“The government of the Republic of Indonesia that I lead will issue a regulation on the governance of natural resource commodity exports. This is a strategic step to strengthen the governance of our natural resource commodity exports,” he said, while delivering a parliamentary speech that was broadcast live on the Presidential Secretariat’s YouTube channel.

“The policy aims to strengthen oversight and monitoring, while combating under-invoicing, transfer pricing, and the flight of export earnings overseas. Export under-invoicing over the 1991-2024 period reached USD 908 billion,” Subianto stated further.

As per the reports, while the full force of the new policy will come into effect after a transition period of three months, the timeline will likely be extended till the end of 2026. During the transition period, commodity exporters and buyers will be allowed to carry on their usual business, but the transactions will be overseen by state firm PT Danantara Sumber Daya, a unit of sovereign wealth fund Danantara Indonesia.

Former director of nickel miner Vale Indonesia, Luke Thomas Mahony, will be the chief executive of Danantara Sumber Daya. As per the Jakarta Globe, once the transition period gets over, Danantara Sumber Daya will buy products from domestic sellers and then sell them to foreign buyers at a price benchmarked against prices set by exchanges.

“The new regulation will be implemented in stages wherein the first stage ‌will ⁠cover exports of palm oil, coal, and ferroalloys. Every three months, there will be a review to add more commodities,” Jakarta Globe reported further.

Under the old industry practices, Indonesian companies used to export coal and palm oil directly to foreign buyers. However, the government controlled how much quantity could be produced and the benchmark price to use.

Justifying the regulatory reform, the Subianto administration has said that it wants to improve the transparency aspect of Indonesia’s commodities sector by putting a stop to under-invoicing practices, optimise the government’s earnings, and help stabilise the rupiah and enlarge foreign currency reserves.

Talking about Indonesia’s commodities trade, the archipelagic state is the world’s largest exporter of thermal ⁠coal and palm oil. It has consolidated its position as the top thermal coal supplier to many of the world’s largest importers, including China, India, Vietnam, and ⁠the Philippines.

Apart from the latest rule, Indonesia has also issued a new export earnings regulation that requires exporters of natural resources to store 100% of their earnings in state banks. The regulation will take effect in June 2026.

The post All you need to know about Indonesia’s commodity export control appeared first on International Finance.

According to the industry body, while Malaysia’s economic fundamentals remain sound, geopolitical tensions may have indirect spillover effects through higher energy prices, market volatility and potential disruptions to trade and supply chains.

“These could impact business costs, inflation, and cash flows for certain segments of the economy. The Islamic banking industry remains vigilant and ready to respond to these evolving risks,” AIBIM said, while adding that the industry players are also advancing value-based intermediation (VBI) to deliver sustainable and inclusive outcomes.

Talking about the health of Malaysia’s Islamic finance sector, as per Bank Negara Malaysia (BNM), in its 2025 annual report, noted that Islamic financial assets in the Southeast Asian country have more than doubled from USD 468 billion in 2014 to USD 954 billion in 2024, with regional peers like Singapore and the Philippines also experiencing notable growth.

According to the BNM report, building on its strong domestic foundation, Malaysia has emerged as a regional leader in Islamic finance, expanding services, fostering innovation, and supporting cross-border growth. Last year, nine participants from ASEAN used the country’s commodity trading platform, Bursa Suq Al-Sila, completing transactions valued at RM55.9 billion for the year. In fact, in Malaysia and Indonesia, sukuk has been widely used to fund the development of various infrastructure projects and green initiatives.

“More recently, Islamic finance has increasingly been channelled toward green and transition-related activities. Indonesia and Malaysia collectively contributed 45% share of the global sustainable and responsible investment and environmental, social, and governance (ESG) sukuk outstanding in 2024. This reinforces the sector’s alignment with broader ESG objectives and strengthens its role as a catalyst for sustainable development,” BNM said.

The central bank also noted that by September 2025, Malaysian players captured 82% of Asean’s Islamic banking assets, while dominating the takaful and retakaful segments with a massive 91% share. The Southeast Asian country also accounts for about 75% of total outstanding sukuk in ASEAN.

“Beyond financing, Islamic finance also plays an important role in promoting inclusive wealth distribution through instruments such as zakat, waqf and sadaqah. In Indonesia, for instance, innovative instruments like cash waqf-linked sukuk and deposits enable individuals to channel funds into social, humanitarian, and public projects,” the report noted.

“Malaysia, meanwhile, has actively leveraged a blended financing initiative known as iTekad to support entrepreneurial activities by combining banks’ financing with zakat‑based seed capital, further reinforced by capacity‑building programmes and skills training. As these communities expand their income‑generating activities, they evolve from recipients to economic contributors who help uplift others. As a result, this creates pathways for more inclusive and sustainable growth within the economy,” it concluded.

The post Malaysia’s Islamic finance landscape remains resilient: AIBIM appeared first on International Finance.

“In recent months, central banks from Guatemala, Indonesia and Malaysia have all bought gold, either following a long hiatus or for the first time ever,” said Shaokai Fan, global head of world banks for the World ‌Gold Council.

“A phenomenon we’ve been seeing in the last few months is new central banks, or ⁠central banks that have been inactive or absent from the gold market for a long time, entering the gold market. I think that might be a trend that will continue into 2026,” the official commented.

“Some central banks are also buying gold from ‌small-scale domestic producers to ⁠support the local ⁠industry and to stop those gold sales going to bad actors,” Fan noted without elaborating on the details.

In March 2026, gold prices had plunged by more than USD 1,000 per troy ‌ounce to last trade around USD 4,340, and talking about this, Fan told Reuters, “Historical trends suggest ⁠it’s partly due to margin call-related selling.”

“The record peak for gold was just shy of USD 5,600 in late January. During a gold selloff in October, central banks stocked up on the metal, but it’s too early to see if the same phenomenon has occurred with this month’s rout. Central bank demand for gold may decline because higher prices not only deter new buying but also ‌increase the weight of existing gold holdings relative to total reserves,” Fan said.

The World ‌Gold Council, as per its January estimates, expects record gold prices to slow purchases by central banks to 850 metric tons in 2026 from 863 tons in 2025, even though their buying remains elevated when compared to the pre-2022 level. The same buying process ⁠accounted for some 17% of total demand in 2025.

The post Will central banks’ demand for gold decline? appeared first on International Finance.

He slowly included phoney numbers into the financial report. Instead of five years of hard labour, he turned his firm into a winner in one hour. He clicked send to show his investors; surely, he would get caught.

But he did not. It pleased his backers that his business was growing. Without knowing the data were manufactured, they contributed extra money to help Gibran avoid bankruptcy. In late 2018, he began building a house of cards that would cost some of the world’s greatest money managers hundreds of millions of dollars.

Six years after starting a second set of accounts (a real one for his team and a second, inflated book for investors), eFishery was one of Asia’s brightest firms with $1.4 billion in valuation and 2,000 employees. In addition to automated fish feeders to enhance output, it offered financing.

By the time it fell, the fraud had spread worldwide with bogus shell firms and inflated accounts. According to an internal enquiry, the corporation reported $752 million in first-nine-month 2024 revenues but actually earned $157 million.

Deception caught several of the world’s most prominent venture capitalists, including SoftBank Group Corp. and Temasek Holdings. Abu Dhabi’s 42XFund and Chamath Palihapitiya’s Social Capital to Sequoia India and Southeast Asia (now Peak XV).

The episode raises unpleasant concerns about ego, groupthink, and how so many red flags were missed in backing a business darling. At least $300 million was lost by investors. It is unclear how much each fund lost, and some may have sold shares at a greater valuation.

The beginning

Gibran was reared in East Jakarta’s slums by a construction worker father and a homemaker mother. MIT of Indonesia, Institut Teknologi Bandung, was his biology school. When his family struggled financially, Gibran was on his own. As food was scarce, he slept in mosques and at school, tutoring for money, working in a convenience store, and various side jobs.

