Indonesia

Indonesia is emerging as the lone bright spot in South-East Asia’s syndicated loan market with a pipeline of around US$6bn of offshore loans primed for launch in the coming months, Reuters reported. Instant noodles manufacturer Indofood Sukses Makmur, state-owned electricity utility Perusahaan Listrik Negara, gold and copper miner Freeport Indonesia and Bank Rakyat Indonesia are among a number of top-tier borrowers that are eyeing offshore borrowings.

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Indonesian companies from airlines to builders of luxury condominiums and cement makers are warning investors of plunging revenue and profit as the coronavirus pandemic ravages Southeast Asia’s largest economy, Bloomberg News reported. While national carrier PT Garuda Indonesia and PT AirAsia Indonesia are hit by a ban on domestic travel and large scale social distancing rules, property developers are reporting declines in their sales as buyers turn more cautious.

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The worst crisis in more than two decades among Indonesia’s smaller companies will boost loan losses and curtail profit at the nation’s largest lender, according to PT Bank Rakyat Indonesia Finance Director Haru Koesmahargyo, Bloomberg News reported. Bank Rakyat expects more than 10 million customers in its core segment -- micro, small and medium enterprises -- to be affected by the Covid-19 outbreak, Koesmahargyo said.

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Months of concern over rising Covid-19 infection levels may be secondary for investors in coming days as market-moving events and policy decisions take center stage, Bloomberg News reported. China’s annual National People’s Congress starting Friday will likely keep volatility suppressed for developing-nation currencies, despite the prospect of another flareup in tensions between Beijing and Washington.

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Since surviving an IMF bailout and violent change of government during the Asian financial crisis, Indonesia has shown an uncanny resilience in bouncing back from global selloffs, Bloomberg News reported in a commentary. As soon as the dust settles, investors are lured by higher yields and the promise of a young and vibrant population. Foreigners now own more than 30% of the country’s sovereign debt. This time, they may not return. The key reason is the pile of debt at state-owned enterprises that President Joko Widodo, known as Jokowi, has built up since taking office in 2014.

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Indonesian banks are looking to the government for additional stimulus measures to cope with a growing pile up of bad loans, as the coronavirus pandemic batters the economy, Bloomberg News reported. The country’s lenders are poised to add at least 556.6 trillion rupiah ($36 billion) of non-performing loans this year amid the unprecedented headwinds from the Covid-19 pandemic, according to PT Bank UOB Indonesia. That will push their soured debt ratio above 5%, from 2.8% at the end of January, the bank estimates.

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Indonesia will expand tax incentives it currently gives to some manufacturing industries to cover 11 more sectors to prevent “massive bankruptcy” due to the impact of the coronavirus pandemic, officials said on Friday, Reuters reported. Governments around the world have provided stimulus measures to alleviate the threat to their economies from the widespread travel curbs and shutdowns of schools and businesses that have been triggered by the rapid spread of the novel coronavirus.

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The Indonesia Deposit Insurance Corporation (LPS) denied on Thursday media reports that its stress test had shown eight banks at risk of collapse under the government’s worst-case scenario for the economic impact of the coronavirus outbreak, Reuters reported. LPS Chairman Halim Alamsyah told an online briefing there were no indications any Indonesian bank would fail. “All banking indicators are normal and their fundamentals sound,” said Alamsyah, a former member of the Indonesian central bank’s board of governors.

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The coronavirus crisis is creating a new threat for Indonesia’s debt-laden state-owned businesses, Bloomberg News reported. Many had binged on debt for years, faced accusations of mismanagement and even corruption, and were running into repayment problems before the virus struck. Now a slump in revenues and a credit crunch triggered by the dollar’s surge mean those risks will get a whole lot worse. “Covid-19 is exacerbating some of the challenges of the state-owned sector,” said Xavier Jean, an analyst at S&P Global Ratings in Singapore.

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