The Week That Was in ASEAN@Smartkarma - Indonesia's Deficit, Slowing Staples, and Bangkok Bank

Garuda Chief Chopped for Chopper / Hartarto Survives / E-Commerce Regulated / PSCs Revived

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

Ministers continue to cite bold plans for Labor Law reform, although they pushed back the target for submitting the Omnibus Bill to parliament to January.  The finance minister broached civil-service pay reform -- a topic with potential to eventually improve governance.  The Jakarta-Cikampek elevated tollroad opens next week and a new study on marine debris can help guide policymaking.  Lippo Group owner James Riady ignored a KPK summons and the salacious Garuda saga tests State Enterprise Minister Erick Thohir.  The World Bank cautiously predicts a 2020 GDP growth uptick to 5.1%.Politics: People’s Consultative Assembly (MPR) Speaker Bambang Soesatyo will obtain one of Golkar’s vice party‑chair posts.  This confirms that Party Chair Airlangga Hartarto won re‑election through an accommodation with the controversial Soesatyo, who will therefore remain politically influential.  Soesatyo advocates rolling back democratiza­tion (Page 2).  Gerindra Chair Prabowo Subianto omitted former Vice Speaker of Parliament Fadli Zon, his longstanding loyalist, from a revised list of party spokespeople.  A Gerindra official acknowledged that Zon is too critical of the administration, which now features Prabowo as a minister (p. 3).  Elevated tensions are apparent within the National Mandate Party (Pan) as it approaches its congress.  At issue is whether Zulkifli Hasan can win re‑election as party chair despite party‑founder Amien Rais preferring the parliamentary delegation chair, Mulfachri Harahap.  Hasan would be far more inclined to re‑align the party with the government, although he disparages the finance minister (p. 4). Electoral System: Constitutional Court justices overruled the General Election Commission (KPU) and affirmed that former corruption convicts may stand for election as regional heads.  They need only wait five years after incarceration before running (p. 4).Justice: The president reportedly aims to mandate an evaluation of the Anti-Corruption Commission (KPK) to improve preventive efforts (p. 4).  Lippo Group owner James Riady failed to appear for questioning as a witness in the Meikarta scandal.  With the KPK’s current five members leaving office next week, he may prove able to avoid scrutiny (p. 5). Policy News: Responding to Garuda’s scandals, the state enterprise minister pledged emphatically to improve efforts to prevent sexual harassment in state firms – but a ministry spokesperson immediately downplayed the matter (p. 6).  January is the new target for providing parliament with an Omnibus Job Creation Bill.  Labor activists complain that they remain excluded from deliberations.  In what may be an indicative case study, West Java’s governor is struggling to render labor rules more flexible amid union resistance (p. 7).  The finance minister discussed civil‑service incentive structures (p. 10).  The presi­dent met with Pertamina officials, including President Commissioner Basuki Purnama (p. 11).  Infrastructure: The president called for more private roles in infrastructure (p. 11).  The elevated Jakarta‑Cikampek tollroad will open for use next week (p. 12).Environment: A new taxonomy of land‑derived marine debris estimates that 16‑30 tons enter Jakarta Bay each day (p. 13). Economics: Tax receipts are low (p. 14).

Ministers continue to cite bold plans for Labor Law reform, although they pushed back the target for submitting the Omnibus Bill to parliament to January.  The finance minister broached civil-service pay reform -- a topic with potential to eventually improve governance.  The Jakarta-Cikampek elevated tollroad opens next week and a new study on marine debris can help guide policymaking.  Lippo Group owner James Riady ignored a KPK summons and the salacious Garuda saga tests State Enterprise Minister Erick Thohir.  The World Bank cautiously predicts a 2020 GDP growth uptick to 5.1%.Politics: People’s Consultative Assembly (MPR) Speaker Bambang Soesatyo will obtain one of Golkar’s vice party‑chair posts.  This confirms that Party Chair Airlangga Hartarto won re‑election through an accommodation with the controversial Soesatyo, who will therefore remain politically influential.  Soesatyo advocates rolling back democratiza­tion (Page 2).  Gerindra Chair Prabowo Subianto omitted former Vice Speaker of Parliament Fadli Zon, his longstanding loyalist, from a revised list of party spokespeople.  A Gerindra official acknowledged that Zon is too critical of the administration, which now features Prabowo as a minister (p. 3).  Elevated tensions are apparent within the National Mandate Party (Pan) as it approaches its congress.  At issue is whether Zulkifli Hasan can win re‑election as party chair despite party‑founder Amien Rais preferring the parliamentary delegation chair, Mulfachri Harahap.  Hasan would be far more inclined to re‑align the party with the government, although he disparages the finance minister (p. 4). Electoral System: Constitutional Court justices overruled the General Election Commission (KPU) and affirmed that former corruption convicts may stand for election as regional heads.  They need only wait five years after incarceration before running (p. 4).Justice: The president reportedly aims to mandate an evaluation of the Anti-Corruption Commission (KPK) to improve preventive efforts (p. 4).  Lippo Group owner James Riady failed to appear for questioning as a witness in the Meikarta scandal.  With the KPK’s current five members leaving office next week, he may prove able to avoid scrutiny (p. 5). Policy News: Responding to Garuda’s scandals, the state enterprise minister pledged emphatically to improve efforts to prevent sexual harassment in state firms – but a ministry spokesperson immediately downplayed the matter (p. 6).  January is the new target for providing parliament with an Omnibus Job Creation Bill.  Labor activists complain that they remain excluded from deliberations.  In what may be an indicative case study, West Java’s governor is struggling to render labor rules more flexible amid union resistance (p. 7).  The finance minister discussed civil‑service incentive structures (p. 10).  The presi­dent met with Pertamina officials, including President Commissioner Basuki Purnama (p. 11).  Infrastructure: The president called for more private roles in infrastructure (p. 11).  The elevated Jakarta‑Cikampek tollroad will open for use next week (p. 12).Environment: A new taxonomy of land‑derived marine debris estimates that 16‑30 tons enter Jakarta Bay each day (p. 13). Economics: Tax receipts are low (p. 14).

Labor Omnibus Prep / Bandung Unions Fight / Garuda Saga Tests Erick / WB on Econ / KPK on Riady