the Government for
funding Non-Public Goods-UMKM amounting to IDR114.81 trillion. With this synergy, the
Government can focus more on efforts to accelerate the realization of the State Budget
to encourage national economic recovery.

FIGURE 37. FACTORS THAT AFFECT RUPIAH MOVEMENT

Rupiah was fluctuated between 13,500 – 16,600 in 2020*
COVID-19 pandemic risks, Vaccines progress, Trade war, US Election, and Geopolitical tensions
Accommodative policy of global Central Banks (Dovish The Fed, Benchmark Rate cuts)
Government stimulus and Bank Indonesia policy mix (Economic packages, Burden Sharing
Scheme, Lower RRR, Open Market Operation, Triple Interventions, etc.)
Bilateral agreement to reduce USD transaction
Foreign funds flow and investor’s confidence will affected by the weakening of the global
economic growth during COVID-19 pandemic
Trend of USD index (ranging from 90 - 103 level)
Sources: Bank Mandiri, The Federal Reserve, Bloomberg
Synergy between monetary policy and fiscal stimulus to promote national

economic recovery. To encourage national economic recovery during the pandemic, BI
is still committed in funding the 2020 State Budget by purchasing SBN from the primary
market. As of 8-Oct-20, BI has purchased SBN in the primary market through the market
mechanism reaching IDR 60.18tn, including main auction schemes, green shoe option
(GSO), and private placement. Meanwhile, BI's realization on funding and burden sharing
for public goods in the APBN through the SBN purchase mechanism has reached IDR
229.68tn. BI burden sharing with the government for funding non-public-goods MSMEs
has reached a realized amount of IDR 90.88tn. With this synergy, the government can
focus more on efforts to accelerate the state budget realization to encourage national
economic recovery.
Our view: easing market volatility toward year-end. The accommodative central bank
policy measures and liquidity injection are expected to continue easing the market
volatility. The Bank Mandiri Economic Research Team believes that economic recovery
must continue so foreign funds can flow consistently into the domestic market. BI must
continue to implement policies that accelerate the financial market deepening. Amid a
slowing global economy, domestic economic fundamentals were relatively
well maintained, supported by government and household consumption as well as the
sustainable monetary and fiscal policies. Assuming the COVID-19 outbreak will gradually
subside toward the end of 2020, we predict there is still room for capital inflow to the
domestic market, and that the USD Index will decline to below 95. The Fed dovish
stance and foreign exchange reserves
external resistance. We see some potential risks that will still overshadow the
movement. Therefore, the government and BI must persist in mitigating external risks by
strengthening their macro policy mix and market operations. To support the
effectiveness of the exchange rate policy, BI continues to optimize its monetary
operations to safeguard the market mechanism and ensure liquidity availability in both
the money market and the foreign exchange market. Based on the considerations above,
we maintain that the rupiah exchange rate target can close at 14,296 per USD at the end
of 2020.

Rupiah Long-Term Trend

EVENT ANALYSIS DURING CRISIS: RUPIAH DEVELOPMENT 1992-2020
Long-legged Doji,
indicates supply and
demand near equilibrium
Shooting Star -
End of uptrend Bearish Harami,
indicates a future
Bearish Harami,
Tweezer bottom, bearish trend
indicates a future
bearish trend indicates minor
bearish reversal
Long-legged Doji, Tweezer top, Bullish Harami,

Bearish Harami, indicates indicates supply and indicates minor indicates a future
a future bearish trend, demand near equilibrium bearish reversal bullish trend
confirmed down trend
Upside Tasuki Gap - Abandoned baby bottom.
Bullish continuation indicates bullish reversal
Downside Tasuki Gap Morning Star

as an early Inverted Hammer to
- Bearish continuation determine a bottom trend
indication of
bullish reversal
Hawkish
End of The Fed
FFR Taper China Yuan COVID-19
Macro Indicator Asia Financial Crisis Global Economic Crisis Europe Crisis Commodity and
Tantrum Devaluation Pandemic
Boom US-China
Trade War
Year 1997 1998 2007 2008 2010 2012 2013 2015 2018 2020*
IDR/USD 5403 8000 9393 11120 9013 9638 12170 13788 14390 16310
RenyEkaPutrireny.putri@bankmandiri.co.id
(% yoy) 128.7 48.1 4.4 18.4 (4.2) 6.3 26.3 11.3 6.1 14.5
USD Index 99.7