Inspired, he rented ponds after taking a fish-farming course. He rapidly discovered hard work, small margins, and finicky fish.

Aquaculture, or water agriculture, is hard. Too little feed starves fish, while too much wastes money and produces algae. Spawned eggs are nursed in a series of pools before being released into larger ponds and given precise amounts at specific intervals. After months of care, fish must be sold and transported, sometimes alive, to processors and customers. Prices can vary greatly.

Gibran was determined. To make more money, he opened warungs to sell cooked fish and urged grocery stores to carry his product. While managing over 70 ponds, he intended to start a seafood restaurant franchise.

One veteran farmer advised him that growth makes feeding a chore. Gibran welded and programmed an automated fish feeder himself. His student project was a shiny milk bucket connected to a funnel that gravity-fed fish meal pellets onto a rotating disk. Texting opened a slide to release the feed, which scattered across the water.

Using a prototype on his motorcycle, he travelled between farms on rutted roads and village pathways for months. As the initially reluctant farmers observed yield benefits and provided testimonials, the initiative gained traction.

To raise awareness and win cash prizes to keep the business alive, he entered Jakarta startup competitions and quickly learnt the ABCs of venture capital: how to write a pitch deck, present his business model, and thrill investors with vision and financials.

eFishery struggled with their feeders’ expensive pricing and small-scale fish farming’s tight margins. Costs range from $400 to $600, depending on size and incentives. That was too expensive for many Indonesian clients, where 10% of the 280 million people live below the poverty line, and labour is inexpensive.

Gibran immediately switched from selling to renting his machines to farmers. He thought he could launch his feeders faster and recoup their expenditures in a few years. Because he had to buy the equipment ahead, he was spending money.

He tried to attract regional venture funders but was turned down. Singapore regulatory documents show the startup had $8,142 in cash by December 2017.

Aqua-Spark remained interested. It offered $1.5 million in three equal tranches for the Series A round in May 2018. Only other investors could provide the final $500,000.

The bargain bought him time, but no one else joined. Gibran believed he was responsible for the first million dollars if he failed to get investors. Aqua-Spark co-founder Amy Novogratz stated that the agreement did not impose personal liability.

He asked fellow Indonesian founders how they raised new investments, dejected. Gibran believed the unclear, coded advice meant fudging the figures. He had a moral dilemma: be honest and fail, or manipulate the stats and keep the show going for himself, staff, and farmers.

The trolley speeds up

The sentiment changed drastically after a successful Series A fundraising, attracting Singapore-based Wavemaker Partners and San Francisco-based 500 Global’s Southeast Asia fund. It raised $4 million, including Aqua-Spark’s third tranche.

Gibran had to justify the spreadsheet’s new numbers. He started with a simple system. He said fish farmers had already bought feed and sold fish, so he offered 2% to 3% to “move” their business onto eFishery.

It was a sophisticated trick. Field consumers were unaffected. They used the same systems to sell to the same customers at the same prices. However, eFishery’s income increased after those transactions were added to its financial accounts.

Kabayan, a finance scheme that used the startup’s aquaculture expertise to assess harvesters’ credit scores and secure loans from lending platforms, was riskier. A 1% to 3% commission and little risk were promised by eFishery. The truth was worse: eFishery owed the debts, and default rates were high.

eFishery’s Singapore-filed financial filings indicate a 50-fold increase in sales from $185,405 in 2018 to $10 million in 2019. Investors were thrilled. In the same period, it went from a loss to a gross profit, attracting term sheets inconceivable months earlier. With greater money came rapid expansion: applications to buy fish directly from farmers and drop points across islands to distribute feed and collect fish.

It affected some farmers. In Cirebon, West Java, Suganda was one of the first to use the eFeeder machine. A chest-high plastic drum can carry 100 kg (220 lbs) of fish feed. The barrel’s bottom control box decides how much feed the pond fish receive. Farmers downloaded an eFishery app and entered feeding times and feed amounts to utilise the machine. Suganda denied that Gibran asked him to inflate numbers.

Suganda and his Cirebon collective farmers grew with $150,000 in loans from eFishery. His revenue increased by 20% to $603 a month as his pond count went from 10 to 70.

This progress occurred as startup investors sought more help-the-world concepts. Morningstar reported that sustainable fund assets rose 67% to roughly $1.7 trillion in 2020 as investors sought social and environmental partnerships.

With Gibran’s rags-to-riches story and increasing financials, eFishery was a rising star. Gibran raised $20 million in Series B funding in 2020 from private equity firm Northstar Group and Go-Ventures (formerly Argor Capital).

Money and pride

Gibran said eFishery did not need extra money now. The pandemic even helped him balance the books: investors expected revenues to drop, but the business was doing well. He fabricated slow growth to catch up with the genuine data.

He learnt that SoftBank founder Masayoshi Son wanted to talk. In 2021, the COVID-19 pandemic peaked. He could not show SoftBank the fish farms in Indonesia that used his product like he did with prior investors. He only had an hour.

Gibran was anxious at his Bandung office. He bred fish on a small Indonesian farm a few years ago, and now SoftBank, which had raised roughly $100 billion for startup deals through its “Vision Fund,” was ready to verify his conviction in eFishery’s future.

The company provided support to Yahoo Japan, Alibaba Group Holding, and Grab Holdings, which is one of Southeast Asia’s most promising companies. Gibran mentioned that Son, who was listening from Tokyo, interrupted the pitch after 15 minutes. One of SoftBank’s term sheets valued the company at $200 million, which made Gibran very happy.

Sequoia India and Southeast Asia (Peak XV) suddenly submitted a $300 million bid. Temasek, Singapore’s multibillion-dollar state-owned investor, also sought allocations. Gibran opened WhatsApp and saw a text from Temasek CEO Dilhan Pillay, which he thought was spam. Pillay requested time to discuss.

He enjoyed the attention his small startup was getting, but he spent nights worrying about its weak foundations. eFishery reported 1.6 trillion rupiah ($95.3 million) in revenue and 142 billion rupiah before-tax profit in 2021. Revenue fell 40% to 958 billion rupiah, with a pre-tax loss of 164 billion rupiah.

Gibran felt uneasy with the lie, but he remembered the trolley problem. He noticed how eFishery helped certain farmers. His startup had an impact, he believed. Taking this money would put further pressure on eFishery to grow, thus reconciling its two books would have to wait. He was split.

After the interest, SoftBank, Temasek, and Sequoia India offered $90 million in new funding at a $410 million value, according to Gibran, sources, and Alternatives.pe. The price was high for a young firm led by an unskilled Indonesian fish salesperson. Three years ago, eFishery was worth $12 million, but the world’s greatest investors noticed. The deal was accepted.

Red flags missed

In retrospect, warning indicators existed. The 2020 Singapore holding company financial statement was filed in 2024. The lack of disruption in markets where eFishery claimed to be making waves was noteworthy. The company purportedly had over 300,000 feeding units in the field and over 44,000 fish and shrimp farmers buying from its platform by 2023, which should have shaken the supply chain.

Gibran ghosted them when one investor with feed producer ties tried to connect them with eFishery, a win-win for both parties. Another said Gibran was typically three months late with basic numbers and that a feeder component manufacturer told them it only produced enough for 5,000 units per year. Senior officials at Indonesia’s largest fish feed distributors informed a separate investor that their unchanging sales were confusing.

Gibran said he needed larger farms with over $1 million in annual sales for his inflation approach to make sense after his Series C funding round, because the claims and targets were so big. After searching the nation, he found nothing to join.

He states that an employee proposed a solution in early 2022. By establishing a complex network of subsidiaries and managing farmers’ accounts, the firm became sophisticated enough to exaggerate transactions. He notes that this led to the creation of five enterprises with over 5,000 accounts related to fish feed and fish sales.

While trying to meet investor claims, he burned through actual money. The lax checks and collections on the lending site made it popular with fish farmers, but default rates rose. The software had major troubles, requiring nationwide field teams and sales matchers.

