Indonesia’s new president; Thailand’s PM selling the land bridge

This week in Asean:

• Indonesia: Prabowo set to win the presidential election
• Thailand: Consumer confidence at 47-month high; declared extra holiday to grow tourism
• Malaysia: Biggest port, Westports, eyeing new investors for expansion
• Singapore: 2023 GDP growth revised down to 1.1 per cent

Dear BT reader,

Indonesia, South-east Asia’s largest economy, held the world’s largest single-day election on Feb 14. As many as 204 million voters across the archipelago of 17,000 islands cast their votes, not only to elect their president for the next five years but also parliamentary and local representatives. 

Following the unofficial “quick count” by several independent pollsters, the country’s current Defense Minister Prabowo Subianto is poised to become president for the next five years, attracting around 58 per cent of votes. His election partner, Gibran Rakabuming Raka, son of outgoing President Joko Widodo, is set to become the next vice-president. 

Prabowo’s apparent one-round victory was cheered by analysts and economists who pointed out that it would remove the uncertainty over the country’s political scene. Prabowo is known for his commitment to continuing Widodo’s economic policies and direction – especially on infrastructure developments, the commodity downstreaming push, the new capital city Nusantara, as well as higher welfare spending. This commitment to policy continuity may explain why voters preferred Prabowo. Stability and continuity top the list of concerns for both domestic and foreign investors in Indonesia’s market.

While we await the official announcement of results by Mar 20 to confirm Prabowo’s victory, Indonesia’s consumer companies will continue to ride on the likely continuation of the government’s populist policies. Staples such as food and beverages as well as fast-moving consumer goods will benefit the most from direct cash assistance and other measures introduced by the government to preserve the purchasing power of low to middle-income families against challenges posed by rising interest rates and weak commodity prices.

Over in Thailand, we have examined the potential impact of the ambitious US$28 billion land bridge in our past stories. However, it has to be noted that the project is still in its infancy and is searching for funding. Despite Thai Prime Minister Srettha Thavisin’s effort to promote it, the project has garnered little firm interest from investors. Our journalist Goh Ruoxue spoke to experts and discovered that the absence of a full-scale feasibility study, a lack of transparency and uncertainty over the project’s profitability are some key concerns deterring potential investors. 

In the final instalment of our “Crazy Rich Asians” series, our Indonesia correspondent Elisa Valenta looks at how the Hartono brothers amassed their US$48 billion wealth, transitioning from the tobacco industry to becoming the largest shareholders in Bank Central Asia, the largest bank in Indonesia, and even venturing into the digital sector. The digital pivot features prominently in the brothers’ strategies, capitalising on Indonesia’s burgeoning young population and rising digital economy.

Keep scrolling down for more stories on the region. Thank you for supporting The Business Times as always and see you again next Friday!

Trending

US inflation remains stickier than thought: January headline inflation slowed to 3.1 per cent, a smaller drop than expected. This challenges market expectations that the Fed would begin rate cuts in May and raises the likelihood of a “no landing” scenario. A later cut would mean the interest rate differential between the US and Asean countries stays high for longer, posing downside pressure on exchange rates for Asean currencies.

Asean in Brief

• Indonesia’s consumer companies to ride on election spending, populist policies Despite rising inflationary pressures, consumer companies in Indonesia are expected to be lifted by election-driven spending and a likely continuation of the government’s populist policies, analysts said. Read more
• Amid funding crunch, smaller Indonesia startups face hard decision to sell or shut down Faced with a funding crunch, smaller Indonesian startups are starting to reconsider their options, including selling their businesses to larger and more established tech companies – or in the worst case, the grim prospect of closing down entirely. Read more
• Bali’s 150,000 rupiah tourist e-tax comes into force The Indonesian resort haven of Bali began imposing a 150,000 rupiah (S$13.50) tax on arriving tourists on Wednesday (Feb 14) to preserve the culture of the “Island of Gods”, officials said. Read more
• Thailand mulls US$1 billion global sovereign bond offer, first in two decades Thailand’s government is weighing a plan to raise about US$1 billion from the global market via what would be the country’s first foreign-currency sovereign bond sale in two decades. Read more
• Thailand’s pitching US$28 billion land bridge to the world, but foreign investors not ready to bite In the roughly five months or so since he took office, Thai Prime Minister Srettha Thavisin has wasted little time in traversing the globe with a multibillion-dollar sales pitch. Read more
• Thailand’s January consumer confidence at 47-month high on support measures, tourism Thai consumer confidence rose in January to reach the highest level in 47 months, bolstered by government stimulus measures and tourism, a survey showed on Tuesday. Read more
• Singapore’s 2023 GDP growth revised down marginally to 1.1%; 2024 forecast kept at 1% to 3% Singapore’s economy grew 1.1 per cent in 2023, revised down marginally from advance estimates, data from the Ministry of Trade and Industry (MTI) showed on Thursday (Feb 15). Read more
• Malaysia’s biggest port considers new investors for RM39.6 billion expansion Malaysia’s biggest port operator, Westports Holdings, is considering external strategic investors to help fund a RM39.6 billion (S$11.1 billion) expansion that will see capacity nearly double in the coming decades. Read more
• Potential for insects not just as food for the table but also in supplements and feed The buzz in insect farming is loudest around alternative proteins, but some regional startups are finding better opportunities in the production of insect-derived ingredients for health supplements and animal feed. Read more