Residents receive food aid in Indonesia. The Indonesian government is considering extending its rice handout scheme. PHOTO: EPA
Dear BT reader,
Indonesia’s debt problem has long been a concern.
At a seminar in Jakarta this week, Fitch Ratings expressed worries that Indonesia may struggle to maintain a balanced budget, projecting fiscal deficits could rise to 2.9 per cent next year due to uncertainties surrounding the fiscal policies of President-elect Prabowo Subianto.
The US credit rating agency noted potential medium-term fiscal risks from Prabowo’s ambitious campaign promises, including a costly free lunch programme for 80 million schoolchildren.
Prabowo, in contrast, has advocated taking on additional debt to boost annual economic growth to 8 per cent. At the same event, Indonesia’s Finance Minister Sri Mulyani Indrawati emphasised prudent budget allocation to support Prabowo's administration, focusing on investment in human resources and infrastructure.
Yet, the archipelago is facing further strain on its fiscal position with the severe impact of El Nino threatening its food security. Outgoing President Joko Widodo is considering extending the country’s rice handout programme by six months until December.
The scheme, which has provided 10 kg of rice monthly to over 20 million low-income families since March 2023 to combat high prices caused by El Nino-induced drought, has successfully managed local rice prices. However, the extension of the programme depends on budget availability.
Meanwhile, the country’s smallholder farmers are arming themselves with technology to mitigate the drought’s impact. To understand how climate challenges have forced changes in Indonesia, the country’s largest employer for decades, read this story by our correspondent Elisa Valenta.
Indonesia is not the only Asean member facing fiscal challenges. During an interview at the Qatar Economic Forum this week, Malaysia Prime Minister Anwar Ibrahim reiterated the need to cut excess subsidies, including the broad-based fuel concessions, but did not commit to a timeline.
The privatisation aims to position Malaysia Airports for sustainable growth by focusing on improvements to infrastructure, service standards and airline connectivity. The offer is subject to pre-conditions and, if all goes smoothly, would see Malaysia Airports removed from the Malaysian bourse in the fourth quarter of the year.
Meanwhile, Vietnam is enjoying yet another boost to its digital infrastructure. The country is aiming to upgrade its bandwidth capacity through the construction of more undersea Internet cables.
Keep scrolling to check out more Asean news. Thank you and see you next Friday!
Trending
Lawrence Wong was sworn in as Singapore's fourth Prime Minister on May 15, succeeding Lee Hsien Loong. In his final media interview, Lee warned that other countries may test Singapore’s new leaders and urged them to maintain good relations with neighbouring countries, while also playing an active role in Asean to contribute to regional stability. Wong's approach to these challenges will be closely watched.
Fitch Ratings said that Indonesia may struggle to maintain a balanced budget, and that its fiscal deficits could rise to 2.9 per cent next year amid uncertainties over the fiscal policies of incoming president Prabowo Subianto.
Indonesia posted a larger-than-estimated trade surplus of US$3.56 billion in April, attributed to slowing imports, according to data from the country’s statistics agency released on Wednesday (May 15).
An influential member of Vietnam’s powerful Politburo has resigned, the Communist Party said on Thursday (May 16), weeks after the president and national assembly head stepped down as part of a sweeping anti-corruption campaign.
Vietnam is relatively late in the race to cast itself as one of the region’s top digital hubs, but it may still have a shot if plans to upgrade its bandwidth capacity by constructing more undersea Internet cables proceed as planned.
A consortium led by Malaysia's sovereign wealth fund and pension fund provider announced a conditional offer on Wednesday (May 15) to take Malaysia Airports Holdings Berhad private, in a deal worth about US$3.9 billion.
Malaysia's industrial production index rose 2.4 per cent in March from the year before, driven by higher output from the mining and electricity sectors, said the Department of Statistics Malaysia on Friday (May 10).
Malaysia's Johor state is proposing its economic and petrochemical hubs as the sites for a special zone with Singapore, as it aims to become the “Shenzhen of South-east Asia,” according to a report in The Star.
South Korea’s HD Hyundai Heavy Industries will set up operations in a former US naval base in the Philippines, an investment that may usher in the return of shipbuilding there.
Residents receive food aid in Indonesia. The Indonesian government is considering extending its rice handout scheme. PHOTO: EPA