Rupiah Fluctuation Against US94.2
Dollar 76.7 81.3 79.0 79.8 80.0 98.6 96.2 99.0
(% ytd) 13.1 (5.5) (8.3) 6.0 1.5 (0.5) 0.3 9.3 4.4 1.8
10-yr US Treasury Yield 5.7 4.6 4.0 2.2 3.3 1.8 3.0 2.3 2.7 0.7
(bps ytd) (67.6) (109.4) (67.9) (181.1) (54.3) (11.9) 127.1 9.8 27.9 (173.6)
5-yr Credit Default Swap - - 152.8 691.4 128.2 124.0 236.9 229.9 137.5 210.4
(% yoy) - - 26.6 352.4 (33.2) (40.4) 91.1 43.4 61.2 129.3
Volatility Index 24.0 24.4 22.5 40.0 17.8 18.0 13.7 18.2 25.4 53.5
(% yoy) 14.8 1.7 94.6 77.8 (18.1) (23.0) (23.9) (5.2) 130.3 290.5
Source: Bloomberg, Mandiri Group Estimate
Source: Bloomberg, OCE Bank Mandiri Calculation, *) table as of March 31, 2020

Lower Rupiah Volatility

RUPIAH TREND AND DEVELOPMENT AGAINST USD
Long-legged Doji,
indicates supply and
demand near equilibrium
Shooting Star -
End of uptrend Bearish Harami,
indicates a future
Bearish Harami,
Tweezer bottom, bearish trend
indicates a future
bearish trend indicates minor
bearish reversal
Long-legged Doji, Tweezer top, Bullish Harami,

Bearish Harami, indicates indicates supply and indicates minor indicates a future
a future bearish trend, demand near equilibrium bearish reversal bullish trend
confirmed down trend
Upside Tasuki Gap - Abandoned baby bottom.
Bullish continuation indicates bullish reversal
Downside Tasuki Gap Morning Star

as an early Inverted Hammer to
- Bearish continuation determine a bottom trend
indication of
bullish reversal
RenyEkaPutrireny.putri@bankmandiri.co.id
Rupiah traded between IDR14,000 to

IDR14,300 against USD in November. The
14296 RSI indicator has recently triggered an
Rupiah Fluctuation Against US Dollar 14390
13788 overbought reading and moved back into
13568 13866
SELL USD territory at around 32 level or
12385
13473 lower than IDR14,300 per USD in short
11120 12170
10400 term.
9830
9675 9270 9404 9638 From the technical side, we expect in the
9393
8000 8950 8995 9013 9067 short-term rupiah will fluctuate from
8420 IDR13,900 to IDR14,300 against USD.
7100 External factors, such as COVID-19 risks,
5403 capital inflow, may affect the foreign
2287
volatility.
1995 2102
2363
2067 2199 We still maintain forecast our rupiah target
at IDR14,296 against USD at the end of
2020.
1994
1995
1996
1997
1998
1991
1992
1993
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
note: RSI = Relative Strength Index

MACD = Moving Average Convergence/Divergence
DMI = Directional Movement Index
Source: Bloomberg, OCE Calculation

