The Week That Was in ASEAN@Smartkarma - Indocement, Indonesia Chemicals, and Thai Retail

Indonesia's 2020 Assessment: Economic Reform, Governance & Democracy

Fumbling Jiwasraya Insolvency / New PLN Head / 2.2% Budget Deficit / DNI in Jan

Indonesia Political Risk Analyst

Kevin O’Rourke

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

The much-anticipated Jobs Omnibus is on a collision course with unions, who plan major demonstrations on 20 January, but so far the bulk of parliament is remaining aloof, which bodes well.  Yet another planned omnibus bill, on maritime affairs, promises sorely needed deregulation -- but actually it may intend primarily to superimpose a quasi-military agency in a policymaking role.  The controversial new KPK chair made a distinct impression by arresting aides to PDI-P's number two figure, Party Secretary General Hasto Kristiyanto, who could become implicated.  This may intend to demonstrate that the KPK is using its extraordinary powers to play power politics.  Chinese vessels intruded in the Natuna Sea, again, and Indonesia's reponse has been distinctly tepid.  Politics: In the 2017 attack on the corruption investigator Novel Baswedan, police seem intent on confining blame to two low‑ranking personnel arrested last week.  A police spokesperson took pains in an interview to emphasize the possibility that they attacked the Anti-Corruption Commission (KPK) official because of strong personal objections to him.  The Widodo administration seems unmoved by criticism that police are perpetrating a whitewash of the acid attack that left Baswedan blind in one eye (Page 2).  A range of union leaders adamantly denounced the planned Omnibus Bill on Job Creation, pledging to stage rallies in Jakarta on 20 January.  It remains to be seen whether the unions will be able to incapacitate the capital and intimidate the administration.  If not, the bill may have potential to pass smoothly: few parliamentarians are echoing the concerns of union figures thus far.  Widodo’s weakening of the KPK may have won him loyalty within parliament, where the KPK is an object of disdain (p. 3). Electoral System: The home affairs minister formally called on parliament to scrap direct elections for regional heads (p. 4).Justice: A district‑level corruption case in South Sumatra creates adverse publicity for the new KPK chair, but without jeopardizing his position (p. 5).  The new KPK’s first major case is focusing on a member of the General Election Commission (KPU) – plus a powerful PDI‑P figure (p. 6). Policy News: It remains to be seen whether yet another omnibus bill (the third mandated by the president) is a genuine deregulation measure for the maritime sector – or a push by the military to control a swath of the economy (p. 7). Appointments: Widodo appointed an undistinguished academic to the Constitutional Court, suggesting that the president may value personal loyalty ahead of potentially crucial decisions that could arise in future (p. 9).International: The administration seems unwilling to bear the economic pain that would accompany harsh sanctions on China for territorial infringement in Natuna (p. 9). Disasters: 43 died in last week’s floods in Greater Jakarta (p. 11). Economics: The full‑year 2019 fiscal account saw revenues and spending fall, as per­centages of GDP, relative to 2018.  Amid a lack of assertive governance reform, the state sector continues to perform sluggishly, complicating development (p. 12).

The much-anticipated Jobs Omnibus is on a collision course with unions, who plan major demonstrations on 20 January, but so far the bulk of parliament is remaining aloof, which bodes well.  Yet another planned omnibus bill, on maritime affairs, promises sorely needed deregulation -- but actually it may intend primarily to superimpose a quasi-military agency in a policymaking role.  The controversial new KPK chair made a distinct impression by arresting aides to PDI-P's number two figure, Party Secretary General Hasto Kristiyanto, who could become implicated.  This may intend to demonstrate that the KPK is using its extraordinary powers to play power politics.  Chinese vessels intruded in the Natuna Sea, again, and Indonesia's reponse has been distinctly tepid.  Politics: In the 2017 attack on the corruption investigator Novel Baswedan, police seem intent on confining blame to two low‑ranking personnel arrested last week.  A police spokesperson took pains in an interview to emphasize the possibility that they attacked the Anti-Corruption Commission (KPK) official because of strong personal objections to him.  The Widodo administration seems unmoved by criticism that police are perpetrating a whitewash of the acid attack that left Baswedan blind in one eye (Page 2).  A range of union leaders adamantly denounced the planned Omnibus Bill on Job Creation, pledging to stage rallies in Jakarta on 20 January.  It remains to be seen whether the unions will be able to incapacitate the capital and intimidate the administration.  If not, the bill may have potential to pass smoothly: few parliamentarians are echoing the concerns of union figures thus far.  Widodo’s weakening of the KPK may have won him loyalty within parliament, where the KPK is an object of disdain (p. 3). Electoral System: The home affairs minister formally called on parliament to scrap direct elections for regional heads (p. 4).Justice: A district‑level corruption case in South Sumatra creates adverse publicity for the new KPK chair, but without jeopardizing his position (p. 5).  The new KPK’s first major case is focusing on a member of the General Election Commission (KPU) – plus a powerful PDI‑P figure (p. 6). Policy News: It remains to be seen whether yet another omnibus bill (the third mandated by the president) is a genuine deregulation measure for the maritime sector – or a push by the military to control a swath of the economy (p. 7). Appointments: Widodo appointed an undistinguished academic to the Constitutional Court, suggesting that the president may value personal loyalty ahead of potentially crucial decisions that could arise in future (p. 9).International: The administration seems unwilling to bear the economic pain that would accompany harsh sanctions on China for territorial infringement in Natuna (p. 9). Disasters: 43 died in last week’s floods in Greater Jakarta (p. 11). Economics: The full‑year 2019 fiscal account saw revenues and spending fall, as per­centages of GDP, relative to 2018.  Amid a lack of assertive governance reform, the state sector continues to perform sluggishly, complicating development (p. 12). 

China Intrudes / KPK Flexes / Maritime Omnibus Serves Military / Revenues Slump / 20 Jan Demo