By then, phoney numbers made eFishery seem supercharged. Series D fundraising spearheaded by Abu Dhabi-based sovereign fund 42X raised $200 million at a $1.4 billion value. The investors included Malaysian pension fund KWAP.

During all these raisings, eFishery was reviewed by top investors and auditors. Three sources said Grant Thornton audited the Indonesian entity’s 2022 annual financial statements while PwC was a week away from signing off.

Grant Thornton is investigating the eFishery claims and is concerned about them. Gibran said 20 farmers were visited for Series B fundraising and 70 for Series C. He said the due diligence firms used eFishery’s database of farms to tell the startup which they planned to visit, aside from a few random spot inspections.

This allowed Gibran to prepare the ground. Gibran adds that local area managers were handed fact sheets with numbers to tell visitors and informed farmers; the rest was luck.

The same issues that make Indonesia a difficult market can make auditing corporations difficult. The nation has over 17,000 islands, and much of the job is done in rural areas where exact addresses are not enough, and farmers need to reach the front door.

The fall

Gibran planned to fix the business after investors were told it was stopping expansion to focus on financial sustainability before going public. Make eFishery Great Again was his Project MEGA.

To improve its financial health, eFishery aimed to more than halve its losses before tax to 107 billion rupiah, cut late loans on its Kabayan programme, and persuade more farmers to use its technology. It also wanted additional farmers to buy and sell fish through them. They had a challenge: half of their 28,000 Kabayan fish and shrimp growers were idle. Documents showed another 7,000 frozen accounts. Over 90% of eFishery’s sales came from firms with less than 2% gross profit margin.

Gibran revealed in a 30-minute Zoom chat on December 11 that he confessed to Aqua-Spark co-founder and eFishery board member Novogratz, who was one of the company’s original investors and his mentor. Gibran stated that Novogratz was deeply disappointed in him.

Two days later, on December 13, eFishery’s Steering Committee suspended Gibran. An interim CEO and CFO took control of eFishery, including its bank accounts.

Many lessons learnt

Investors are contemplating how to close the company. The board hired FTI Consulting Singapore to evaluate and manage the organisation. It advised closing the business and returning investors’ money. Abu Dhabi’s 42X, which spent $100 million in April 2023, may receive $8.3 million two years later.

A mystery is what happened to all the money. The FTI research suggests that some staff stole money, and Gibran received a salary and bonus comparable to a much larger company, but he seemed to live modestly. One worker drove a Hyundai Ioniq 5 to work. Indonesian tycoons have fled with millions of investment dollars, while he stays in Bandung, a second-tier city where he founded the firm to cut costs. None of his critics have proven he embezzled.

According to Winnie Yamashita Rolindrawan, partner at Indonesian law firm SSEK, the scandal exposed vulnerabilities in regulatory oversight and corporate governance in Indonesia.

While Rolindrawan advocated for VCs adopting a more thorough due diligence approach, on their part, startups must maintain accurate and verifiable records. Investors need to closely monitor, apart from carrying out post-funding audits, to ensure that startups operate transparently.

The post The rise & fall of eFishery appeared first on International Finance.

Singapore’s geopolitical approach is intricately linked to its economic survival, particularly in light of its small population and limited resources. Singapore, being an important hub of international trade and finance, has to contend with the challenge of navigating an increasingly fragmented world, characterised by shifting allegiances and economic uncertainty.

Geopolitics and economics

The US, as a key security ally and major investor in Singapore, has a corresponding role. Meanwhile, China’s proportion of trade with Singapore makes the nation a key economic partner. To this end, Singapore has kept its word. The city-state has cultivated close ties with both superpowers and promoted multilateralism through ASEAN and other regional economic frameworks.

Today, geopolitical tensions in the form of South China Sea disputes and the United States efforts to exit Chinese supply chains have left Singapore in a challenging situation. Counterintuitively, the city-state is extending its trade treaties with emerging markets, as well as working to advance digital trade with other value-hungry nations like Australia, the European Union (EU), and Japan.

Being a small country, Singapore is sensitive to changes in international trade, investment flows, and technological progress. With its policy of globalisation, Singapore’s open economy has thrived. However, the global shift away from a rules-based multilateral system due to prevailing protectionist policies poses a threat to Singapore’s economic stability.

The pandemic-induced supply chain disruptions and global push toward self-reliance in producing semiconductors have shed light on the middleman vulnerabilities of Singapore. In response, Singapore has shifted its attention towards diversifying its economic base through giant investments in frontier industries such as artificial intelligence, biotechnology, and financial technology.

The government has implemented incentives to attract multinational companies while backing local firms, particularly those involved in green energy and sustainable finance. Additionally, Singapore is going digital, focusing on cross-border e-commerce and fintech products, all to stay relevant in a future where digital commerce is as significant as traditional trade corridors. Despite these strategic initiatives, Singapore is also facing some long-standing issues that could slow down its economic growth in the future.

“With our population ageing and fertility rates dropping, the labour shortage problem remains a top priority. The government is trying to attract foreign skilled talent while ensuring that domestic workers are able to remain competitive through lifelong learning and retraining opportunities,” says Faizal Bin Yahya, Senior Research Fellow at the Institute of Policy Studies at the Lee Kuan Yew School of Public Policy, National University of Singapore.

However, immigration remains an issue that provokes strong emotions, with individuals voicing growing concerns about how the newcomers fit into society and what it does to our national identity.

“Singapore’s limited geographical size restricts its ability to expand its physical footprint. This limitation has resulted in innovative urban planning strategies such as underground infrastructure development and land reclamation schemes. Climate change further compounds our challenges, as the rising sea level and climate-related disasters pose threats to Singapore’s long-term sustainability,” Yahya added.

The government has made significant efforts to mitigate this challenge through investment in green technology. The government is introducing renewable energy, funding carbon capture initiatives, and advancing financial instruments tied to sustainability, as the world economy moves towards sustainability.

One important aspect of Singapore’s economic policy is trade diversification, which can mitigate some adverse effects. Beyond strengthening trade relations with its immediate neighbours, Indonesia and Malaysia, Singapore has signed 27 bilateral and regional free-trade agreements.

Moreover, Singapore has further deepened sub-regional development cooperation with Indonesia and Malaysia. In Batam, Indonesia, for example, Singapore has jointly developed industrial and high-tech parks. Furthermore, it is a partner to the Johor-Singapore Special Economic Zone, which aims to open Johor, Malaysia, to Singapore-based companies.

Structural and demographic challenges

Singapore’s labour force and resources, particularly its land, limit its ability to grow and develop. The number of foreign workers rose from 1.2 million in December 2021 to 1.52 million in December 2023, despite strict regulations such as the dependency ratio ceiling, which limits the number of foreign workers in relation to the overall labour force.

As of June 2024, the population of Singapore includes 1.86 million non-residents, 3.64 million citizens, and 544,900 permanent residents. The median age of the citizens was 42.8 years old in 2022. As of today, it is 43 years old. It is worrying that 19.9% of its citizens are 65 years and above, and in 2030, this number is expected to rise to 24.1%.

In 2023, 34,491 people were granted permanent residence, and 23,472 people were granted citizenship, a 1.7% increase from the previous year. To manage the flow of new citizens, social integration, ethnic, and interreligious peace activities have been at the forefront, although the number of new citizens granted has remained stable recently.

Immigration and foreign labour have become significant issues, particularly as general elections like the one in 2025 approach. The politicisation of immigration and foreign labour issues draws attention to the importance of maintaining racial harmony and ethnic balance. Racial classification by the Singaporean government is done using the Chinese-Malay-Indian-Others model.

During his 2025 budget speech, Singapore Prime Minister and Finance Minister Lawrence Wong presented several measures to aid Singaporeans to ensure that the nation maintains its economic growth and social compact with its residents.

These policies aim to encourage lifelong learning, offer job assistance, and help with workforce transformation. These included regular training subsidies for certain full-time and part-time courses, and enhanced workfare skills assistance for low-income individuals.