November 2020 Bond Market Recap

Bond Rally Continued on Foreign Fund Inflows
The INDOGB market posted another positive return in November. Compared with the end of
the previous month, the 10-yr INDOGB yield fell by 43 bps to 6.18% (as of 30-Nov). Thus, the
overall return of INDOGB in November was +2.8% MTD or +12.5% YTD (as of 30-Nov). The rally
was supported by foreign fund flows, following continued risk-on sentiment after the US
election, encouraging progress on vaccines, abundant liquidity, lower USD, and manageable
government supply risk for the rest of this year. Looking at the bond fund flow data, foreign
reported net inflows for the second consecutive month, posting net buy of +IDR 15.6tn MTD,
but was still a net seller on a year-to-date basis, reaching IDR
with settlement date as of 30-Nov.
The rupiah government bonds continued their rally in November. The rupiah
government bond market has continued to make positive returns in November,
reporting a gain of 2.8% MTD or 12.5% YTD, following the positive gain
of1.8%, according to Bloomberg as of 30-Nov. The BINDO performance was pushed by
foreign fund inflows, following continued risk-on sentiment after the US election,
encouraging progress on vaccines, abundant liquidity, lower USD, and manageable
government supply risk for the rest of this year. The BINDO performance was also
data: the trade balance, which reported a
surplus of USD3,610mn as exports fell by only 3.29% YoY to USD 14.39bn in Oct-20 (vs. -
4.36% cons. est. and -0.51% in Sep-20); meanwhile, imports tumbled by 26.93% YoY to
USD 10.79bn (vs. -18.7% cons. est. and -18.9% in Sep-20). This was the sixth straight
month of surplus in the trade balance and the largest since Dec-10. Strong trade balance
and surplus in the
trend may give Bank Indonesia (BI) room to cut its BI7DRR rate in the next meeting.
Another BI rate cut to a new low, as expected. BI cut its 7DRR benchmark interest rate
by 25 bps to a record low of 3.75% in November. This cut was in-line with our polling
result but different from the market consensus expectation of no change. Moreover, it
was the fifth cut this year, totaling 125 bps, on the back of a low-inflation environment,
maintained external stability, and the need to accelerate economic recovery. The deposit
facility and lending facility rates also decreased by 25 bps to 3% and 4.5%, respectively.
BI reaffirmed its commitment to help finance the National Economic Recovery program,
implemented through government bond purchases in the primary market. Note, from
21-Apr (SKB I already signed) to 26-Nov, BI has bought Rp73.5tn in government bonds
from the primary market or only 10% of the total bond issuance.
IDR yield curve bullish flattened in November. Compared to the end of October, the
rupiah government bond yield curve has bullish flattened, with the 2-yr bond yield falling
by 37 bps to 4.11%, whereas the 10-yr yield fell more by 43 bps to 6.18%. Meanwhile,
compared to the end of last year, the 2-yr bond yield fell by 166 bps, while the 10-yr bond
yield fell less by 88 bps.

FIGURE 38. RUPIAH YIELD CURVE IS BULLISH FLATTENED IN NOVEMBER COMPARED TO

THE END OF OCTOBER
8.0
7.0
6.0
Yield (%)
5.0
4.0
3.0
Dec-19 Oct-20 Nov-20
2.0
0 5 10 15 20 25 30
Maturity (Years)
Sources: Bloomberg
Foreign fund inflows continued in November. Foreign fund inflows continued in

November, reporting +IDR
+IDR21.8tn, thus making foreigners the third-highest net buyer of government bonds in
November. Foreign ownership in the rupiah bond market was still light, as it reported a
net buy of IDR43.6tn after the COVID-19 pandemic announcement or only 29% of the
total outflows in Feb Mar-20. YTD, cumulatively, foreign still posted net sell of
IDR91.4tn, and the foreign ownership portion to total outstanding reached IDR970.5tn
or 26% of the total outstanding (vs. 38.6% in Dec-19), according to DMO data with
settlement date as of 30-November. Meanwhile, the biggest net buyer in rupiah
government bonds this month is still BI, posting a net buy of +IDR50.8tn (vs. net buys
+IDR499tn YTD and +IDR55.8tn in FY2019). This is in-line with the burden-sharing
scheme between BI and the Ministry of Finance on financing the fiscal stimulus to handle
the COVID-19 pandemic. Note that increasing central bank ownership in government
bonds is also happening in other countries, including the US, as foreign participation is
lower. Another support also came from onshore banks, which became the second-
biggest net buyer of rupiah government bonds, with net buy of +IDR29.6tn (vs. net buy
of IDR363tn YTD and +IDR53.2tn in FY2019). Surging deposits and declining lending are
driving banks to dramatically increase their holding on rupiah government bonds, thus
offering significant support to the bond market.

FIGURE 39. FOREIGNER FUND INFLOWS CONTINUED IN NOVEMBER

IDR tn
40.0 15.2 21.8 15.6
20.0 7.1 5.2 8.8
0.0
(20.0) (2.1) (3.9) (8.8)
(40.0) (28.9)
(60.0)
(80.0)
(100.0)
(120.0)
(140.0) (121.3)
Mar-20
Apr-20
Oct-20
Aug-20
Sep-20
Jan-20
Jun-20
Nov-20
May-20
Feb-20
Jul-20
Source: DMO and Mandiri Sekuritas
FIGURE 40. MEANWHILE, IN TERMS OF YEAR-TO-DATE, FOREIGN STILL REPORTED AS THE BIGGEST NET SELLER THOUGH BIIS THE
BIGGEST NET BUYER OF RUPIAH GOVERNMENT BONDS, FOREIGN INVESTORS STILL HASTHE BIGGEST OWNERSHIP OF RUPIAH
GOVERNMENT BONDS
Net buy/ (sell) - IDR tn

