Economy: The economic authority confident that Indonesian economy to print a nearly seven-percent growth in the second quarter of 2021 thanks to an upward trend in the realization of foreign direct investments and consumer confidence index. “Our economic growth rate indicates a positive trend. It is expected to reach seven percent,” Coordinating Minister for Economy noted in a press statement quoted by ANTARA. As of March 2021, the realization of foreign direct investments had reached 54.6 percent, while the consumer confidence index of those, with expenses below Rp5 million, was recorded at 90.1, or approaching the optimistic zone of 100.
A positive trend was also apparent in the growth of Indonesia’s exports and imports, gross fixed capital formation, and the government spending. A surge in the prices of commodities, such as palm oil, rubber, nickel, copper, and coal had also bolstered the government’s endeavors to facilitate economic recovery. The minister said that the rising prices of those commodities had helped to improve the economic conditions of several regions during the first quarter of 2021. A positive trend was observed in the economic conditions in the islands of Sumatra and Java, with growth rates of 0.86 percent and 0.83 percent respectively, the minister pointed out. Similarly, certain parts of eastern Indonesia, such as Sulawesi and Papua, recorded growth rates of 1.2 and 8.97% respectively.
E-commerce: A multi-billion-dollar tech company called GoTo has been created as the result of merger between the Indonesian ride-hailing and payments firm Gojek and e-commerce leader Tokopedia. The combined entity, which will span online shopping, courier services, ride-hailing, food delivery and other services in Indonesia will be the biggest privately held technology firm in the South East Asia region. Go-To plans to list in Indonesia and the United States markets later this year and was seeking a pre-IPO funding that could enable it to raise about US$2 billion followed by public market floats with a potential valuation of roughly US$40 billion for the group. In a joint statement, the companies said their combined past valuation was US$18 billion based on fundraisings done in 2019 and early 2020. The merger of Gojek and Tokopedia – each backed by global giant investors – comes amid a surge of competition in the ride-hailing and food delivery markets in Southeast Asia. Stay-at-home pandemic restrictions have stoked demand for food delivery, e-commerce and e-payments.
Analysts said that GoTo will still need to face stiff competition from larger regional rivals Shopee and Grab, which are leading in market share in both e-commerce and food, and which have their dominance in other parts of Southeast Asia to cushion the long term investment commitment into Indonesia. GoTo’s biggest investors include Alibaba Group Holding (9988.HK), SoftBank Group Corp (9984.T), Singapore sovereign wealth fund GIC, Alphabet’s Google (GOOGL.O) and Tencent Holdings (0700.HK). Sources said Gojek’s shareholders will own 58% of the holding company with the balance held by Tokopedia’s investors. Tokopedia top management said that GoTo will be unique in its ability to cover two-thirds of Indonesian consumer expenditure. “If you look at our regional peers, they exceed only at covering one sector,” he said. Using the model of Alphabet, Gojek and Tokopedia plan to remain separate but work together on payments, logistics and food deliveries.
Infrastructure: Pension funds in Canada and the Netherlands as well as the Abu Dhabi Investment Authority have announced they will co-invest up to US$3.75bn in toll roads with Indonesia’s new sovereign wealth fund. The agreement represents the first official commitment by global institutional investors to the fund as foreign groups seek the potentially higher returns offered by south-east Asia’s largest economy. The three institutions — Caisse de Dépôt et Placement du Québec (CDPQ), Canada’s second-largest public pension fund; APG Asset Management, the biggest pension fund in the Netherlands; and an ADIA subsidiary — will each put US$1bn into a toll-road investment vehicle. Under the memorandum of understanding, Jakarta’s sovereign wealth fund, known as the Indonesia Investment Authority (INA), will commit $750m to the vehicle, according to a person familiar with the matter. The platform “would be the consortium members’ primary vehicle for toll road investments in Indonesia”, said the INA in a statement.
The INA’s chief executive, said the new vehicle showed global investors’ “confidence” in Indonesia’s economic potential. Head of infrastructure at CDPQ, said the memorandum of understanding was “an opportunity to jointly build a portfolio of critical road assets in one of the fastest-growing economies in the world”, leveraging INA’s local networks. The sovereign wealth fund was also the first significant test of radical reforms passed by Indonesia in October that were designed to attract foreign investors to the world’s fourth-most populous nation, analysts said. The toll-road investment vehicle has identified a list of assets mostly owned by state-owned enterprises with long-term concessions expiring between 2043 and 2067. “If this platform is successful in delivering what it has promised, it could probably become the blueprint for other similar platforms targeting other sectors,” said managing director for infrastructure in the Asia-Pacific at CDPQ. Head of infrastructure at APG Asset Management Asia, said the collaboration would bring benefits “through the application of best practices in operational performance and corporate governance”.