Author: OBG Admin

Éric N’guessan-Managing Partner-EY Côte d’Ivoire

Scrapping oil subsidies frees up funds to invest in Indonesia’s new infrastructure projects

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One key development in the new wave of Indonesian infrastructure programmes is a major change in the way they will be funded. The government is set to play a much bigger role in financing, directly through increased central and local government budgets, and indirectly through enhanced funding opportunities for state-owned enterprises (SOEs). The private sector stands to benefit from this public sector boost, too, as projects become more attractive to private investment when risks are more appropriately shared – and state guarantees and incentives ease the burden of infrastructure’s classically low internal rate of return (IRR), although there is still room to improve the legislative

Mark Geilenkirchen-CEO-Port of Sohar

Stamping out corruption on the energy sector in Indonesia

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Throughout the 2014 campaign for the presidency, Joko Widodo, the eventual winner, stressed the need to bring new blood into a system widely perceived as broken and corrupt. With Widodo now in the driver’s seat, the optimism and hope that often follow a change in leadership is coming to a head during his first year of office. The big questions on everyone’s mind are whether the grand promises made on the campaign trail by the media-savvy former furniture salesman will be kept, and whether he will be able to shake up the status quo enough to achieve meaningful, positive change. Only months into his four-year

Daouda Coulibaly-Managing Director-Société Ivoirienne de Banque

Addressing Indonesia’s urban congestion

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Few visitors to Jakarta will miss its notorious traffic. Indeed, Castrol’s Magnatec Stop-Start Index recently declared the capital the world’s most congested city. A number of factors have contributed to this gridlock over the years. Land use is one: only 6% of Jakarta’s land is dedicated to roads, compared to the roughly 15% needed for a modern city. Growing car ownership is another. Net national income per capita surged from $546 in 1999 to $3010 in 2013, while Jakarta’s average income was more than twice that by 2012, at $8443. Alongside growth in income, domestic car sales went up from 1.1m in 2012 to 1.23m

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Safety at top of agenda as airlines seek to boost passenger numbers in Indonesia

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The aviation industry in South-east Asia suffered an unprecedented number of fatal tragedies in 2014. March saw the mysterious disappearance of Malaysian Airlines Flight 370, followed by the shooting down over Ukraine of another Malaysia Airlines plane in July, and then, closer to home, the crash of Indonesia Air Asia’s Flight 8501 in December. These events rocked passenger confidence and led airlines across the region to redouble their efforts to ensure the safety of their flights. Even so, the local aviation sector continues to expand dramatically, on the back of steady economic and population growth, combined with bottlenecks and logjams in other modes of transport.

Chaim Zach-Managing Director and CEO-Agric International Technology and Trade; Kabiru Rabiu-Group Executive Director-BUA Group; and Aliyu Abbati Abdulhameed-Managing Director

Opportunities for logistics providers expanding in Indonesia

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With more than 17,500 islands spread across three time zones, Indonesia’s geography inevitably presents certain logistical challenges. The country, which lies on either side of the equator and whose islands are separated by the Java Sea, is noted for its rugged terrain, active volcanoes, tropical storms and mudslides, as well as its congested streets and poor infrastructure. Given these obstacles, one could even say that the local logistics sector performs daily miracles in delivering goods and services. However, there are also hopeful signs that government and private sector action could lead to improvements, with a large infrastructure development programme on the cards. Even so, investing

Daouda Coulibaly-Managing Director-Société Ivoirienne de Banque

Indonesia’s industry must address a range of structural issues to ensure growth

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Bolstered by rising domestic consumption and comparatively low labour costs, Indonesia’s textile industry has reported years of steady expansion, with the value of exports estimated at more than $13bn in 2014. However, wage hikes and low productivity have cut into profits, while rising power costs in 2014 have had an adverse effect on the sector’s growth forecast for 2015. Overview Indonesia’s textile industry includes manufacturing and production activities across almost every segment of the supply chain, including production of man-made fibres, weaving and knitting, dyeing, printing, and finishing. Moreover, is a major employer, with the Indonesian Textile Association (API) reporting that total employment in the

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Government master plan for Indonesia’s industry

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With its target of becoming a highly developed nation by 2025, Indonesia is aiming to bolster industrialisation and value addition, as well as expand its labourintensive manufacturing industry as it implements the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI.) An ongoing focus on industrial development has seen the government – including the new administration of President Joko Widodo – roll out a series of strategies and reforms aimed at improving the investment climate and attracting investors in high-priority sectors, including industry and manufacturing. With foreign direct investment (FDI) having already surpassed government targets in 2014, and scheduled to more than

Chaim Zach-Managing Director and CEO-Agric International Technology and Trade; Kabiru Rabiu-Group Executive Director-BUA Group; and Aliyu Abbati Abdulhameed-Managing Director

Green light for the auto sector in Indonesia

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With new export bans, investment reforms and a push for value addition driving a flood of new projects in the country, Indonesia’s manufacturing sector is slated for significant expansion in the medium term. Automotive manufacturing in particular is set to benefit, with the government’s low-cost green car (LCGC) programme witnessing strong growth when it was rolled out in 2013, while the luxury vehicle segment is expected to expand in the coming years. Growth Story Indonesia’s manufacturing sector has been on the rise in recent years, with expansion driven by its low-cost workforce, a growing young population and increasingly affluent consumer class, as well as government

Peter Wong-Deputy Chairman and Chief Executive-HSBC

Tobacco manufacturers adapt to Indonesia’s more stringent regulatory environment

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Representing the world’s fifth-largest tobacco market, Indonesia’s tobacco industry has soared in recent years, with manufacturers vying for market supremacy in a country with an estimated 85m smokers. The market has long been attractive to major international players such as Philip Morris International (PMI) and British American Tobacco (BAT), which both witnessed sharp growth in profits after entering the market. However, although an expanding middle class should help growth prospects in the coming years, rising awareness of the negative effects of tobacco consumption and an increasingly stringent regulatory environment could slow expansion. Moreover, the newly elected President Joko Widodo rolled out an industry tax hike

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Chain links: Global retailers flock to the market in spite of stricter regulations

Posted OBG AdminPosted in Uncategorized

Although Indonesia’s retail sector was officially added to the government’s negative investment list in April 2014, thereby prohibiting foreign ownership of smallscale enterprises, foreign investment in large-scale operations – particularly in the fast-moving consumer goods (FMCG) segment – has seen a sharp rise in recent years. Most recently, global equity investor Warburg Pincus announced plans to invest $125m in a joint venture to build shopping malls across several Indonesian cities. The nation’s 250m-strong consumer base, expanding middle class, concurrent increase in urbanisation and considerable growth in domestic consumption all offer lucrative opportunities to retail investors and should underpin strong expansion in 2015. Chain Reaction In