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The Star
13-05-2025
- Politics
- The Star
‘Be firm on thugs': Indonesia to tackle protection rackets as investments threatened
JAKARTA: A grainy photo shows a 3m-wide banner hanging at the entrance of a rubber processing factory in Central Kalimantan province in Indonesia. The banner reads: 'This plant's operations have been shut down by Grib Jaya Kalteng.' Grib, short for Gerakan Rakyat Indonesia Bersatu, is one of the country's many organisasi kemasyarakatan (ormas) or community groups said to be engaging in extortion and protection rackets, at the expense of business. On April 26, a video surfaced on social media showing its members putting up the banner. After the video went viral, police investigated and found that Grib's intimidation tactics were aimed at collecting a supposed debt from the factory, on behalf of the group's client. This practice of ormas members forcing companies to pay up by threatening harassment, disruption and even violence has been prevalent for decades. But politicians are now vowing to crack down on it, not least because it impedes commerce and the ambitious 8 per cent annual growth target set by Indonesian President Prabowo Subianto. West Java Governor Dedi Mulyadi recently pledged to stamp out thugs masquerading as community groups in his province, which houses the highest number of industrial estates in the country. This came after the police arrested Grib members who had set fire to three police cars on April 18 in Cimanggis. The governor's promise itself was met with threats. 'Don't mess with us... We never mess with you. It is a warning to you to not create chaos,' Grib spokesman Razman Nasution told reporters, referring to Dedi. Meanwhile, Grib chairman Rosario de Marshall, also known as Hercules, said he could mobilise 50,000 members to storm the governor's office in Bandung. The group's membership across Indonesia is believed to number in the hundreds of thousands. Neither Razman nor Rosario responded to The Straits Times' queries. Other incidents revealed via social media have highlighted how thuggery by errant community groups is hampering investment and raising the cost of doing business in Indonesia. In an Instagram post on April 21, Eddy Soeparno, a member of the parliamentary committee on energy, environment and investment, disclosed that Chinese electric vehicle giant BYD came across thugs who tried to disrupt construction of its 11.7 trillion rupiah (S$920 million) plant in Subang, West Java. He did not reveal when the incident took place nor which ormas was involved. 'Regional governments have to be firm against thuggery. Don't let foreign investors here be without a guarantee of security,' said Eddy. Local business leaders say these incidents have been on the rise, partly due to increasing unemployment in the country. Ahead of Muslim Aidil Fitri celebrations at the end of March, groups of people calling themselves ormas visited factories in their respective districts seeking a 'Hari Raya bonus' payment, said Abdul Sobur, chairman of Indonesia's furniture and handicraft producers' association. 'This disturbs businesses although it seems like a small thing,' said Abdul. Association members have reported more such cases recently, with ormas personnel getting paid as much as 500,000 rupiah each. Former chairman of Indonesia's employers' association Hariyadi Sukamdani put this higher incidence down to the rising number of jobless people, who are drawn to joining these groups to earn some money. 'It's mutually beneficial. The larger the groups, the greater their influence. And the greater their chances at extracting payment,' he told ST. As at end-February, Indonesia's unemployment rate stood at 7.28 per cent. Dr Esther Sri Astuti, executive director of the Jakarta-based Institute for Development of Economics and Finance, said the government's budget cuts have led to reduced social spending, including on allocations to community groups for vocational training and other activities. 'Last time, the government had kept them busy and useful, hence they didn't cause trouble. Now, the government has cut spending,' Dr Esther told ST. Data from the domestic affairs ministry as at March 2024 shows there were 553,692 community groups nationwide, with their stated activities covering diverse issues like smoking prevention, child protection, tourism and the environment. Tenggara Strategics, a Jakarta-based investment research and advisory institute, noted in its analysis that some of these community groups have close links with political parties or leaders, who rely on their support during election season. 'While some of the groups have proven to violate the law, it looks difficult for the law enforcers to act against them, simply because of their connection to, and hence support from, political elites, if not the military or the police top brass,' said the institute in its report published in The Jakarta Post on May 9. On April 30, Investment Minister Rosan Roeslani said the government is stepping up coordination with provincial governors, mayors and regents to ensure protection rackets and similar practices are both prevented and eradicated. Details of the plan, however, have not been disclosed. - The Straits Times/ANN
