Fed adds urgency to Indonesia’s fuel reform test 20 Aug 2014 President-elect Joko Widodo’s first big challenge will be to rethink the country’s $30 billion energy subsidy. Though higher fuel prices will be unpopular, the handout boosts the trade deficit. That makes Indonesia extra vulnerable to capital flight when U.S. interest rates rise.
Slow growth may help Indonesia catch second wind 6 Aug 2014 The economy grew 5.1 percent in the second quarter, the weakest in five years. But the slowdown is good news for incoming President Joko Widodo. It will allow him to scrap fuel subsidies without having to worry about an inflation scare. Energy reforms will fuel the next spurt.
Indonesia reform hopes rise with clear Jokowi win 23 Jul 2014 The president-elect’s wide victory margin, and lack of ties to the old regime, give him credibility. If he reins in nationalism and makes Indonesia a better place to do business, the country can make better use of its natural advantages: resource riches and a young workforce.
Close presidential race may slow Indonesia reforms 9 Jul 2014 Popular Jakarta Governor Joko Widodo faces a tough challenge from ex-general Prabowo Subianto in the country’s presidential poll. While the latter’s nationalistic talk makes investors edgy, a slim win for the former could also dim hopes of strong leadership and lasting change.
Economic nationalism can mar Indonesia’s prospects 26 May 2014 The country’s two presidential hopefuls are chanting the mantra of self-sufficiency. Deepening Indonesia’s engagement with the world is a more urgent priority. The economy needs a big productivity boost. That will elude it if politicians keep making a virtue of insular policies.
Dairy holds key to $1.2 bln Goodman takeover 28 Apr 2014 The troubled Australian food group has rejected a bid from Singapore’s Wilmar and Hong Kong’s First Pacific that values it at 8 times this year’s EBITDA. To convince investors it is worth more on its own, Goodman quickly needs to find a buyer or partner for its dairy business.
Missing inflation could make Asian bonds frothier 21 Apr 2014 Prices of goods in the region are rising more slowly than expected. Inflation drives bond yields up; a lack of it could send them downward, even though the U.S. Fed is threatening to edge up rates around the world. Asian debt is already pricey – it may get yet more expensive.
Indonesia poll may not answer investors’ prayers 28 Mar 2014 The nation’s commodities- and consumption-led growth is in doubt. Even so, the stock market is up 10 percent this year on bets a new president will reset south east Asia’s largest economy. But reforms in Indonesia occur at a glacial place. Optimism should be more guarded.
Indonesian mineral export ban is mistimed idealism 9 Jan 2014 The mining ministry wants to delay a proposed ban on shipping raw commodities by three years. But exports of nickel and bauxite could still be blocked immediately. Nudging miners to invest in domestic processing has merit, but barring sales could widen the trade deficit.
Asia’s fear of Fed is now infecting more economies 21 Nov 2013 The fragilities revealed by last summer’s market wobble are spreading beyond India and Indonesia. Growth has stalled in Thailand. Malaysian public finances look shaky. Debt is piling up everywhere. Asian assets will feel a jolt as the Fed starts to turn off the tap of dollars.
China’s Bakrie burns may have less sting 10 Oct 2013 Like Nat Rothschild, China Investment Corp. has been scorched by Bumi Resources. A $1.3 bln debt swap has turned the sovereign fund from major creditor to minority investor in the Indonesian miner. But CIC’s state backing limits the risk of climbing into bed with the Bakrie clan.
Not all Asian countries need to fear the Fed 5 Sep 2013 Plunging currencies have raised contagion concerns. But not all nations are equally vulnerable to receding tides of dollar liquidity. A Breakingviews interactive map shows that while no Asian economy is entirely immune, none is as badly exposed as India.
Emerging market currency rescue is a pipe dream 2 Sep 2013 India’s idea of group-selling dollars to prop up emerging market exchange rates would be a tough sell. Participants would be asked to spend their reserves to help others, and probably lose money in the process. The best thing India can do is to revive sputtering growth.
Currency market’s rude wakeup call stirs Indonesia 29 Aug 2013 The collapsing rupiah has finally forced the country’s central bank to raise interest rates. It’s a step Jakarta should have taken much earlier. High inflation and a widening trade deficit have shown the country’s loose monetary policy for what it is: a risky growth obsession.
Asia sell-off will expose weak corporate defences 26 Aug 2013 Market turbulence invites comparisons with Asia’s last financial crisis. Though most economies are in better shape this time, corporate leverage has risen. Higher interest rates, slower growth, and falling currencies will lay bare companies that failed to learn past lessons.
Indonesia imitates India’s costly growth obsession 16 Aug 2013 The central bank has missed an opportunity to raise interest rates. The authorities risk a weaker currency, runaway inflation and financial instability if they chase growth while a stubborn current account deficit lingers. Jakarta is at risk of emulating New Delhi’s folly.
Indonesia biggest loser from bank merger flop 1 Aug 2013 After more than a year in limbo, DBS has scrapped a $7.2 bln bid for Indonesia’s Danamon. The retreat is frustrating for the Singaporean lender and for sovereign fund Temasek, which has stakes in both banks. But the main casualty is Indonesia’s appeal to foreign investors.
New Bumi plan makes bad jam even worse 11 Jul 2013 Fresh proposals could see the Bakrie family bought out of the London-listed Indonesian coal miner by its chairman, Samin Tan. It’s far inferior to an earlier plan to cancel the shareholding. It would help investors, including Nat Rothschild, if Tan commits to sell down his stake.
Indonesian anti-graft zeal sours business climate 5 Jul 2013 A Jakarta court will soon decide if offering Internet on a 3G network without paying mobile license fees is a corrupt practice. A guilty verdict will put small providers at risk and dent investor confidence just when the economy looks vulnerable to the risk of capital flight.
Indonesia subsidy cut is right plan for wrong time 18 Jun 2013 The country’s plan to hike energy prices is a welcome reduction in a $20 billion subsidy bill. But inflation could surge, raising the risk of capital outflows. That leaves the central bank no room to offset the fiscal tightening; sacrificing GDP growth is the only option.