30-Nov-20 % of outs
MTD YTD
Bank (excl. reverse repo) 933.7 25.0% 29.6 363.0
Bank Indonesia 772.2 20.7% 50.8 499.0
Mutual Fund 155.9 4.2% 3.7 25.0
Insurance 534.9 14.3% 5.8 63.2
Foreign 970.5 26.0% 15.6 (91.4)
Retail 146.1 3.9% (3.0) 64.9
Others 216.7 5.8% 11.3 53.4
Total 3,730.0 100.0% 113.8 977.2
Source: DMO Mandiri Sekuritas
Government bond supply is still manageable. The gross financing this year will reach
IDR1,679tn to finance a budget deficit of -6.34% of GDP (or IDR1,039tn). If deducted with
the non-debt financing of IDR181tn, the gross bond issuance this year is at IDR1,530tn.
This amount is more than double compared to the initial forecast for this year. Still, it is
not such a big financing issue, as there is more support from onshore banks, which
currently have flush liquidity, reflected from LDR lowering to 83.2% as of Sep-20 (vs.
93.8% in the same period last year). Furthermore, BI is also helping the government
financing using the (joint regulation) SKB1 and SKB2 schemes, with the total ceiling
projected at IDR606.4tn.
Until the end of November, the government has already issued IDR1,395.9tn or 91.2% of
the full-year target. Although it seems the government is back-loading in its financing
strategy this year, actually the government bond issuances for the rest of this year
through market mechanism only need IDR34.6tn or only 2.3% of the full-year target,
given that with the second joint regulation (SKB II) between MoF and BI about burden
sharing, BI will buy government bonds for public goods financing, estimated at around
IDR100.5tn for the rest of this year.

Mandiri
FIGUREGroup Research
41. YTD, | May 2017ig HAS ISSUED RP1,395.9TN-GROSS OR 91.2% OF GROSS ISSUANCE TARGET
THE GOVERNMENT
APBN 2020 Perpress Realized YTD Remaining

Government Securities APBN 2019
No 72/2020 (24-Nov-2020) 2020
Budget Deficit (343) (1,039)

% of GDP (2.21) (6.34)
Gross Bond Supply 902.0 1,531.0 1,395.9 135.1
Gross Local Currency Bonds 753.0 1,372.1 1,237.0 135.1
Auction Program (incl Sukuk) 681.0 763.5 728.9 34.6
Retail Bonds (ORI & Sukuk) 48.0 76.8 76.8 -
Private Placement 24.0 531.8 431.3 100.5
Gross Foreign Currency Bonds 149.0 158.9 158.9 -
Average issuance per auction (6 times conventional and 6 times sukuk auction for the rest of this year)- Rp trillion
1 Conventional 21.3 24.6
1 Sukuk 7.1 10.0
Total 28.4 34.6
Assumption 2019 2020F

Gross Local Currency Bonds 83.5% 89.6%
Auction Program (incl Sukuk) 75.5% 49.9%
Retail Bonds (ORI & Sukuk) 5.3% 5.0%
Private Placement 2.7% 34.7%
Gross Foreign Currency Bonds 16.5% 10.4%
Source: DMO and Mandiri Group Estimate


Equity Market Update
2021 will be a year of relief, recovery, and reform, favoring equity as a growth-sensitive asset.
Cyclical outperformance is expected to continue, though we keep our defensive hedge as risks
remain until mass vaccinations begin in 2Q21. We identified six investment themes that will
shape 2021 and how investors should position themselves. We expect JCI to end 2021 at 6,850.
The announcements of
promising vaccine efficacies helped fueling up the equity rallies, up 9.4% in November
and another 6.1% this month up to 11-Dec. While there have been some noises over the
tightening mobility restrictions across European countries, the pullback appears to be
short lived as strong vaccine candidacies pushed the market to look beyond such risks.
While we are bullish for 2021, navigation could still be bumpy as mass vaccinations only
begin in 2Q21.
Foreign flows started returning, albeit minimal. -