As part of its National AI Strategy 2.0, which the Singaporean government updated in 2023, Singapore is focusing on building its AI capability alongside leveraging technology to drive economic growth. The aim is to triple the number of AI experts to 15,000 by 2023. Furthermore, by enhancing its connectivity, the state continues to utilise and maximise its locational advantage.

Among the most densely populated countries is Singapore. Singapore’s housing market is in a dilemma situation—while it has made many homeowners by providing housing to residents through the Housing Development Board (HDB), it has also seen escalating property prices that have created giant concerns regarding affordability.

The government has introduced stringent regulations to curb speculation and ensure stability, such as cooling measures, additional stamp duties, and restrictions on loan-to-value ratios. However, demand continues to outstrip supply, leading to record resale levels and increasing rental costs.

Increasing foreign investment in luxury homes and a rising tide of expatriates have been pushing housing costs sky-high, posing difficulties for younger Singaporeans and lower-income groups in being able to find housing that they can afford.

The rising price of private flats has contributed to inflationary pressures, and Singapore is now among the most expensive cities to live in globally. The government has taken measures by increasing the supply of Build-To-Order (BTO) flats and introducing first-time homebuyers’ subsidies. However, the extent of their impact remains uncertain.

The current cost-of-living crisis is not limited to housing alone; it affects our everyday essentials such as food, transport, and healthcare. The global supply chain disruptions and higher energy prices have driven the increasing cost of living. Singapore imports most of its food and products, leaving it exposed to price fluctuations.

The hike in the Goods and Services Tax (GST) from 8% to 9% in 2024 has caused consumer prices to go up, despite the assurance of assistance from the government to lower-income earners.

The government has rolled out schemes such as U-Save rebates, cash handouts, and transport subsidies to alleviate the burden. But concerns about wage stagnation and income inequality persist.

As Singapore attracts increasing numbers of high-net-worth individuals and multinational companies, a means of balancing economic expansion with affordability for residents will be a key issue for policymakers over the coming years. Trade hub, sustainable energy, and AI: Singapore must enhance its global connectedness to consolidate its position as a node within the global value chain.

Changi Airport served over 58.9 million passengers in the aviation sector in 2023. Singapore is now restarting the construction of Terminal Five, which will be larger than Terminals One to Four combined and accommodate 50 million annual passengers to help it compete with other airline hubs.

The aviation sector supports around 200,000 individuals and contributes to 3% of Singapore’s GDP. In its 2025 budget, the government injected S$5 billion (US$3.7 billion) into the Changi Airport Development Fund.

The maritime sector supports around 170,000 individuals and contributes 7% of Singapore’s GDP. With the development of the Tuas Mega Port, Singapore continues to enhance its geographical benefits.

Singapore’s aspiration to be zero-emitting by 2050 means that it will have to rely increasingly on its neighbours because it is resource-constrained. S$5 billion (US$3.7 billion) was allocated to the Future Energy Fund in the 2025 budget.

To achieve its target of importing four gigawatts of clean energy by 2035, Singapore would purchase 1.2 gigawatts from Vietnam. Singapore also has deals with Indonesia to import one gigawatt of clean energy and two gigawatts of low-carbon electricity from Cambodia.

It is enabled by automation and investments in emerging technologies, such as AI, but this strategy must be accompanied by the retraining and education of Singapore’s ageing workforce. There must be collaboration with key stakeholders, such as small and medium enterprises, global corporations, and trade unions.

Singapore is employing sub-regional development and digital trade, including e-commerce, with like-minded partners in a bid to seek alternatives to strengthen multilateral trade. In the transition to a greener economy for more sustainable growth, connectivity also needs to be enhanced, but this has to be paired with cooperation with sub-regional partners.

Singapore’s economy grew faster than expected into the end of 2024. The city-state’s economy grew 5.0% in the fourth quarter from a year earlier, higher than both an official advance estimate of 4.3% and economists’ forecast of 4.7% growth. However, the government anticipates slower growth in 2025, as trade frictions and ongoing geopolitical conflicts may lead to higher production costs.

Ultimately, the city-state needs creativity, collaborative partnerships, and a relentless policy reform drive to ensure its prosperity as a vital stakeholder in the global marketplace, while the trade war wages on.

The post Singapore: Balancing power and survival appeared first on International Finance.

Where it all began

When Mulyani Indrawati was first appointed finance minister in 2005, Indonesia’s economy was in tatters. The country was still reeling from the late-1990s Asian financial crisis and struggling to recover from a devastating tsunami in Aceh and several earthquakes that required massive reconstruction funding. The cost to rebuild Aceh alone was estimated at around $4.5 billion, much of it needing foreign aid.

In Jakarta, the Finance Ministry she inherited was bloated and inefficient, while state institutions were rife with corruption. The nation’s largest bank, Bank Mandiri, had been mired in corruption scandals, and the banking sector at large was shaky. Poverty and unemployment were stubbornly high. Indrawati’s desk was piled high with urgent reforms from day one.

Facing this crisis, Indrawati moved swiftly. One of her first acts was to clean house. She fired dozens of corrupt tax and customs officers and disciplined thousands more, signalling a zero-tolerance stance on graft. She overhauled incentive structures in her ministry by paying honest officials better to remove the temptation of bribes. Backed by reformist President Susilo Bambang Yudhoyono, she slashed wasteful spending and tightened Indonesia’s budget. These efforts restored investor confidence, as foreign direct investment nearly doubled in her first year, from $4.6 billion in 2004 to $8.9 billion in 2005.

In 2008, Indonesia was affected by the global financial crisis, resulting in capital flight and a liquidity crunch. The crisis prompted the emergency bailout of Bank Century, a medium-sized lender, to prevent a widespread bank run. The government injected roughly Rp6.7 trillion (around $700 million) to rescue Bank Century, arguing it was necessary to protect the broader banking system. The bailout soon exploded into one of Indonesia’s longest-running political scandals. Critics alleged the rescue was mishandled and that some of the Rp6.7 trillion might have ended up in the wrong hands.

A special parliamentary enquiry claimed there were suspicious transactions and potential fraud associated with the bailout. Though Indrawati defended the decision as necessary to avert systemic collapse, the ruckus that ensued in the media and legislature put her under intense pressure.

Economist who means business

By 2010, Mulyani Indrawati had made a big impression on Indonesia’s economic trajectory. During her first tenure, growth rebounded (hitting 6.6% in 2007, the highest since the 1997 crisis), and public debt fell dramatically. Indonesia’s debt-to-GDP ratio, which had exceeded 90% in the aftermath of the Asian crisis, was brought down to around 30% by 2009, immensely improving the country’s fiscal stability. These achievements earned her international accolades.

Euromoney magazine named her “Finance Minister of the Year” in 2006, and she was lauded as Asia’s Finance Minister of the Year by Emerging Markets in 2007.

After six years at the World Bank, Indrawati returned to Jakarta in 2016 at the request of President Joko Widodo. Nearly 20 years after her initial appointment, she has now been back in the finance chief’s seat for almost a decade. The economic proof is there for all to see.

Under her stewardship, Indonesia’s economy was thoroughly overhauled and expanded. Annual growth has generally been robust (typically in the 5–6% range in the late 2010s), and prudent fiscal management has slashed government debt levels. Borrowing costs have fallen, and credit ratings have improved. GDP grew from about $286 billion in 2005 to nearly $1.5 trillion by 2025.

This rapid rise has vaulted Indonesia into the ranks of the world’s 20 largest economies. The once-sprawling Finance Ministry has been slimmed down and modernised, especially in tax collection and customs, which were hotbeds of corruption before. Indrawati’s reforms in those areas, including digitising systems and cracking down on tax evaders, helped boost the number of registered taxpayers from 4.35 million in 2005 to almost 16 million by 2010, and even more in the years since.

