Saved By Abundant Supply Amid Campaign

Mar‐09’s Inflation +0,22%MoM (7,92% YoY)
Inflation on March increased slightly from 0.21% in February to 0.22%, still better
than consensus 0.24% MoM. As year‐on‐year, was inflated to 7.92% which was
lower than February’s 8.6%. As expected, inflation was detained to escalate higher,
as harvesting time occur in March and April as shown with deflation in foodstuff
price index ‐0.26% MoM and also on volatile price index ‐0.4%, but prepared food
+0.52% and clothing +1.02% due to harvesting time lifted up purchasing power.
Recent up on material cost (average price +77%), has drove housing price +0.2%
while increasing index price on transport +0.25%, education +0.06% and medical
care +0.7% was mainly due to combination of rainy season and depreciating rupiah.
Going forward, inflation’s pressure will likely to increase as government spending
on infrastructure project (Rp12.2 tn) and general campaign (campaign’s cost
estimated at Rp50 tn) occur between mid March to September FY09.

Export eased to ‐1,02% MoM (‐33% YoY)
In February 2009, total export continue to decline ‐1.02% MoM to US$7.08 bn (far
better than ‐17.7% MoM drop in January). As annual rate, Indonesia’s export
slumped by 32.86% YoY. Biggest decline was contributed by Non‐Oil and Gas (85%
of total export) dropped by 2.4% MoM, US$6.05 bn due to mineral fuel’s export
decline by US$247.2 mn to US$505.8 mn.

Indonesia’s oil and gas export surprisingly jumped by 8.2% MoM,
While export of Oil and Gas sector (13% of total export) surprisingly jumped by
8.16% MoM to US$1.02 bn supported by significant growth on oil product +95.5%.
Export to China (the 3rd largest main export by destination) has the highest
contraction by plunging US$73.3 mn, Japan ‐US$61.6 mn but to US increased by
US$30.1 mn (+12.8% MoM).

Import plunged ‐11.9% MoM (‐36% YoY)
Meanwhile import deteriorated by 11.9% MoM and 36.2% YoY. Import in energy
sectors declined by 39.8% to US$770 mn spurred by decreased in import of oil
product ‐53.1% (49% of total import on energy) and crude oil ‐14.7% (40% of total
import on energy) while non‐energy sectors slumped slightly by 5.2% to US$5.0 bn
from US$5.3 bn in January.

Surplus on trade balance also climbed at US$1.3 bn
Decline in import on February likely to be followed by decreased in export on
March, as most of our export oriented’ industry material are still imported. It’s
worth noting that increase in import on oil and gas sector in January has effect in
increased on February’s export of oil and gas. Surplus on trade balance in February
was recorded at US$1.3 bn, climbed + 56% from US$0.8 bn in January.

Expected BI rate cuts 25bps from 7.75% to 7.50%
On the back of, low inflation rate in March 2009 and destroying demand BI rate is
expected to lower by 25bps to 7.50% in this 3 April 2009 in order to spur economic
and prevent blooming NPL.