Indonesia

Questions have emerged over whether one of Indonesia’s wealthiest families has in effect dragged itself into court to prevent a foreign creditor from recovering a loan — a case experts say threatens the credibility of the country’s bankruptcy laws, the Financial Times reported. The case against a subsidiary of Lippo group, which is controlled by Indonesia’s Riady family, comes at a time when defaults are rising in the country. It is expected to spark concerns over powerful local conglomerates forcing out foreign creditors through bankruptcy proceedings.

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Indonesia at times felt uncomfortably close to the center of this year’s emerging-market selloff as bond yields rose for five straight months and the rupiah slid more than 6 percent, Bloomberg News reported. Some funds are now saying it’s time to get back in. Loomis Sayles & Co. is looking to boost holdings of Indonesian bonds, citing sound domestic fundamentals and inflation that is close to target. Western Asset Management Co. says a proactive central bank and the recent increase in yields may be creating a buying opportunity for the nation’s dollar-denominated debt.
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Global mining giants Freeport-McMoRan Inc. and Rio Tinto PLC have agreed to hand over control of the world’s second-biggest copper mine to Indonesia, moving closer to resolving one of the world’s most prominent recent battles over resource wealth, The Wall Street Journal reported. Thursday’s agreement comes after years of tense negotiations and follows moves by governments around the world, from the Democratic Republic of Congo to Tanzania, to wrest control of mines and take a bigger cut of profits.
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Indonesia’s central bank raised interest rates for the second time in as many weeks on Wednesday after its newly-appointed governor called an off-cycle monetary policy meeting, the Financial Times reported. The Bank of Indonesia increased its benchmark seven-day repo rate by 25 basis points to 4.75 per cent, after raising rates for the first time since 2014 in mid-May in a bid to prevent capital flight. In its mid-May statement, the bank highlighted that the move was designed to support the rupiah.
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Indonesia’s household consumption, a major contributor to GDP, has been growing at a lacklustre rate in recent years because of weak commodity prices and currency devaluations, the Financial Times reported. The latest economic indicators and FT Confidential Research data show signs of recovery, although the overall outlook remains precarious. This situation is likely to drive pro-growth President Joko “Jokowi” Widodo to support households with subsidies, a populist policy that is incompatible with his fiscal reform agenda as he seeks re-election in April next year.
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A steep recent slide in Indonesia’s stock markets and currency is rooted in heavy foreign ownership of the country’s government bonds—something officials here have been trying to change. The Indonesian stock market has slid more than 7% in two weeks, while the rupiah has shed 1.4% since mid-April as global investors have pulled funds from emerging markets. The selloff is partly because of ripple effects from Indonesia’s local-currency bond market, which until recently has been a beneficiary of investors’ yearslong search for yield, The Wall Street Journal reported.
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Indonesia will hand over a luxury yacht seized on the resort island of Bali to U.S. authorities, police said Wednesday, giving the Justice Department an elusive asset connected to a $4.5 billion fraud case centered on the Malaysian state fund 1MDB, The Wall Street Journal reported. Daniel Silitonga, Indonesia’s chief police investigator in seizure of the yacht Equanimity, said police would transfer control over the $250 million, 300-foot vessel “in a few days” upon the completion of legal arrangements.
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Last year Indonesia’s finance minister, Sri Mulyani Indrawati, invited chief executives, directors and shareholders from the country’s leading industries to banquets at her ministry, The Economist reported. As they munched, she would give presentations setting out who among them had—and, by omission, who had not—signed up to the government’s tax amnesty. “This may be the most expensive dinner in your lifetime,” the 54-year-old economist recalls telling them. Indonesia’s tax amnesty, which began in July 2016, ended on March 31st.
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A tax amnesty program launched by Indonesia to bring home money stashed overseas by wealthy individuals has attracted 135.4 trillion rupiah (US$10.5 billion) in asset repatriation since July, the government said Friday, The Wall Street Journal reported. The announcement came at the end of the final day of the most generous terms, as low as 2% penalties, offered to those participating in the tax program, which will continue for six months.
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PT Trikomsel Oke, an Indonesian mobile-phone retailer that defaulted on bonds last year, said that a court hearing on the company’s debt workout plan will be held today, Bloomberg News reported. A Jakarta commercial court had decided on Sept. 26 to postpone a deliberation meeting, the firm said in a filing to the Singapore stock exchange. The company said that it obtained approval from creditors based on the majority of votes cast at a meeting held on Sept. 22.
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