rated to ~16x based on a 12-month forward PE, exceeding its long-term average yet
justified by below-average risk-free rate and above-average EPS growth. We forecast 40%
EPS growth this year, higher compared with the average 33% EPS growth in ASEAN ex-
Indonesia, while we expect Indo GB 10Y yield to decline to 5.75-6.00% by end-2021.
Foreign investors have started returning, netting some IDR 3.4trn of inflows in Nov-20,
albeit small compared to what have been sold this year. With the hunt for yield and
expectations of recovering economic growth, we believe Indonesia will be favored next
year.
Navigating the recovery. We turned more bullish on cyclicals by closing our barbell
strategy on 5-Nov, with JCI delivering 14% return since then. We stick with our cyclical
preference, though mobility restrictions remain a risk until mass vaccinations begin in
2Q21. Any corrections should be opportunities to add while the market may look beyond
dictated by the
promising vaccine results, but should soon shift to the production,
distribution, and social acceptance rate of the vaccines. We expect backloaded 2021 EPS
recovery, while pent-up demand fueled with excessive domestic liquidity could be the
upside risk.
Six investment themes for 2021. We are optimistic that 2021 will not be just a year of
recovery but the beginning for structural reforms, upgrading long-term
investment thesis (i.e., quality of growth and risk premium) compared to the past eight
years. We identified six major investment themes in Indonesia for 2021: 1) vaccine-led
recovery; 2) uneven normalization with post-pandemic industry consolidation; 3)
excessive liquidity supporting 2021-22 recovery in growth, credit cycle, and fueling pent-
up demand; 4) pursuit of yield and weak dollar favoring Indonesia; 5) strong commodity
tailwinds entering 2021, and; and 6) the start of structural reforms with the emergence
of Indonesia as a nickel/EV supply-chain powerhouse.
2021 JCI target at 6,850. Our bottom-up estimates are for 40%/16% EPS growths in
2021/2022, compared to average ASEAN ex-Indonesia EPS growth of 33%/16%. In
deriving our index target, we applied a more conservative EPS growths of 30%/12% in
2021/2022, with forward PE of 17x assuming 6.0% risk-free rate, 2.5% risk premium, and

2.5% dividend yield. At the prevailing risk-free rate, there is still scope for further
normalization in equity risk premium to its long-term average. Our BULL/BEAR index
target is 7,300/5,270.
Sticking with cyclicals preference. Cyclical-over-defensive preference is unchanged,

though we keep a portion of defensive, as the
in 2Q21. Our preferred cyclicals are Banks (BBNI, BBTN), Building Materials (SMGR),
Infrastructures (JSMR), Property (BSDE), Commodities (UNTR), Industrials (PGAS), and
Consumer Discretionary (ASII, MAPI). Our preferred defensives are Telecom (TLKM, EXCL)
and Healthcare (MIKA). Consumer Staples is our least preferred amidst a two-speed
economy.

