AirAsia’s minority structure clouds crash impact

January 6, 2015

The Malaysian carrier owns just 49 percent of the tragedy-hit Indonesian unit. Accounting rules partly insulate the parent from profit fluctuations. But a shared brand, intercompany loans, and leasing agreements mean the woes of its minority partners aren’t neatly contained.

Cheap oil is no tonic for sluggish Asian economies

October 17, 2014

Less expensive petrol and diesel mean smaller subsidy bills and healthier budgets in India and Indonesia. For others in the region, though, falling crude prices are a worrying sign of stalling global growth. Asia has too much debt to welcome disinflation.

Asia’s reform spotlight swings to Indonesia

August 22, 2014

The election of a charismatic leader raises hopes for overdue change. Joko Widodo’s rise invites comparisons with India’s Narendra Modi and Shinzo Abe in Japan. In some ways, Indonesia’s new president faces the more daunting challenge. But the rewards for faster reform are large.

Fed adds urgency to Indonesia’s fuel reform test

August 20, 2014

President-elect Joko Widodo’s first big challenge will be to rethink the country’s $30 billion energy subsidy. Though higher fuel prices will be unpopular, the handout boosts the trade deficit. That makes Indonesia extra vulnerable to capital flight when U.S. interest rates rise.

Close presidential race may slow Indonesia reforms

July 9, 2014

Popular Jakarta Governor Joko Widodo faces a tough challenge from ex-general Prabowo Subianto in the country’s presidential poll. While the latter’s nationalistic talk makes investors edgy, a slim win for the former could also dim hopes of strong leadership and lasting change.

China’s Bakrie burns may have less sting

October 10, 2013

Like Nat Rothschild, China Investment Corp. has been scorched by Bumi Resources. A $1.3 bln debt swap has turned the sovereign fund from major creditor to minority investor in the Indonesian miner. But CIC’s state backing limits the risk of climbing into bed with the Bakrie clan.

Not all Asian countries need to fear the Fed

September 5, 2013

Plunging currencies have raised contagion concerns. But not all nations are equally vulnerable to receding tides of dollar liquidity. A Breakingviews interactive map shows that while no Asian economy is entirely immune, none is as badly exposed as India.

Currency market’s rude wakeup call stirs Indonesia

August 29, 2013

The collapsing rupiah has finally forced the country’s central bank to raise interest rates. It’s a step Jakarta should have taken much earlier. High inflation and a widening trade deficit have shown the country’s loose monetary policy for what it is: a risky growth obsession.

Fed liquidity curbs will act as Asia’s detox plan

August 22, 2013

Asia’s sliding trade surpluses were making it increasingly reliant on cheap foreign debt. Higher U.S. interest rates will cure the craving. Though markets may be turbulent, costlier local money or cheaper currencies will improve the trade balance for most countries in the region.

Indonesia imitates India’s costly growth obsession

August 16, 2013

The central bank has missed an opportunity to raise interest rates. The authorities risk a weaker currency, runaway inflation and financial instability if they chase growth while a stubborn current account deficit lingers. Jakarta is at risk of emulating New Delhi’s folly.