Conducive economy, issuers to be more expansive

JAKARTA. Some issuers listed on the Indonesia Stock Exchange (IDX) are ready to continuously launch business expansions, thanks to the economic prospect in 2017. This year, the domestic economy is predicted to be more conducive.

For an example, PT Astra International Tbk (ASII) has prepared as much as Rp 20 trillion capital expenditure (capex), including for its unconsolidated subsidiaries. ASII will allocate the capex for heavy equipment, property, and infrastructure businesses.

Meanwhile, PT Aneka Tambang Tbk (ANTM) has increased its capex by 60% to Rp 2.56 trillion.

The state owned enterprises recorded the highest increase in the capex allocation among other issuers. For an example, the capex of PT Jasa Marga Tbk (JSMR) has increased by two times.

Director of Investa Saran Mandiri Hans Kwee estimates that the improvement in commodities prices had led to the economic improvement. “The low commodities prices might decrease the purchasing power in some region,” Hans said.

On the other hand, according to Hans, the banks have improved their non-performing loan (NPL) rate. This is potentially to reduce the interest rate and to expand the credits so that the issuers would be easier to obtain loans from the banks.

Meanwhile, the increase in the government expenditure has also encouraged the state owned enterprises to launch expansions.

However, The Fed’s decision to increase the interest rate in this year will lead the US dollar’s appreciation against rupiah. “This might affect to the issuers, which use the US dollar currency for estimating their capex,” he said.

Analyst at Danareksa Sekuritas Lucky Bayu Purnomo said, the government has revised some regulations, including in mining sector. In this case, the market participants need to consider the effects of the policies for the issuers.

Lucky estimates that the economic growth tends to be stagnant so that the expansions seem would not too vast. Let alone, the vast expansions do not necessarily result at the proper performance. “The cash flow has to be maintained, as the economy has yet to grow significantly,” he said. (Muhammad Farid/Translator)