BusinessToday
28-04-2025
- Automotive
- BusinessToday
Hazy Road Ahead For Auto Sector
RHB Investment Bank Bhd (RHB Research) has maintained its NEUTRAL outlook on the Malaysian automotive sector, despite a subdued performance in the first quarter of 2025 (1Q25). The research house reaffirmed its 2025 total industry volume (TIV) forecast of 730,000 units, citing a lack of catalysts to push sales to new highs. The TIV for March stood at 72,704 units, a 2% increase year-on-year (YoY) and an 11% rise month-on-month (MoM), primarily driven by stronger pre-Aidil Fitri deliveries from major marques such as Proton, Honda, and Toyota. However, 1Q25 recorded a 7.4% YoY decline in TIV, in line with RHB's muted expectations for the sector. Despite the stronger March performance, the 1Q25 TIV came in 7.4% lower YoY, with total industry volume for the quarter reaching 188,100 units, which was also a 15.5% drop from the previous quarter. The decline was anticipated following a record-breaking TIV in 2024, and RHB Research noted that 1Q25 was a quiet quarter, driven by disappointing sales in January and February. The research house expects the second quarter to face further challenges with a seasonal dip in sales due to the Aidil Fitri festivities, as well as factory maintenance shutdowns at major automotive plants. Production volume also experienced a dip, falling 5.7% MoM in March and 13% YoY, largely due to the Ramadan fasting month, which typically slows manufacturing activity. The biggest declines in production came from Perodua, Toyota, and Honda, with Proton being the only marque to see a slight increase in output. RHB Research projects a continued decline in production for 2Q25, driven by scheduled factory shutdowns and the tapering off of backlogs from major marques. Electric vehicles (EVs) have seen some traction in 1Q25, with EVs making up 2.9% of total TIV, up from 1.8% in 2024. Data from the Road Transport Department (JPJ) showed a 46% YoY increase in EV car registrations, bringing the total to 6,827 units, or 3.4% of total car registrations in 1Q25, compared to 2.5% in 2024. However, despite the rise in EV registrations, RHB highlighted two major obstacles to wider EV adoption: high prices, driven by the MYR100,000 price floor on completely built-up (CBU) EVs, and a lack of charging infrastructure. RHB Research remains cautious, as the local EV market share is unlikely to have a meaningful impact on overall TIV in the short term. Sime Darby remains the research house's top pick within the sector, owing to its strategic positioning to weather challenges such as the anticipated removal of the RON95 subsidy, as well as its exposure to Malaysia's most popular car brand, Perodua. Related
BusinessToday
25-04-2025
- Business
- BusinessToday
AEON Co., Weathering From Uncertainties
Solar Photovoltaic (PV) Panels installed in the open air parking lots of one of the Aeon Malls. (Photo credit - Aeon Malaysia) RHB Research has maintained a 'BUY' rating on AEON Co M with a target price of RM1.75, citing the company's strong growth prospects in its property management segment and resilient retail performance. The research firm remains positive on AEON, supported by ongoing expansions and above-industry rental reversions driven by asset enhancement efforts. AEON's retail segment is expected to deliver steady performance, underpinned by resilient consumer spending and margin expansion from cost-control initiatives. RHB Research believes that AEON's current valuation, which is -1SD below the mean, presents an attractive entry point for investors seeking domestic-centric exposure amidst heightened global market volatility. RHB Research expects AEON to report a net profit of RM60-65 million for 1Q25, driven by stronger sales from the earlier timing of Aidil Fitri and margin expansion from cost initiatives. The research firm believes that the declining global interest rate environment remains supportive of AEON's inorganic growth strategy. Backed by a deleveraged balance sheet, AEON is well-positioned to execute its planned expansions, including new malls at KL Mid Town (FY25) and Bandar Dato Onn (FY27). Related
