Major Developments:
Consumers in Indonesia and Malaysia continue to boycott US brands over the Israel-Hamas war.- The boycott of US Brands has expanded to other industries as well, including beauty and retail brands.
- The boycott has impacted the operations and bottom lines of US franchises in Indonesia, highlighting the spreading risks of geopolitical tensions on International businesses.
Singapore’s PM and Indonesian President talk about electricity trade in their final meeting.- Plans for Singapore to import low-carbon electricity from Indonesia are “progressing well.”
- Indonesian President Jokowi encouraged continued investment into green industries.
- Jokowi also invited Singaporean companies to invest in Indonesia’s new capital, Nusantara.
- Other topics discussed included medical tourism in Bali, food resilience, and development of a data center on Batam.
Indonesia’s central bank delivers a surprise rate hike to bolster the rupiah.- Indonesia’s central bank appears to be stepping up efforts to strengthen the rupiah, which has fallen to a four-year low.
- The rupiah has weakened due to delays in US rate cuts, as traders have grown increasingly risk adverse.
- Rate hike also sought to address an increasing inflation rate, although inflation remains within the target range for now.Indonesia’s economy is anticipated to grow between 4.7-5.5% this year
News From Around South East Asia:
Export Extension for Mining company in Indonesia under consideration.- Indonesia’s investment minister said that an export exemption that allows Freeport Indonesia to export raw minerals should be extended. Indonesia banned all export of raw minerals in June of 2023, but that restriction is forcing mining companies to consider slashing output due to a lack of smelting capacity.
Cambodia is increasingly seeking ASEAN investment as Chinese investors pack up.Deforestation markedly increased in Indonesia in 2023, driven by mining and industrial expansion.Indonesian Air Force expresses interest in UAV acquisition.Indonesia formally declares Prabowo Subianto president elect after court rejects rival’s appealIndonesia Fishery event to be held between 17-19 July 2024.
Other Items of Interest:
Indonesian Data Center Market Investment Analysis Report 2024-2029. [Research product not affiliated with Commerce Bridge]
- $3.63 billion in anticipated growth for the Indonesian Data Center Market, a 5.91% annual rate for the next five years.
- Key market for data centers in South-East Asia.
- Many data centers are looking to take advantage of the expected boom in renewable energy production in Indonesia in the next few decades.
Commerce Bridge Summary of the Week:
This week firmly demonstrated continuing transitions in the SEA region, as Indonesia’s new president elect was formalized, the final meeting between the outgoing leaders of Singapore and Indonesia discussed future investment and trade opportunities, and ongoing heat waves demonstrated growing regional challenges. Much of the week’s news focused on Indonesia, which continues to attract a lot of attention following the country’s recent election and preparation for the unveiling of the new capital city of Nusantara.
President-elect Prabowo put a final legal challenge to his election behind him after receiving 58% of the vote in February. Prabowo has served as the Minister of Defense of Indonesia since 2019, having previously been unsuccessful in several presidential bids. Prabowo also had a long background in the military prior to 1998, when he was discharged amid allegations of human rights abuses that also barred him from entry to the US until 2020. Despite these controversies, Prabowo appears to have a good relationship with incoming Singaporean PM Wong, and his time as Minister of Defense was marked by attempts to build positive relationships with both China and the US. Prabowo conducted significant entrepreneurial activity between his time in the military and his political career, founding the Nusantara Group which controls 27 companies across both Indonesia and abroad. Prabowo is therefore expected to be a business-friendly president.