Insatiable desire for infrastructure

For all of Indonesia’s gains, Mulyani Indrawati has also faced an uphill battle against deeply entrenched challenges. Upon returning to office in 2016, she found that some reforms had stalled in her absence, and new issues had emerged. In 2017, an OECD research paper bluntly concluded that Indonesia still had significant room for improvement in public governance.

“The quality of public governance, as measured by the World Bank estimate of government effectiveness, puts Indonesia well behind countries like the Philippines, Thailand, Malaysia, Vietnam, and Singapore,” the OECD noted.

In other words, Indonesia’s bureaucratic effectiveness lagged many of its regional peers, affecting everything from business licensing to public service delivery. Indrawati has worked to streamline regulations and improve coordination between central and local governments, but changing a large bureaucracy’s culture is a slow process.

A particular sore point has been Indonesia’s inadequate infrastructure, which for years has been a bottleneck to growth. A 2016 World Economic Forum report on competitiveness highlighted that Indonesia’s overall competitiveness (ranked 41st out of 140 economies) was dragged down by the poor quality of infrastructure, which ranked only 60th. The country suffers from chronic shortages of power, congested ports and airports, and overloaded roads and railways.

“Indonesia’s competitiveness is dragged down by the poor quality of its infrastructure (60th),” the WEF report warned, citing factors like frequent electricity outages for industry and inadequate transport networks. For a sprawling nation of over 17,000 islands, building connectivity is a colossal and expensive undertaking.

Mulyani Indrawati has had to juggle demands for new infrastructure spending against the need to maintain fiscal discipline. Under her guidance, infrastructure outlays did increase, especially during President Widodo’s term, which prioritised new highways, airports, and a subway for Jakarta, but progress sometimes felt slow given the scale of needs.

Nonetheless, Indrawati is undeterred. She sees infrastructure and human capital investment as the keys to unlocking Indonesia’s next level of development. In the late 2010s, she oversaw innovative financing schemes, such as infrastructure bonds and public-private partnership frameworks, to stretch public funds further in building roads, power plants, and ports. By 2020, such efforts were paying off, with multiple new toll roads and transit projects completed.

She also championed major increases in funding for education and healthcare. Indeed, about 20% of Indonesia’s national budget is now devoted to education, a priority Indrawati has consistently supported. This reflects her belief that long-term growth depends on a skilled, healthy population.

A prudent finance minister

Even as she pushes forward on economic reforms, Mulyani Indrawati now faces perhaps her most delicate political test yet. In late 2024, Indonesia elected a new president. Prabowo Subianto, a retired army general, marked the third administration Indrawati has served under (after Yudhoyono and Widodo). Prabowo campaigned on ambitious populist promises to accelerate growth and tackle inequality. Once in office in 2025, he wasted no time rolling out bold (and expensive) programmes, with expectations of rapid results.

Among his headline initiatives is an “extreme poverty eradication” free meals programme targeting schoolchildren and pregnant women across the country. The plan aims to provide free nutritious meals to more than 80 million young and expectant Indonesians. Indeed, in January 2025, the government quietly launched the first phase, serving meals to some 570,000 students and pregnant women on the first day alone.

Prabowo Subianto envisions scaling up to reach 82.9 million people by 2029 under this programme. While few dispute the merits of fighting child malnutrition, the cost of this free food initiative is enormous. Initial estimates put the price tag at around $28 billion over five years. It’s a figure that alarms many economists, given Indonesia’s commitment to fiscal discipline. In its first year, 2025, the programme is budgeted at 71 trillion rupiah to feed 15 million people. Such sums risk blowing up the deficit unless offset by new revenues or cuts elsewhere.

Prabowo Subianto’s vision isn’t limited to free meals. He has also touted grand plans for Indonesia to achieve food self-sufficiency by dramatically expanding domestic agriculture. His administration talks of creating vast new rice paddies and even large sugarcane plantations to reduce reliance on imports of staples like rice and sugar.

Unsurprisingly, the markets have reacted nervously to these big-ticket promises. Investors worry that Prabowo’s agenda, which includes free meals for tens of millions, large-scale farming schemes, and a push for 8% annual GDP growth, could lead to bloated budgets or heavy borrowing. In mid-2024, as his campaign promises became known, Indonesian bond prices wobbled, and the rupiah currency weakened.

Upon Prabowo Subianto’s election, credit rating agencies signalled concerns that debt and deficits might rise. When he reiterated plans for free school meals (in a country of 270+ million people) and other subsidies, the rupiah fell as much as 0.4% in a single day, prompting Indonesia’s central bank to intervene to stabilise the currency. Financial markets were essentially firing a warning shot. They view Indrawati as the guardian of fiscal prudence, and any sign that her influence might be sidelined or that spending might spiral is met with anxiety.

This has set up a potential showdown between Prabowo’s expansive social spending agenda and Indrawati’s cautious fiscal approach. Behind closed doors, the technocratic finance minister has reportedly pushed back on some of the more expensive proposals, urging phasing or scaling them down to keep the budget sustainable. Rumours swirled in early 2025 of tensions between the president and his finance minister.

Political gossip even suggested Indrawati might resign rather than sign off on unsound fiscal policies. Prabowo’s own nephew, Thomas Djiwandono, whom Prabowo had installed as a deputy finance minister, could replace her. Such talk hit the news in March 2025, when The Straits Times reported on “whispers” that Indrawati might be replaced.

Whether Indrawati and Prabowo will continue to coexist amicably is a question that markets and Indonesians are watching closely. But if it comes to a true showdown, many believe that one of the region’s most capable finance ministers holds considerable cards. Sri Mulyani Indrawati carries the trust of investors, the respect of Indonesia’s civil society, and the hard-won experience of steering through many storms.

The post Mulyani Indrawati: Indonesia’s go-to crisis fixer appeared first on International Finance.

Satoru Iijima said, “Yoshiharu Ikeda has spent decades advancing organisations within the Mitsubishi Heavy Industries Group, and we are thrilled to welcome him as the new CEO of Primetals Technologies. He is an exceptional leader who will support our vision of being the pioneer and global leader in the metals industry.”

Who Is Yoshiharu Ikeda?

In the mid-1980s, Yoshiharu Ikeda began his career at Mitsubishi Heavy Industries. He has since held a number of international positions, such as CEO of Primetals Technologies USA and Manager of Global Sales for Mitsubishi-Hitachi Metals Machinery. He is currently the Chief Financial Officer (CFO) at Primetals Technologies.

Yoshiharu Ikeda said, “The metals industry is in an interesting and, at the same time, challenging phase. Working with customers around the world, our role is to innovate the industry and redefine how sustainable metals are produced. This applies not only to the upstream area and projects like HYFOR and Smelter, but also to the downstream area, including the electrification of furnaces in rolling mills and processing lines, as well as our groundbreaking Arvedi ESP technology. Additionally, digitalisation is an essential part of our innovation efforts. We are innovating in areas such as digital decarbonisation, emissions monitoring, robotics, and process optimisation – just to name a few.”

“Primetals Technologies is an international community of more than 7,000 metals engineers and specialists. Together, we take on these challenges, and I really look forward to being part of this endeavour,” he added.

Effective April 1, 2025, Yoshiharu Ikeda will be succeeded as CFO by Andreas Weinhengst, who has served as CFO of Primetals Technologies Austria since 2018. Weinhengst began working in the metals industry in Austria and overseas in the early 1990s, holding a variety of executive roles in controlling, accounting, and commercial sales. He has previously held positions at Siemens VAI Metals Technologies, the forerunner of Primetals Technologies.

The appointment of Karl Purkarthofer to the newly created position of Chief Operating Officer (COO) at Primetals Technologies will also take effect with the company’s new fiscal year. In this role, Purkarthofer will oversee global functions such as supply chain, turnkey projects, manufacturing, project management, engineering, quality management, and environmental, health, and safety. Individual projects will continue to fall under the purview of the corresponding business divisions.

