Opportunities and Risks in Indonesia

We recently concluded our second event in Singapore looking at opportunities and risks in Indonesia. We were joined by esteemed panellists: 

  • Annisa Natalegawa, Partner and Managing Director of Asia Group Advisors
  • Ju Ye Lee, Vice President and Economist at Maybank Securities Singapore
  • Keith Toh, Partner at Novo Tellus Capital Partners
  • Samuel Seow, Managing Partner at YSL Legal

Ju Ye kicked off the event with an overview of Indonesia’s macro-economic and political picture. Here are some of the key takeaways of her presentation and the panel discussion:

Macro-economic picture:

  • GDP expectations remains strong at ~5% forecasted for 2023 based on resilient private consumption, but is slowing as reopening tailwind fades.
  • Foreign investment jumped in 2022, mainly driven by heavy industries. In particular, there is strong interest from major EV players.
  • Key risk of a sharp correction in commodity prices, and a potential falling through of investors in the new capital relocation project to Nusantara.

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On to the panel discussion

  • Although the macro environment picture seems rosy, narrower businesses and investments face specific risks that are systemic and unique to their industries.
  • New industries (especially the electronics sector) are nascent. How fast they grow is dependent on the inflow of talent and Indonesia’s connectivity to the rest of the world – both are improving.
  • More global supply chains are connecting to Indonesia, bringing along greater scrutiny and adherence to stricter regulation. With greater stakeholders, there are more on-the-ground audits aided by digitalisation.

Political continuity is expected

  • Jokowi’s legacy remains strong, and new candidates do not hold opposing views.
  • Protectionism, especially in the downstream processing of natural resources is a perpetual theme.
  • Public consultation on the Omnibus Law is likely to result in dilution of legislation relating to wage-setting and the streamlining of environmental protections.

Thanks to everyone who attended. Our next event will be our Regional Strategic Forecast, presented by our Chief Economist Simon Baptist.