Indonesia

Indonesia's Ministry of Energy and Mineral Resources has announced the finalisation of a domestic pricing mechanism scheme for coal that will come into effect next year.

Facing its toughest test since the 1997-98 Asian Financial Crisis, Indonesia's banking sector appears to be well positioned to weather the global financial storm. While lending and liquidity are being squeezed in line with the global trend, the country's leading banks appear to be in good shape, less exposed to the pitfalls that have plagued the banking sectors in the US and Europe.

Despite some polling hiccups and minor unrest, the April 9th parliamentary elections were staged peacefully, with early results boding well for incumbent president Susilo Bambang Yudhoyono (SBY). He is expected to be comfortably re-elected in the July 7th presidential poll. Considered pro-business, with a strong track record when it comes to the economic advancement of the country, the results point towards the country enjoying political and economic stability for years ahead. The news is being greeted with optimism by the international investment community.

Despite being home to the world's largest Muslim population, Islamic finance in Indonesia has yet to catch up with other Asian financial markets, such as Malaysia, Singapore and Hong Kong. In order to increase its domestic penetration, as well as help the country attract more outside funding, the government is introducing new legislation to make sharia-compliant financial products more competitive.

The Indonesian government has recently announced two new policies aimed at raising the production and demand for palm oil-derived biofuels. It is hoped that these initiatives will help stimulate the sector and revive investment and expansion during times of low returns due to the global economic slowdown.

For nearly a century, Indonesia has been Asia Pacific’s leading producer and exporter of oil and gas. In recent years, however, a combination of ageing fields, growing domestic demand and a lack of new investment has resulted in the country becoming a net importer, prompting Indonesia to withdraw its membership from the Organisation of Petroleum Exporting Countries (OPEC) in 2008.