The Star
22-04-2025
- Business
- The Star
Trade surplus rises as exports to US spike
JAKARTA: Indonesia has booked a large trade surplus for March thanks to surging exports to the United States before import tariffs introduced by US President Donald Trump took effect. Data unveiled by Statistics Indonesia (BPS) in a press conference on Monday showed that last month's trade balance, or total exports minus imports, amounted to a US$4.33bil surplus, higher than the US$3.1bil surplus recorded in the preceding month. March marked Indonesia's '59th consecutive month' of trade surplus in a rally that began in May 2020, BPS head Amalia Adininggar Widyasanti explained, adding that bilateral trade with the United States contributed most to positive net exports last month. At US$1.98bil, Indonesia's non-oil and gas trade surplus with the United States in March was the highest logged in bilateral trade with the world's largest economy since the US$2bil surplus in March 2022. Shipments of electrical machinery and equipment alongside footwear and crude palm oil (CPO) were the commodities that contributed the most to the surplus with the United States, Amalia said. The BPS head disclosed that the United States, the world's largest consumer market, was Indonesia's largest export destination for numerous goods. For instance, it absorbed 63% of certain apparel and accessories throughout this year's first three months, while Japan, the next largest market, only bought 5.41% of the same goods. Similarly, 34% of Indonesian footwear exports went to the United States, while the next largest market was responsible for less than 10%. On the opposite end, China once again accounted for Indonesia's largest bilateral trade deficit last month, as imports exceeded exports by US$1.1bil. That was relatively low when compared with deficits of US$1.77bil and US$1.75bil in January and February, respectively, with the world's second-largest economy. March's US$4.33bil national trade surplus exceeded most economists' forecasts and its extent was out of character, as domestic demand normally increases during the Ramadan and Aidil Fitri holidays, driving up imports. Imports did grow 5.34% year-on-year (y-o-y) in March, exceeding export growth of 3.16% y-o-y. However, the import growth was slower than the 6.6% forecast made by Fithra Faisal Hastiadi, an economist with SSI Research. 'The lower-than-expected import growth during Ramadan reflects sluggish domestic demand, indicating that pressure on household spending remains evident,' Fithra wrote in a report on Monday. He went on to say that exports proved relatively resilient in March amid ongoing global economic uncertainty, including escalating trade tensions and weakening demand in many countries. Bank Danamon economist Hosianna Evalita Situmorang wrote in a report on Monday that exporters had 'accelerated shipments ahead of Trump's' tariffs set for April. She pointed out that freight bookings at China' ports had plunged by 640,000 to 800,000 containers, reflecting 'early spillover from trade tensions that gained momentum in March and blew up in April'. Hosianna wrote that Indonesia's outlook remains resilient but needs to be watched carefully as Jakarta is planning to increase imports from the United States by US$1.5bil to US$2bil per month to placate Washington in tariff negotiations. However, 'risks persist from higher US tariffs' on palm oil, as well as from coal prices sliding because of weakening global demand prompted by the trade war, the economist said. She said Bank Indonesia's accommodative stance and efforts to diversify export markets with a greater focus on Asean, India and Europe 'should buffer external pressure'. Bank Permata chief economist Josua Pardede told The Jakarta Post on Monday that the 'preliminary assumption' might be to attribute Indonesia's rising exports last month to exporters trying to ship out more goods before US tariffs kick in. 'However, that is yet to be verified, since there was a seasonal factor at play as well, with the post-Chinese New Year period falling in March,' Josua said. He pointed out that March's exports had been bolstered largely by iron and steel, a key export category for Indonesia, where shipments rose in both volumes and prices, presumably driven by Chinese industries stocking up on raw materials. Exports of iron and steel grew almost 20% in March and were up 12% y-o-y. CPO shipments also grew by 41% y-o-y, but coal exports plunged 23.14% y-o-y. Indonesia's trade surplus for the first quarter was US$10.9bil, far higher than the US$7.41bil in last year's first quarter. — The Jakarta Post/ANN
