ASIA BUSINESS OUTLOOK9DECEMBERNEWSROOMBOJ'S LATEST MONETARY POLICY TRIGGERS JPY13T IN LOSSESIndonesia is set to launch a significant social welfare program, the Free Meal Initiative, aimed at addressing malnutrition and poverty. This ambitious program will provide daily meals to millions of Indonesians, including children, pregnant women, and breastfeeding mothers.The pilot phase of the program will commence in December 2024, covering a vast geographical area from Sabang to Merauke. The full-scale rollout is scheduled for January 2025, with the goal of reaching 82.9 million people by 2027.The program is expected to create numerous jobs, with an estimated 1.5 million job opportunities being generated. Initially, 923 food kitchens will be established, gradually increasing to 2,000 and then 5,000 by August 2025. Each kitchen is projected to serve approximately 3,000 people daily.The Free Meal Initiative is a key component of President Prabowo Subianto's administration's efforts to combat malnutrition, particularly stunting, which affects a significant portion of Indonesian children. By providing nutritious meals, the government aims to improve the physical and cognitive development of the nation's youth. The Bank of Japan (BOJ) has recently experienced significant financial losses due to its shift in monetary policy. In the first half of the fiscal year, the central bank incurred a record 13.66 trillion yen in valuation losses on its government bond holdings. This is primarily attributed to the rise in bond yields, a consequence of the BOJ's decision to raise interest rates.Historically, central banks tend to face declining bond values when they implement rate hikes, as it leads to a decrease in bond prices. The BOJ's substantial holdings of long-term government bonds, which have now decreased for the first time in 16 years, have contributed to these losses.While the BOJ's ETF holdings generated paper profits, they were lower than in the previous period. The central bank's decision to abandon its ultra-loose monetary policy, including negative interest rates and ETF purchases, has marked a significant departure from its decade-long stimulus program.The BOJ's recent actions, such as raising short-term interest rates and tapering its bond-buying, aim to normalize its monetary policy and reduce its bloated balance sheet. However, these measures have resulted in increased interest payments on excess reserves held by financial institutions.Despite these challenges, the BOJ's dividend income from its ETF holdings has partially offset the losses incurred. The central bank remains committed to its gradual policy normalization while closely monitoring the impact on the economy and financial markets. INDONESIA AIMS TO ADDRESS MALNUTRITION WITH LATEST FREE MEAL INITIATIVE
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