Private Banking Sector | Strategic solutions to Increase conducive conditions for investments in Indonesia in 2019

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State-owned Bank Mandiri and its subsidiary, Mandiri Sekuritas, held the 8thMandiri Investment Forum (MIF) 2019 as part of its continuous efforts to promote investments in Indonesia. Themed “Indonesia: Invest Now”, the forum was designed to be an eye-opener on investment opportunities in the country that could potentially generate higher economic growth.

Addressing the Forum – which saw the attendance of 700 investors, including 90 foreign investors and around 200 corporate clients of Bank Mandiri – were Finance Minister Sri Mulyani Indrawati, Bank Indonesia (BI) Governor Perry Warjiyo, State-Owned Entreprises (BUMN) Minister Rini Soemarno, fiscal policy agency head Suahasil Nazara of the the finance ministry, Mandiri Institute Advisory Board Chairman M. Chatib Basri, and Jefferies Chief Strategist Sean Darby, as well as other notable speakers.

“The MIF 2019 will focus on strategic solutions for decision-makers and private investors in navigating businesses amid the global trend of monetary tightening and Indonesia’s [election] year,” Bank Mandiri Vice President Director Sulaiman Arif Arianto said on Wednesday during the forum’s opening ceremony in Jakarta.

Sulaiman said that Bank Mandiri was ready to support investments in Indonesia as part of the banking industry. State-owned banks were currently recording some of their best performances, with 12 per cent annual credit growth in 2018 and their non-performing loans (NPLs) ratios stable at below 3.0 per cent to November 2018.

“Despite the challenges of Industry 4.0, we believe banks will continue to provide maximum contributions and drive up economic growth, as banks have been maintaining good quality assets, strong capital ratio and efficient operational costs through innovations in digital banking and financial instruments, and on strong domestic consumption,” he said.

Entering this year, Bank Mandiri was optimistic that the Indonesian economy would be better and stronger, as reflected in its 2019 economic outlook. Bank Mandiri economists projected the Indonesian economy would grow 5.22 per cent this year, compared to 5.16 per cent in 2018.

The central bank projected economic growth of 5.0-5.4 per cent in 2019, higher than last year’s 5.1 per cent growth. “Domestic consumption will mainly contribute to economic growth,” BI Governor Perry Warjiyo told the Forum participants.

Sri Mulyani Indrawati told the Forum that household consumption in 2019 was expected to grow more than 5.0 per cent.

“Despite ongoing global economic challenges, Indonesia’s economy is still strong and resilient at present, supported by stable domestic consumption with household consumption seeing strong growth of over 5.0 per cent, while inflation is being maintained at around 3.0 per cent. Besides which, we have already applied fiscal policies to support economic growth, especially through tax instruments,” she said.

She said the government needed to improve human resource quality through better education and health toward sustainable economic growth. “In 2019, the government will focus budget spending on developing human resources, infrastructure and social security,” she said.

In the infrastructure sector alone, Bank Mandiri had realised loans of up to Rp 182.3 trillion by the end of 2018, as part of its total development commitment of Rp 285.4 trillion for seaports, airports, power plants, toll roads and other infrastructure projects.

It was also necessary to develop the manufacturing sector to accelerate economic growth and create a more stable and equal distribution of development, as well as more jobs. Indonesia had the world’s fourth largest workforce but still lagged in progress, as seen in its low information technology skills and usage, which was urgently needed to anticipate the industry’s future needs.

Perry said that considering the current condition of the Indonesian economy, 2019 was the year for investing in Indonesia, as clearly urged in this year’s MIF theme, “Indonesia: Invest Now”.

“There are two reasons why it is the right time. First, Indonesia’s macroeconomics is stable and solid. Second, the government’s policies are synchronised among stakeholders to create a condition conducive to investments. We believe that the stability of the Indonesian economy will be a strong foundation for [even greater] economic growth,” he said.

He said the central bank was optimistic that the rupiah exchange rate against the US dollar would become more stable and see a strengthening trend this year, which would help drive economic growth. This optimism was based on some reasons, including capital inflows to Indonesia, the expected slowdown in the pace of the US Federal Reserve’s policy rate hikes, strong government-BI synergy on improving the rupiah’s fundamental value, and greater flexibility in the foreign exchange market.

Mandiri Sekuritas President Director Silvano Rumantir said the brokerage firm was optimistic that capital market growth would be more positive this year, in keeping with Indonesia’s economic growth.

During the first two days of the four-day Forum on Jan. 28-29, Bank Mandiri and Mandiri Sekuritas also took potential investors on a visit to various entities with high investment potential, such as fintech companies and hospitals, as well as traditional and modern markets that had implemented digitalised systems and microeconomics tools. On Jan. 31, potential investors had the chance to hold one-on-one and group meetings with stakeholders and business players on likely businesses that could be induced to investing in Indonesia.

Bank Mandiri again partnered with Jefferies, the US multinational global investment bank, for this year’s MIF.

Jefferies has since 2017 partnered with Mandiri Sekuritas, which distributes research reports and brokering services to customers outside Asia. Domestic and foreign investors alike have acknowledged the proven credibility and quality of the Mandiri Group research team.

Mandiri Sekuritas is now the best brokerage in Indonesia’s capital market, with total transactions of Rp 205 trillion in 2018. It tops Bloomberg’s league tables with a 5.1 per cent market share in total share transactions, or Rp 4.018 trillion.

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