Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 34 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

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Indonesia: Intensifying Reform Agenda Under an Unbridled Jokowi Is Good News for the Economy

Indonesia: Another 50bp of Rate Cuts by October Will Spur 2H 2020 Recovery

Indonesia: Post-Omnibus Bill Reform Agenda Still Has Legs, With Longer-Term Spillovers for IDR

Indonesia: Budding Signs of a Turnaround, But Watch The IDR

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

Macroeconomics

With the current account in surplus in 2H 2020, and inflation below BI's 2-4% target for 9 months, we expect the policy rate to decline by 50bp over the next half year, spurring a strong above-consensus rebound to 6.7% real GDP growth. Structural reforms that have made the labour-market more flexible and created an equity-funded vehicle to expedite infrastructure investment, will contribute to the economic acceleration, as will the spill-over from 2020's unspent fiscal stimulus, and this year's continued fiscal accommodation. With inflation well below BI's agreed target range of 2-4% for 9 consecutive months (and the real policy rate above +2% for the past 10 months), we expect BI to cut its policy rate by 25bp each in the next two quarters, to an all-time low of 3% by September 2021. This will spur a strong economic rebound. Aided by the low-base effect (especially in 2Q), we expect Indonesia's real GDP to accelerate to 6.7% growth in 2021. In 1Q 2021, real GDP is likely to have grown 4.5% YoY, led by a strong export rebound, but a sharp acceleration is likely in the rest of 2021, with the past year's structural reforms also helping.  Those reforms have substantially reduced the severance compensation employers are required to pay laid-off employees, thereby making the labour-market much more flexible, and aiding Pres. Jokowi's job creation agenda, which depends crucially on spurring FDI inflows. With the current account in surplus during 2H 2020, and FDI inflows up 5.5% YoY, foreign reserves have rebounded in the past 3 months (to US$138.8 billion, or 10 months import cover). While there will still be some downward pressure on the IDR when interest rates decline (given the large proportion of foreign ownership of local bonds), mild depreciation in the early stages of an economic recovery is unlikely to deter BI. The 7-day moving average of new Covid cases peaked at a 7-day moving average of 12,476 on 2nd February and has since moderated to 5174 by 27 March 2021, allowing the economy to resume functioning more normally. Large fiscal packages worth an additional 4.4% of GDP were announced last year, after the constitutional ceiling on annual fiscal deficits was temporarily raised (from 3% of GDP). But past experience suggests that actual spending will spill-over into 1H 2021 (even with the deficit for this year programmed to decline to 5.9% of GDP, and the extra spending cut to 2.1% of GDP). The Nusantara Investment Authority (NIA), created as part of the structural reforms and funded mainly by foreign, private and government equity (rather than debt) will contribute to accelerating the pace of infrastructure investment.  With the economy likely to grow much faster than consensus expectations, we are bullish on Indonesian equities, particularly large banks like <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a>.

With the current account in surplus in 2H 2020, and inflation below BI's 2-4% target for 9 months, we expect the policy rate to decline by 50bp over the next half year, spurring a strong above-consensus rebound to 6.7% real GDP growth. Structural reforms that have made the labour-market more flexible and created an equity-funded vehicle to expedite infrastructure investment, will contribute to the economic acceleration, as will the spill-over from 2020's unspent fiscal stimulus, and this year's continued fiscal accommodation. With inflation well below BI's agreed target range of 2-4% for 9 consecutive months (and the real policy rate above +2% for the past 10 months), we expect BI to cut its policy rate by 25bp each in the next two quarters, to an all-time low of 3% by September 2021. This will spur a strong economic rebound. Aided by the low-base effect (especially in 2Q), we expect Indonesia's real GDP to accelerate to 6.7% growth in 2021. In 1Q 2021, real GDP is likely to have grown 4.5% YoY, led by a strong export rebound, but a sharp acceleration is likely in the rest of 2021, with the past year's structural reforms also helping.  Those reforms have substantially reduced the severance compensation employers are required to pay laid-off employees, thereby making the labour-market much more flexible, and aiding Pres. Jokowi's job creation agenda, which depends crucially on spurring FDI inflows. With the current account in surplus during 2H 2020, and FDI inflows up 5.5% YoY, foreign reserves have rebounded in the past 3 months (to US$138.8 billion, or 10 months import cover). While there will still be some downward pressure on the IDR when interest rates decline (given the large proportion of foreign ownership of local bonds), mild depreciation in the early stages of an economic recovery is unlikely to deter BI. The 7-day moving average of new Covid cases peaked at a 7-day moving average of 12,476 on 2nd February and has since moderated to 5174 by 27 March 2021, allowing the economy to resume functioning more normally. Large fiscal packages worth an additional 4.4% of GDP were announced last year, after the constitutional ceiling on annual fiscal deficits was temporarily raised (from 3% of GDP). But past experience suggests that actual spending will spill-over into 1H 2021 (even with the deficit for this year programmed to decline to 5.9% of GDP, and the extra spending cut to 2.1% of GDP). The Nusantara Investment Authority (NIA), created as part of the structural reforms and funded mainly by foreign, private and government equity (rather than debt) will contribute to accelerating the pace of infrastructure investment.  With the economy likely to grow much faster than consensus expectations, we are bullish on Indonesian equities, particularly large banks like Bank Central Asia (BBCA IJ). 

Indonesia: More Rate Cuts to Spur Recovery After Recent Structural Reform