FIGURE 42. JCI FIGURE 43. TRADING SUB-INDEX OUTPERFORMED THE INDEX
(YTD)
8,000 40 16.8%
JCI
7,000 35
6,000 30
Billions
5,000 25
4,000 20 -1.6%
-3.7%
3,000 15 -5.5% -5.8%
-7.5%
2,000 10 -11.4%
-14.2% -14.7%
1,000 5
0 0 -23.3%
Jan-10
Jan-20
Sep-12
May-16
Oct-11
Dec-10
Mar-18
Aug-13
Jul-14
Dec-20
Apr-17
Feb-19
Jun-15
JAKPROP
JAKFIN
JAKCONS
JAKMINE
JCI
JAKAGRI
JAKMIND
JAKBIND
JAKINFR
JAKTRAD
Volume (RHS) Index (LHS)
Sources: Bloomberg and Mandiri Sekuritas Sources: Bloomberg, Mandiri Sekuritas
FIGURE 44. NET FOREIGN INFLOWS (IDR BN) FIGURE 45. TOTAL TRADING BY INVESTOR TYPES
(Rpbn) 100%
60,000 90%
50,000 80%
40,000 70%
30,000 60%
20,000 50%
10,000 40%
0 30%
20%
-10,000
10%
-20,000
0%
-30,000
Oct-18
Jan-15
Sep-16
Jan-20
May-18
Mar-19
Aug-19
Nov-15
Apr-16
Jul-17
Dec-17
Nov-20
Feb-17
Jun-15
Jun-20
Jan-15
Sep-16
Jan-20
May-18
Oct-18
Nov-15
Apr-16
Jul-17
Dec-17
Mar-19
Aug-19
Nov-20
Feb-17
Jun-15
Jun-20
Domestic Investor Foreign Investor
Sources: IDX and Mandiri Sekuritas Sources: IDX and Mandiri Sekuritas
FIGURE 46. MONTHLY JCI PERFORMANCE FIGURE 47. REGIONAL MARKET VALUATION
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020F PE(x)
2000 -6.0 -9.4 1.2 -9.7 -13.7 13.4 -4.4 -5.2 -9.7 -3.8 5.9 -3.0
2001 2.2 0.6 -11.0 -6.0 13.3 7.8 1.5 -1.9 -9.9 -2.2 -0.9 3.1 SE Thai 27.6
2002 15.2 0.4 6.3 10.9 -0.6 -4.9 -8.2 -4.3 -5.5 -12.0 5.8 8.8
2003 -8.6 2.8 -0.3 13.3 9.7 2.2 0.5 4.3 12.8 4.7 -1.4 12.1 PSEi - Philippine 26.6
2004 8.8 1.1 -3.3 6.5 -6.5 0.0 3.4 -0.3 8.7 4.9 13.6 2.3
2005 4.5 2.7 0.6 -4.7 5.7 3.1 5.3 -11.2 2.8 -1.2 2.9 6.0 JCI Index 23.6
2006 6.0 -0.1 7.5 10.7 -9.2 -1.5 3.2 5.9 7.2 3.1 8.6 5.0
KOSPI 19.6
2007 -2.7 -0.9 5.2 9.2 4.3 2.6 9.8 -6.6 7.5 12.0 1.7 2.1
2008 -4.3 3.6 -10.1 -5.8 6.1 -3.9 -1.9 -6.0 -15.4 -31.4 -1.2 9.2
FTSE Straits Times 19.3
2009 -1.7 -3.5 11.6 20.1 11.3 5.7 14.6 0.8 5.4 -4.0 2.0 4.9
2010 3.0 -2.4 9.0 7.0 -5.9 4.2 5.3 0.4 13.6 3.8 -2.9 4.9 FTSE Malay KLCI 18.8
2011 -7.9 1.8 6.0 3.8 0.5 1.3 6.2 -7.0 -7.6 6.8 -2.0 2.9
2012 3.1 1.1 3.4 1.4 -8.3 3.2 4.7 -2.0 5.0 2.1 -1.7 0.9 Shanghai Comp 15.2
2013 3.2 7.7 3.0 1.9 0.7 -4.9 -4.3 -9.0 2.9 4.5 -5.6 0.4
2014 3.4 4.6 3.2 1.5 1.1 -0.3 4.3 0.9 0.0 -0.9 1.2 1.5 Hang Seng 14.2
2015 1.2 3.0 1.3 -7.8 2.6 -5.9 -2.2 -6.1 -6.3 5.5 -0.2 3.3
2016 0.5 3.4 1.6 -0.1 -0.9 4.6 4.0 3.3 -0.4 1.1 -4.6 2.9
2017 0.0 1.7 3.4 2.1 0.9 1.6 0.2 0.4 0.6 1.8 -0.9 6.8
2018 3.9 -0.1 -6.2 -3.1 -0.2 -3.1 1.3 2.4 -0.7 -2.4 3.8 2.3
2019 5.5 -1.4 0.4 -0.2 -3.8 2.4 0.5 -1.0 -2.5 1.0 -3.5 4.8
2020 -5.7 -8.2 -16.8 3.9 0.8 3.2 5.0 1.7 -7.0 5.3 9.4 5.7
Avg 0.7 0.6 1.7 2.5 -0.1 1.0 3.3 -1.3 0.2 2.0 -0.6 3.2
Sources: IDX and Mandiri Sekuritas Sources: IDX and Mandiri Sekuritas

