The Jakarta Post’s Mark Lempp and Fadhil Haidar Sulaeman spoke to Mira Arifin, Indonesia country manager at Bank of America, on Jan. 27 about how this translates to opportunities for the multinational investment bank and its clients in Southeast Asia’s largest economy.

 

Question: How do you see Indonesia's economy last year?

Answer: Indonesia’s GDP growth is robust compared to a lot of nations surrounding us. And, you know, compared to the developed markets as well.

I would say that the Indonesian government has done an excellent job in 2022, navigating the global environment and the Indonesian economy. You could see the excellent synergy in the government, the Finance Ministry and the central bank. All have done an amazing job.

 

What are your macroeconomic expectations for this year?

In terms of 2023 GDP, BofA expects growth of 5.1 percent.

On the fundraising front, in the past, Bank Indonesia and the Finance Ministry have been pretty much in tandem with the issuance of bonds, and they are going independently this year.

The sentiment, I believe, is a lot more positive this year. We spoke about it recently with investors, and there will be a massive influx of offshore investment into Indonesia.

In the past couple of days, we've seen only the hedge funds, sort of the fast money, coming in. We should expect more of the real money later, because they tend to be slower, but they're more stable. They are coming in pretty soon.

 

Any examples of this positive sentiment?

When the market opened, the Finance Ministry made sure that they accessed the international capital market straightaway on Jan. 4, when they priced the US$3 billion bond issuance. Bank of America was one of the lead managers and took an active role in terms of getting that access to global investors.

We should be proud that Indonesia was actually the first country to reopen the Southeast Asia market. I think we did it just one day after Austria, which is a developed market.

I believe there are several sovereign bond issuers in the queue. The [Indonesian government] priced it very quickly. You could imagine all these fund managers, these investors, they're busy, like Indonesia was the only focus at the time.

So it was really, really critical for us to navigate this train of thought, you know, getting the right attention of the investors, the negotiation, because it was done in a very, very short time span, it's not the usual window. The order book before the price tightening exceeded $11 billion.

 

What are the opportunities for BofA in Indonesia?

In terms of the multinationals and the large Indonesian corporations, if they need financing, that's something that we're more interested in. Our markets business supports clients on bonds and currencies.

We are also the provider of US dollar banknotes; we see it as being more robust, as people have started traveling. The appetite [for US dollars] will keep increasing, and we supply that to our bank clients as well. I think these are all on a positive trajectory.

We will see more, sort of, supply chain-related cash management mandates come in, because more supplies, more consumption is expected. We also see many of our clients seeking investors through direct investment and M&As [mergers and acquisitions].

 

Do you see M&A opportunities in Indonesia through financially distressed firms?

It's very possible, although we don't see that in the immediate future. A lot of M&A opportunities that we are seeing have been focused on big companies with aspirations to grow even bigger, which is a very positive thing.

The technology sector gets a little bit more challenging, but for the real ones [companies] with a good ecosystem, it's still an ongoing process. Those in the EV [electric vehicle] space remain robust in terms of M&As or fundraising activities.

The financial sector, hybrid tech, finance, the consumer space will always be of interest, and telecommunication technology too will be interesting, but very selective. So, I think we will see that a lot more.

 

Any global risks apart from the Ukraine-Russia war?

It's just if the [United States] enters recession. I don't know whether it's going to be a hard landing or soft landing, but we think the US will have a mild recession.

They're the most robust consumer market. They're the spenders. So if that happens, then let’s be sure we're not so isolated. If emerging markets collapse, Indonesia too will be in that pocket.