More winners than losers from Indonesia’s US$206b budget

COMMODITIES firms with downstream investments are likely to benefit most from policy support unveiled in Indonesia’s annual budget, while the healthcare sector is least favored, analysts say.

President Joko Widodo (picture) said on Tuesday that the South-East Asian nation will shift its economy into producing more value-added goods and away from purely selling raw materials. The message was part of a broader speech to Parliament where he also announced plans to shrink the budget deficit and cut healthcare and social protection spending.

Indonesia — one of the world’s biggest producers of energy products including natural gas, coal and palm oil — has seen its equities market soar on the back of supply shortages. The benchmark Jakarta Composite Index, which has rallied 8.4% this year through Tuesday and is Asia’s best performer, may see further gains following the new roadmap.

The focus on greater fiscal discipline will likely be welcomed by the stock market, said Nirgunan Tiruchelvam, an analyst at Tellimer Ltd. “Investors will be encouraged by Indonesia’s status as a commodity hub and a bustling consumer market. Both those sectors will flourish with the reopening, particularly the palm oil and rubber companies,” he added.

Winners include miners PT Aneka Tambang and PT Vale Indonesia, firms that are investing and expanding in downstream production, according to Cristopher Andre Benas, head of research at BCA Sekuritas. While Aneka is down more than 7% this year, shares of Vale are up nearly 40%.

Plans to reduce 2023 borrowing as well as a target for GDP growth to return to pre-pandemic levels will also boost market sentiment despite broader concerns about a possible US recession.

“Compared to other countries, Indonesia’s fiscal improvement is faster, clearly showing Jokowi is putting fiscal discipline as one of his priorities,” said Kota Hirayama, an economist at SMBC Nikko Securities. “While a cut in spending is a worry for the economy, a large part of its negative impact can be absorbed given the country’s economic growth has come back to its cruising speed before the pandemic of around 5%.”

Here’s what analysts see as the main winners and losers from the budget:


  • Mining companies: PT Adaro Minerals Indonesia, PT Merdeka Copper Gold and tin producer PT Timah should benefit from moving into downstream production, said BCA Sekuritas’ Benas, with increasing global and automotive industry demand for their products.
  • Technology, banks and telecommunications: A target for 30 million smaller businesses to use digital systems by 2024 will support e-commerce platforms such as PT GoTo Gojek Tokopedia and PT, as well as lender PT Bank Rakyat Indonesia. Telecom companies and tower operators PT Telkom Indonesia, PT XL Axiata, PT Indosat and PT Sarana Menara Nusantara are also seen as beneficiaries.
  • Property and construction companies: A target to see private investors funding most of the development of Indonesia’s new national capital in Borneo offers opportunities to real estate developers such as PT Bumi Serpong Damai, PT Ciputra Development and PT Summarecon Agung, as well as contractor PT Acset Indonusa.
  • State builders PT Wijaya Karya, PT Adhi Karya, PT Waskita Karya as well as toll-road operator PT Jasa Marga will benefit from higher infrastructure spending.


  • Healthcare stocks such as PT Mitra Keluarga Karyasehat, PT Siloam International Hospitals, PT Medikaloka Hermina and laboratory operators PT Prodia Widyahusada, PT Diagnos Laboratorium Utama stand to lose from lower government spending on public health as the pandemic ebbs. – Bloomberg

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