Mandiri Group Research | May 2017ig Mandiri Research Team

Bank Mandiri Mandiri Sekuritas
Chief Economist Economic Research
Andry Asmoro Chief Economist Bank Mandiri Leo Putera Rinaldy Chief Economist
andry.asmoro@bankmandiri.co.id +62 21 30023693 leo.rinaldy@mandirisek.co.id +6221 5296 9406
Imanuel Reinaldo Economist
Macroeconomic and Financial Market Research Imanuel.reinaldo@mandirisek.co.id +6221 5296 9688
Dian Ayu Yustina Department Head
dian.yustina@bankmandiri.co.id +62 21 5245088 Equity Research
Rully Arya Wisnubroto Banking & Financial Market Adrian Joezer Head of Equity Research, Strategy, Consumer
rully.wisnubroto@bankmandiri.co.id +62 21 5245935 adrian.joezer@mandirisek.co.id +6221 5296 9415
Reny Eka Putri FX & Quantitative Analyst Tjandra Lienandjaja Deputy Head of Equity Research, Banking
reny.putri@bankmandiri.co.id +62 21 5245516 tjandra.lienandjaja@mandirisek.co.id +6221 5296 9617
Faisal Rachman Economist Ariyanto Kurniawan Automotive, Coal, Chemical
faisal.rachman@bankmandiri.co.id +62 21 5245516 ariyanto.kurniawan@mandirisek.co.id +6221 5296 9682
Kresna Hutabarat Telecom, Media
Industry and Regional Research kresna.hutabarat@mandirisek.co.id +6221 5296 9542
Dendi Ramdani Department Head
Lakshmi Rowter Healthcare, Consumer
dendi.ramdani@bankmandiri.co.id +62 21 5245087 lakshmi.rowter@mandirisek.co.id +6221 5296 9549
Nadia Kusuma Dewi F&B, Cigarette, Pharmacy, Retail
Robin Sutanto Property
nadia.dewi@bankmandiri.co.id +62 21 52913501 robin.sutanto@mandirisek.co.id +6221 5296 9572
Adjie Harisandi Oil & Gas, Electricity, Petrochemical & Coal
Edbert Surya Construction, Transportation
adjie.harisandi@bankmandiri.co.id +62 21 5245172 edbert.surya@mandirisek.co.id +6221 5296 9623
Andrian Bagus Santoso Rubber, Palm Oil, Animal Feed & Fertilizer
Silvony Gathrie Research Assistant
andrian.bagus@bankmandiri.co.id +62 21 29528608 Silvony.gathrie@mandirisek.co.id +6221 5296 9544
Mamay Sukaesih Construction, Telco, Toll Road, Cement
Riyanto Hartanto Research Assistant
mamay.sukaesih@bankmandiri.co.id +62 21 52913501 riyanto@mandirisek.co.id +6221 5296 9488
Mufti Faisal Hakim Hotel& Property
Henry Tedja Research Assistant
mufti.hakim@bankmandiri.co.id +62 21 29528608 henry.tedja@mandirisek.co.id +6221 5296 9434
Astari Adityawati TPT, Automotive, Steel
Wesley Louis Alianto Research Assistant
astari.adityawati@bankmandiri.co.id +62 21 5245557 Wesley.alianto@mandirisek.co.id +6221 5296 9510
Haris Eko Faruddin Air Transportation & Sea Transportation
haris.faruddin@bankmandiri.co.id +62 21 5245557 Fixed Income Research
Strategic Research (Mandiri Institute) Handy Yunianto Head of Fixed Income Research
handy.yunianto@mandirisek.co.id +62 21 5296 9568
Teguh Yudo Wicaksono Department Head
Teguh.wicaksono@bankmadiri.co.id +62 21 29528606 Teddy Hariyanto Senior Credit Analyst
teddy.hariyanto@mandirisek.co.id +62 21 5296 9408
Bobby Hermanus Analyst
bobby.hermanus@bankmandiri.co.id +62 21 29528606 Ali Hasanudin Credit Analyst
ali.hasanudin@mandirisek.co.id +6221 5296 9629
Andre Simangunsong Analyst
andre.simangunsong@bankmandiri.co.id +62 21 29528608 Yudistira Yudadisastra Credit Analyst
yudistira@mandirisek.co.id +62 21 5296 9698
Andjarsari Paramaditha Analyst
andjarsari@bankmandiri.co.id +62 21 29528608 Ariestya Putri Adhzani Research Assistant
ariesty.adhzani@mandirisek.co.id +62 21 5296 9465
Elisabeth Carolina Analyst
elisabeth.carolina@bankmandiri.co.id +62 21 29528608
Supporting Data
Sindi Paramita Section Head
sindi.paramita@bankmandiri.co.id +62 21 5245272
Andhi Prasetyo Hadi
andhi.hadi@bankmandiri.co.id +62 21 5245935
Istiqomah
istiqomah.oce@bankmandiri.co.id +62 21 5245272
Marsella Ayu Ariwandi
marsella.ayu@bankmandiri.co.id +62 21 5243024
Giffari Al Hadi
giffari.alhadi@bankmandiri.co.id +62 21 5245172
DISCLAIMER: This report is issued by Mandiri Group (Bank Mandiri and Mandiri Sekuritas), registered and supervised by the Financial Services Authority
(OJK). Although the contents of this document may represent the opinion of Mandiri Group, deriving its judgment from materials and sources believed to
be reliable, Mandiri Group cannot guarantee its accuracy and completeness. Mandiri Group may be involved in transactions contrary to any opinion herein
to make markets, or have positions in the securities recommended herein. Mandiri Group may seek or will seek investment banking or other business
relationships with the companies in this report. For further information please contact our number 62-21-526 3445
ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be
influenced by any part or all of his or her compensation.