Karl Purkarthofer has held global leadership roles in Austria, the United States, and the United Kingdom for several decades. These roles include Executive Vice President and Head of Global Business Unit Services at Primetals Technologies and Senior Vice President and Head of Strategy and M&A at Siemens VAI. Purkarthofer was appointed CEO of Primetals Technologies Austria in April 2024 and will continue in this role.

Primetals Secures Crucial Indonesia Deal

T Gunung Raja Paksi Tbk (GRP), Indonesia’s largest privately owned steel manufacturer, has signed a landmark deal with Primetals Technologies. GRP’s steel mill will become Asia’s first such facility outside of China to meet Europe’s growing demand for zero-carbon hot rolled coil (HRC) steel. GRP will integrate Primetals Technologies’ Arvedi ESP concept, a technology that directly links casting and rolling processes operating in endless mode.

“The aforementioned technology also allows the production of thin and ultrathin gauges well below one millimetre in thickness. It is the first of its kind to eliminate the use of fossil fuels in steel production, reducing direct greenhouse gas emissions to zero,” reported Jakarta Post on the pact.

Primetals will also supply the complete technological equipment package, including a high-speed caster, a three-plus-five stand rolling mill, and a full suite of electric and automation solutions to complete the ESP integration. Production activities are set to begin by 2027, aligning with the launch of the European Union’s Carbon Border Adjustment Mechanism (CBAM) and supporting GRP’s plans to double its current production to 2.5 million tonnes of low-carbon steel. Over 50% of the steel produced will be traded into the European Union. The deal also represents GRP’s latest milestone in its industry-leading “Project Green Dragon” initiative.

Additionally, the operational efficiencies achieved through the use of Arvedi ESP’s advanced digital solutions, such as AI learning tools, at plants like GRP demonstrate how the “Internet of Things” (IoT) is revolutionising the steel production industry and bringing cutting-edge innovation to the Asia region.

Image Credits: Primetals Technologies

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Turkey has set its sights on regional trade blocs like the Association of Southeast Asian Nations (ASEAN) and the Asia Cooperation Dialogue (ACD), aiming to expand trade agreements backed by stronger diplomatic alliances. In 2015, it signed a free trade pact with Malaysia and hopes to achieve a similar deal with Indonesia in the coming days. President Edogan’s ambitious goals include transforming Turkey from a “regional economic centre into a global economic powerhouse” and elevating it from the world’s 16th largest economy into the top ten.

Turkey expands Asian footprint

Beyond Southeast Asia, Turkey wants to attract investment from Asia-Pacific businesses seeking a foothold in Europe and the Middle East. With its strategic location, strong manufacturing sector, and skilled workforce, the country offers a compelling destination for investors.

At the same time, Turkish companies are expanding their presence in Asia. Defence, aviation, and technology firms are forming partnerships in Malaysia and Indonesia, while the textile and construction industries see growing opportunities across the region.

However, challenges remain. Logistical bottlenecks, geopolitical uncertainties, and stiff competition from India and Gulf nations mean Turkey must carve out a distinct advantage in Asia-Pacific trade.

Senior journalist Tulay Kalyon Haznedaroglu said, “To stay ahead, it must enhance its infrastructure, refine trade diplomacy, and tap into emerging sectors like technology and green energy. Expanding shipping routes, increasing air travel agreements, and strengthening digital trade platforms will be key to accelerating its trade ambitions. With new free trade agreements on the horizon and strategic partnerships taking shape, Turkey is positioning itself as a vital bridge between Asia and Europe. Erdogan’s proactive diplomacy lays the groundwork for long-term economic growth, reinforcing Turkey’s status as a rising global trade powerhouse.”

“In the short term, the bi-continental country’s much-vaunted Twelfth Development Plan (2024-2028) aims to improve its international stature, promote prosperity, and combat inflation while maintaining strong and sustainable public finances. That goal will depend partly on the success of an associated Foreign Direct Investment Strategy aimed at significantly boosting FDI. The target is for Turkey to account for 1.5% of global FDI and 12% of regional FDI by 2028,” Haznedaroglu added.

On the domestic front, Turkey’s central bank has cut its policy rate by 250 basis points to 42.5%, marking the third monetary easing in a row after months of holding rates steady, as inflation continues to fall.

Experts now predict that inflation will continue to decrease throughout 2025, although it will still exceed year-end targets. In January, the central bank raised its year-end inflation forecast for 2025 to 24%, up 3 percentage points from the previous projection.

According to the latest official data, Turkey’s annual inflation fell to 39.05% in February, down from 42.1% in January, reaching its lowest level in almost two years and raising expectations for further rate cuts.

However, prices in essential sectors such as food, housing, and transportation have continued to rise. A recent poll by Ankara-based Asal Research revealed that 61.2% of respondents cited the “Economy/High Cost of Living” as their primary concern. Istanbul-based economist Atilla Yesilada also suggested that one more rate cut is likely in April 2025 before policymakers pause to assess the situation.

Growth prospects remain mixed

Not particularly, at least when considering FDI as a key measure. While full-year figures for 2024 have yet to be released, they will likely come close to the previous year’s $10.6 billion—down from $13.7 billion in 2022, far below the 2007 peak of $22 billion and short of the $14 billion hoped for earlier. That amounts to less than 1% of GDP, compared with 3% in 2007 and well under both potential and policymakers’ ambitions.

“In the months since June 2023, when a new policy team led by Finance Minister Mehmet Simsek, Vice President Cevdet Yilmaz, and the Central Bank of Turkey (CBT) reversed unorthodox policies, there have been many positive steps toward rational policymaking. However, challenges have emerged along the way,” said Rafik Selim, lead economist for Turkey at the European Bank for Reconstruction and Development (EBRD).

The EBRD now expects Turkey to post GDP growth of 2.7% in 2024, rising to 3% in 2025. Private consumption will likely be the biggest casualty as policymakers try to lift export-led growth above the current low share of 20% of GDP.

“Reducing spending remains difficult. The 2023 fiscal deficit was 5.2%, and the 2024 level is expected to be similar despite service cuts and tax increases. The main driver is earthquake spending. Ankara committed about $30 billion a year to help communities recover from the February 2023 quake that left several million people homeless in southern and central Turkey. Nevertheless, the unprecedented rebuilding of homes and infrastructure should support growth,” Haznedaroglu noted.

“Without the quake, the deficit would be 1.1%, which is quite reasonable,” Selim noted, adding that the estimated 2024 deficit of 5% will likely fall to 3.1% this year.

“Disinflation will likely continue this year, given the CBT’s signal that it will maintain its tight stance despite the start of rate cuts, the ongoing real appreciation of the Turkish lira, and an improvement in services inflation. We expect inflation to fall below 30% by the end of 2025,” said ING Bank analyst Muhammet Mercan.

The current account deficit has narrowed to around $10 billion from 2023’s high of $60 billion, helping rebuild foreign exchange reserves and reducing Turkey’s dependence on external financing.

“Capital flows have been strong; every recent bond and sukuk issue has been three or four times oversubscribed while yields have declined, indicating falling risk perceptions,” Selim observed.

In 2024, Fitch Ratings upgraded Turkey’s sovereign debt and several Turkish banks twice, from B- to B+ in March, then to BB- in September, making Turkey the only country in 2024 to receive upgrades from all three major ratings agencies up to that point.

“In a sense, we’ve returned to where we were in 2021, before the unconventional policy experiments that caused a dramatic deterioration in the country’s macroeconomic and financial stability outlook,” said Erich Arispe, senior director and head of Emerging Europe Sovereigns at Fitch Ratings.

“Turkey’s slower short-term growth outlook reflects ongoing economic rebalancing, which will take time given stubborn inflation,” Arispe argued. With no elections this year, falling dollarisation, rising foreign exchange reserves, and an expected drop in the fiscal deficit as earthquake spending recedes are all encouraging signs.

