Indonesian investment fund managers may be allowed to include foreign assets in their mutual funds (conventional and Islamic-based mutual funds), offered to investors, soon.
Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan, abbreviated OJK) is currently formulating new regulations – expected to be finalized by June 2015 – that would allow to include foreign assets in an attempt to reduce risks by diversifying mutual fund portfolios. Indonesian investment managers had been requesting for this new regulation.
OJK Deputy Commissioner Nurhaidi, who is in charge of monitoring Indonesia’s capital market, said that the institution is still discussing several details such as the percentage of foreign assets that is allowed to be included in the portfolios. This matter needs careful attention as it will impact on local assets. Indonesian investment companies had requested for the new regulation due to the shallowness of Indonesia’s capital market (compared to Singapore and Malaysia) amid the introduction of the government’s new universal pension program (BPJS Ketenagakerjaan). Since 2014, Indonesian workers (numbering about 100 million) are required to pay five percent of their salary to the pension program.
“This new program implies that Indonesia can expect to see a huge flow of funds in the years ahead and which – potentially – can cause a bubble in prices of Indonesian assets,” said Michael Tjoajadi, President Director of Schroder Investment Management Indonesia (subsidiary of the British independent international asset management and private banking group). Currently, the government’s pension fund BPJS Ketenagakerjaan controls about IDR 187 trillion (USD $15 billion) in assets.
There are presently 508 Indonesian companies listed on the Indonesia Stock Exchange (IDX), with a total market capitalization of IDR 5.171 trillion (USD $414 billion), or, roughly equal to half of the country’s gross domestic product (GDP). As such, Indonesia lags behind its regional peers Malaysia (906 listed companies with a combined market capitalization that is equal to 88 percent of Malaysia’s GDP) and Singapore (775 listed companies, equal to 150 percent of Singapore’s GDP).
The post Mutual Fund Managers in Indonesia to Include Foreign Assets Soon appeared first on Asean Investment | Marc Djandji Blog.
Indonesia continues to post significant economic growth. The country’s gross national income per capita has steadily risen from $2,200 in the year 2000 to $3,563 in 2012.
In terms of macroeconomic stability, Indonesia has managed to fulfill many of its fiscal targets, including a significant drop in Debt-to-GDP ratio from 61 percent in 2003 to 26 percent in 2013.
Subdued revenue growth and rising energy subsidy costs have increased fiscal pressures, prompting a substantial revision to the 2014 Budget, under which the fiscal deficit is increased to 2.4 percent of GDP, up from 1.7 percent. The fiscal position remains vulnerable to any further rise in oil prices or weakening in the Rupiah, and the need to improve further the quality of spending and enhance revenue mobilization is becoming critical if Indonesia is to achieve its development priorities.
The Indonesia-Singapore Bilateral Investment Treaty Comes into Effect
Through the upgraded DTAA, the tax rate on branch profits was reduced from 15 to 10 percent, and the tax rate on royalties for copyrighted works of literature, arts, and film, and eight percent for the use of industrial, scientific, or commercial equipment was lowered from 15 to 10 percent.
Will South-east Asia’s tech giants turn to SPACs to boost post-pandemic growth?
– SPACs have become a hot-button topic in global finance
– The vehicle is widely used to help tech start-ups go public
– Both Singapore’s and Indonesia’s exchanges are set to allow SPACs
– Several South-east Asian tech unicorns may use SPACs to list publicly
South-east Asia is seeing a wave of interest in special purpose acquisition companies, or SPACs, with various major tech players considering them as a means to fast-track public listings. In parallel to this, several exchanges in the region are moving to allow SPAC listings, with a view to boosting post-coronavirus growth.
SPACs are shell companies set up by investors and then listed on a given stock exchange. Their sole function is to acquire a private company, enabling it to go public without having to go through a traditional initial public offering (IPO).
A SPAC does nothing beyond its essential function – it neither produces nor sells anything, and a SPAC’s only assets are the funds raised from its own IPO.
Crucially, people who buy into a SPAC do not know what its eventual acquisition target or targets will be. This is why SPACs are often referred to as “blank cheque companies”: they give the founders a free rein to back their choice of private company. A key feature of SPACs is that they are often headed by big-name business executives or fund managers, who trade on past successes to inspire trust in investors.
While they are far from a novel phenomenon, SPACs have become a hot button topic in recent times: SPAC initial offerings quadrupled last year, with the vehicles raising a record $80bn.
Merging with a SPAC enables a company to go public and raise capital more quickly and painlessly than with a traditional IPO, circumventing some of the volatility that Covid-19 unleashed on global markets. At the same time, they function rather like venture capital, helping investors to buy into high-growth start-ups on the ground floor.
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