Econmark Mid December 2020-Special Topic On Household Spending - FIN

Uploaded by

Copyright:

Available Formats

You might also like

Econmark Mid December 2020-Special Topic On Household Spending - FIN

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Econmark Mid December 2020-Special Topic On Household Spending - FIN

Uploaded by

Copyright:

Available Formats

ECONMARK

Mandiri Group Research | mid December 2020

ECONMARK Special Topic on Household Spending:

Of course, in 2021, we are still highly dependent on government spending as a

Please see important disclosure at the back of this report

Household Spending Reallocation

1Q20 2Q20 3Q20

Perdagangan Besar dan Eceran; Reparasi

Pengadaan Listrik dan Gas

Jasa Keuangan dan Asuransi

Pengadaan Air, Pengelolaan Sampah,

Informasi dan Komunikasi

Pertanian, Kehutanan, dan Perikanan

Jasa Kesehatan dan Kegiatan Sosial

Limbah dan Daur Ulang

Please see important disclosure at the back of this report Page 2 of 49

Transportasi dan Pergudangan-29.2

Pertahanan dan Jaminan…

Pengadaan Listrik dan Gas

Pertambangan dan Penggalian

Jasa Keuangan dan Asuransi

Perdagangan Besar dan Eceran;

FIGURE 3. HOUSEHOLD SPENDING DECREASED IN ALL CATEGORIES OF GOODS AND

Household Total Spendng Foods & drinks spending (exc. restaurant)

Please see important disclosure at the back of this report Page 3 of 49

2018 2019 2020

We think consumer confidence is the key to recover the economy. Bank

Please see important disclosure at the back of this report Page 4 of 49

Source: Indomaret Source: Indomaret

However, we identified that Indomaret sales revenue structure has changed

Please see important disclosure at the back of this report Page 5 of 49

Mandiri Group Research | May 2017ig Details about Household Spending

FIGURE 7. SPENDING INDEX

Transaction frequency index Transaction volume index

Source: Bank Mandiri Big Data Analysis

Please see important disclosure at the back of this report Page 6 of 49

FIGURE 8. SPENDING INDEX

Supermarkets Retail Restaurants Department Stores

Source: Bank Mandiri Big Data Analysis

The second-round PSBB disproportionately hit department stores and restaurants.

Please see important disclosure at the back of this report Page 7 of 49

FIGURE 9. SPENDING INDICES OF PERSONAL HOBBIES, SPORTS, AND OTHERS

Sports Hobbies Gasolines Electronics

Source: Bank Mandiri Big Data Analysis

Please see important disclosure at the back of this report Page 8 of 49

Work-from-home and social distancing measures created new activities and

FIGURE 10. SPENDING INDICES OF TRAVEL AND TOURISM-RELATED SECTORS

Travel Transportations Hotel Airlines

Source: Bank Mandiri Big Data Analysis.

Please see important disclosure at the back of this report Page 9 of 49

Shopping Center and Restaurant Visits

3-7 July 6-11 August 9-13 September 9-17 October

Please see important disclosure at the back of this report Page 10 of 49

FIGURE 12. VISITS TO STORES BY CATEGORY, JULY-OCTOBER 2020 (%)

3-7 July 6-11 August 9-13 September 9-17 October

The visit rate

FIGURE 13. VISITS TO RESTAURANTS COMPARED TO PRE-COVID-19 LEVEL, JULY-OCTOBER