“Turkey has the capacity to grow. We expect 2.6% growth in 2025 and 3.5% in 2026, without creating further economic distortions. But this is a multi-year story, with the economy being recalibrated to support sustainable higher growth and realise its export and FDI potential,” Arispe said.

Another bright spot is Turkey’s exports to Europe, which rose 7.1% in January 2025 compared with a year earlier, despite economic challenges in its biggest trade market.

According to the Turkish Exporters Assembly (TIM), outbound shipments reached $10.32 billion, up from $9.63 billion a year ago.

However, growth in exports to the Eurozone has been weak over the past two years, as the continent battles high energy costs, tight government budgets, and cautious households who are choosing to save more, hurting overall consumption.

Turkey’s EV market surges

More than 105,000 electric vehicles (EVs) were sold in Turkey in 2024, marking a 45.9% increase from the previous year in a market where total vehicle sales rose only 0.5%. The share of EVs in total sales increased from 7.5% in 2023 to 10.7% in 2024.

Of the 105,315 EVs sold in 2024, 99,489 were pure electric, and 4,826 were extended-range vehicles.

The country’s first indigenous EV brand, Togg, delivered 30,093 cars last year—far surpassing the 11,534 units sold by US giant Tesla. In December 2024 alone, Togg and Tesla delivered 5,732 and 2,307 vehicles, respectively.

Togg, a joint venture of five Turkish holding companies and a business union, began deliveries only in 2023. In December 2024, Turkey’s EV market grew 82.3% to 22,017 units, capturing a 16.3% share of total vehicle sales.

EVs will make up 30% of the country’s auto market in 2025, predicted Ali Bilaloglu, CEO of Turkish auto exporter and distributor Dogus Otomotiv.
The Energy Market Regulatory Authority’s (EPDK) high-case scenario estimates that the number of EVs in Turkey will exceed 361,000 in 2025 and climb to 1.7 million in 2030 and 4.2 million in 2035.

Turkey’s charging network has expanded rapidly, and the country now ranks first in Europe in socket power and in the number of fast (DC) sockets per electric vehicle. Over the past two years, the number of charging sockets has grown from about 3,000 to 26,000.

Chinese EV manufacturer BYD’s plan to build a $1 billion plant in Turkey is seen as the sort of encouraging development the government hopes for, given the sector’s rapid growth.

Growth outlook remains wary

According to a United Nations report, the Turkish economy is expected to grow by 3% in 2024 and 3.1% in 2025, surpassing the global average of 2.8% for both years, with a moderately easing monetary policy aligned with declining inflation.

While conditions seem favourable for Ankara, a further upgrade to investment-grade status by ratings agencies would be a major step toward realising Erdogan’s broader 2028 ambitions.

According to Fitch, Turkey’s private sector has a remarkable ability to adapt.

“However, it takes time to reestablish macroeconomic credibility and for this to resonate with investors,” the agency warned.

“Many of the factors underlying Turkey’s potential also pose risks, including its geographic location, the possibility of indirect impacts from higher US tariffs, and exposure to shifts in investor sentiment. Many factors are beyond Turkey’s control, not least the current, highly fluid international environment,” Fitch said.

Turkey is working to strengthen its place in the global economy by building new ties in Asia while pushing reforms at home. Falling inflation, better credit ratings, and stronger exports give the country some momentum, even as challenges remain. Its growing EV market and rising investment interest show clear progress. Still, long-term success will depend on steady policies and stronger investor trust. If Turkey stays on this path, it could secure a stable future ahead.

The post What awaits the Turkish economy in 2025? appeared first on International Finance.

“We will use the strong foundation he has built, especially in the economic sector, to work faster, harder, to bring results as quickly as possible to the Indonesian people,” Prabowo said.

In this article, we will explore the significance of the outcome for the Indonesian economy.

The ground reality

Joko “Jokowi” Widodo came to office in 2014 by pitching a promise of raising the Southeast Asian country’s growth rate to 7%. Prabowo has taken the game higher by suggesting that a double-digit growth was possible.

However, the Q4 2023 data shows that Indonesia’s GDP growth settled at 5.0%. The economy grew 0.45% compared to the previous quarter, and economic activity picked up ahead of the election.

Household spending (up by 4.5%) supported the growth. Government outlays posted growth but were more modest, up roughly 2.8%. The economy also got a boost from fixed capital formation, which expanded 5.0%, thereby managing to post decent growth despite seeing borrowing costs at elevated levels.

While Indonesia’s growth remains resilient, supported by declining inflation and a stable currency, the World Bank states that the nation’s GDP growth will ease slightly to an average of 4.9% over 2024-2026 from 5% in 2023 as the commodity boom loses steam. Private consumption will be the primary growth driver, while business investment and public spending will also pick up due to reforms and new government projects.

However, the overall economic outlook still possesses downside risks, mostly due to external factors like higher-for-longer interest rates in major economies, which, apart from weighing on global demand, will increase borrowing costs and make it harder to borrow on world markets. Add the geopolitical uncertainties, which may disrupt supply chains.

The World Bank has some advice for the Southeast Asian country: speed up growth and strengthen resilience while transitioning into a low-carbon and climate-resilient economy that will eventually reduce poverty.

Despite being a resilient economy, achieving the 7% target looks like a pretty tough one for Indonesia as of now. The last time it achieved the milestone was way back in 1996, just before the Asian Financial Crisis. Since the Southeast Asian country transitioned to democracy in 1998, promises of higher growth have remained as empty rhetoric than the policies that could have supported the plan.

Looking back at the Jokowi rule

Widodo wasn’t able to complete his “7% growth” prophecy. However, he has achievements to flaunt. A decade ago, Indonesia used to be one of the “Fragile Five”, a group of emerging-market economies vulnerable to high interest rates abroad and a strong dollar. As of 2024, its current account is roughly balanced and its external debts are modest.

Jokowi’s omnibus bill, which cuts restrictions on foreign investment and simplifies licensing, finally became law in 2023. Also, Indonesia’s infrastructure has improved over the past decade, highlighted by the construction of thousands of kilometres of roads.

Jokowi’s other milestone is Indonesia’s nickel-focused industrial policy. The metal is used in electric vehicle (EV) batteries, and Indonesia has the world’s largest deposits. Indonesia, by banning the export of its raw ore, is now forcing companies to process and manufacture in Indonesia. BYD, Ford and Hyundai are now investing in the Southeast Asian nation.

Exports of ferronickel, a processed form of the metal, rose from $83 million in 2014 to $5.8 billion in 2022. However, as per Cullen Hendrix of the Peterson Institute for International Economics, lithium-iron phosphate batteries, which contain no nickel, are becoming more popular. Sodium-ion batteries, which need neither nickel nor lithium, could surpass both types. In 2024, JAC Motors, a Chinese carmaker, delivered the first lot of commercial vehicles powered by sodium-ion batteries to customers.

Despite reforms introduced by the omnibus law, rules requiring imports to be screened at particular entry points have remained at a 22% tariff, and as per the World Bank, the ratio is more than twice the South-East Asian average.

Compare Indonesia with its neighbours Malaysia, Thailand and Vietnam and there is a stark difference. The three countries place fewer restrictions on outside investors and are becoming obvious destinations for firms looking for alternatives to Chinese manufacturing. Indonesia is losing out big time here, as its exports of electronics are not just lower than any other large economy in Southeast Asia, but the sector’s overall growth ratio in the country has slowed down too.

However, not everything is bleak. Since 2014, the Indonesian economy has grown by an average of 4.2% every year. Take out the pandemic years of 2020 and 2021 that figure goes up to 5.1%. Economic activity has not remained entirely dependent on commodity exports, with growth being increasingly driven by a combination of consumption and investment.

According to World Bank data, net foreign direct investment averaged USD 15.5 billion a year from 2014 to 2022, and portfolio investment averaged USD 12.6 billion a year. Investment has come from a variety of sources and in a variety of forms. Domestic capital markets have flourished, especially the stock exchange, whose market cap has grown tremendously over the last 10 years, with hundreds of new companies having gone public.

On the infrastructure front, the count of toll roads, airports, power plants, and dams has gone up in 10 years. At the same time, fiscal reforms drove tax revenue up. Despite increased spending, Indonesia’s fiscal health is quite good. One can argue that the Jokowi era also saw wasteful public works projects, widespread corruption, and the prioritisation of economic growth over the interests of local communities and the environment. However, a 5% annual growth anchored by investment and consumption, combined with big spending on infrastructure and social welfare and financed by sound fiscal policies makes the outgoing President’s rule a fruitful one.

Indonesia has a goal of becoming a high-income developed country by 2045. To fulfil that, the nation needs a national programme capable of effectively harnessing Indonesia’s human capital and population characteristics. Widodo’s “Kartu Prakerja” programme has become a good example for the future Indonesian administration to advance the nation’s economy by harnessing human capital.

The programme, which aims to enhance the competence, productivity, competitiveness and entrepreneurial development of Indonesia’s workforce, has been made available for Indonesian citizens over 18 years who are not enrolled in formal education and do not engage with other welfare programmes.

The Kartu Prakerja programme, a conditional cash transfer scheme, started in 2020. Under it, participants get vouchers to purchase training courses and once they complete the training, they receive a cash incentive. In the pandemic-disrupted 2020, the initiative reached over 5 million. A further 17.5 million recipients were reached in the next couple of years through online training, with the beneficiaries getting digital wallet incentives through fintech companies and banks.

Reimagining things under Prabowo

What the Southeast Asian country needs is a series of reforms that will allow investors to deliver the jobs boom. These reforms can be as simple as regulatory changes like creating a truly level playing field between state-owned and private enterprises or allowing easier immigration avenues for skilled foreign labour. In short, reforms that will make the Indonesian economy a competitive one in a globalised world order. Also, Prabowo needs to ensure job creation, poverty reduction and price stability.

“Prabowo’s economic technocrats need to convince him, in the context of a still-underdeveloped tax base and limited domestic savings available to underwrite private and public investment, that alongside deepening Indonesia’s own capital markets, there is no alternative to inviting a bigger role for foreign investment in the economy if Indonesians’ expectations for growth, expanded public services and better employment prospects are to be met,” EastAsiaForum noted.

The former general has an ambitious plan to raise the tax-to-GDP ratio from 10% to 16% and become a food-exporting nation in the next four years. His 8% growth target is higher than the World Bank’s January 2024 forecast, which predicted Southeast Asia’s biggest economy to grow only 4.9% this year and next.

Bhima Yudhistira, director at the Jakarta-based Centre of Economic and Law Studies (Celios), while interacting with the South China Morning Post, called Prabowo’s 8% growth forecast a “delusional and unfounded” target that was reminiscent of Widodo’s promise of a 7% annual growth rate during his first presidential campaign a decade ago.

Prabowo intends to raise the budget deficit cap, currently set by law at 3% of Indonesian GDP, as well as increase the government debt-to-GDP ratio from the current level of 38.11%. He has pledged to uphold Widodo’s economic policies while urging the nation to adopt the best economic practices from major Asian powers such as China and India in order to progress. Additionally, he has promised to enhance the private sector’s contribution and promote efficiency in state-owned enterprises.

Prabowo has also sought advice from experts on potential new sources of tax revenue. As per the OECD, Indonesia’s current tax ratio of around 10% is lower than the Asia-Pacific average (19.8% in 2021). Bhima thinks that in case Prabowo raises taxes for the country’s 52 million middle class, the move will affect Indonesia’s purchasing power and household consumption.

Bhima credited outgoing Finance Minister Sri Mulyani Indrawati behind Indonesia’s sound fiscal discipline. However, it’s unclear that Sri will join Prabowo’s new cabinet as her relationship with the government soared since Widodo asked the veteran economist to allocate more spending to social assistance programmes ahead of the election.

In December 2023, Prabowo revealed that his programmes to modernise Indonesia’s ageing military were hindered by a lack of funding. This, as per the analysts, may have also hurt his ties with Sri.

“The future minister of finance must act as a brake on Prabowo’s populist programmes. If you can’t apply the brakes, there will be fiscal pressure that will be felt by all economic indicators, and capital outflow will occur,” Bhima told the South China Morning Post.

The post Indonesia’s future under Prabowo Subianto appeared first on International Finance.

Kretek cigarettes, which have a unique flavour and aroma from a combination of tobacco and cloves, are among Djarum’s most recognisable products. The business has perfected the craft of producing kretek, fusing cutting-edge technology with age-old methods to produce a singular smoking experience that is adored by customers all over the world. Djarum makes more than just cigarettes; in addition, it makes cigars and cigarettes flavoured in different ways using cloves.

Djarum has expanded its line of business beyond tobacco in recent years. The company has expanded into other industries, such as banking (it owns Bank Dinar Indonesia) and telecommunications (it owns a portion of XL Axiata, a mobile operator). This deliberate diversification is a reflection of Djarum’s dedication to maintaining its relevance in a constantly shifting market and solidifying its standing as a vibrant and adaptable conglomerate.

Despite its success, Djarum has been the subject of debate and criticism, especially in relation to its advertising strategies and the health effects of its tobacco products. Djarum, like many tobacco companies, has had to deal with strict laws and public health initiatives meant to lower tobacco use. Nevertheless, the business continues to rule the Indonesian market thanks to its well-known brand, extensive distribution system, and innovative product line.

Djarum is still a powerful force in the Indonesian and international business arenas thanks to its diverse portfolio and dedication to quality. The brain behind this successful venture is Michael Bambang Hartono, an Indonesian billionaire heir and businessman. He along with his brother Robert Budi has expanded the business beyond tobacco.

Who Is Michael Bambang Hartono?

• Michael Bambang Hartono was born on 2 October 1939, in the town of Kudus, in Central Java
• His father Oei Wie Gwan had purchased a small Kretek cigarette factory called Djarum Gramofon (in English, Gramophone needle) in April 1951, and renamed it Djarum
• After completing his high school in Kudus, he studied in the faculty of economics and business at Diponegoro University in 1959
• In 1963, the Djarum factory was destroyed by fire and shortly thereafter Oie Wie died, leaving Michael Bambang Hartono and his younger brother Robert Budi Hartono to inherit the factory
• The cigarette company grew under the two brothers, making its first export in 1972 apart from introducing new products
• The brothers began their banking career with Haga Bank and Hagakita Bank
• In 2002, they acquired 51.15% of Bank Central Asia through a consortium led by Farallon Capital and registered under the Mauritius Corporation FarIndo Investments
• The Djarum group also controls several shopping malls and buildings in Jakarta, including Grand Indonesia, Hotel Indonesia and BCA Tower
• Michael Bambang Hartono has a net worth of USD 18.5 billion, as of September 2019, making him the 56th richest person in the world, according to Forbes
• He and his brother, who was also listed slightly under him at 69th, were named the richest Indonesians in 2017, the 9th year in a row
• His company is also active in internet ventures, controlling e-commerce website Blibli.com and one of Indonesia’s largest online communities Kaskus
• Michael Bambang Hartono represented Indonesia at the Asian Games 2018 in bridge, winning a bronze medal with his team at the Supermixed team event hence making him the oldest Indonesian Asian Games medal winner
• He was part of the Indonesian teams which won bronze medals in the 2008 World Bridge Games in Beijing, the 2009 World Team Championships in Sao Paulo, and the 2010 World Series Championships in Philadelphia

‘Bridge Is Like Business’

In an interview with Richmond News, Hartono claims to have used similar skills to those he uses for the bridge to amass an estimated net worth of USD 18.5 billion, as of 2019, from the tobacco, banking, and communications industries.

“Bridge is like business. First, you get the data, the information. You analyse the information, and then you make a decision. So business, real life and bridge are the same. Decision-making is the same. If you want to be a good leader, and you want to be a successful man, businessman, play bridge. Never quit, never give up,” he said.

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