INDONESIA Trends and Developments Contributed by: Alvin Suryohadiprojo, KARNA
KARNA Deutsche Bank Building 17th Floor #1703
Jl. Imam Bonjol No. 80, Menteng, Jakarta Pusat DKI Jakarta 10310 Indonesia Tel: +62 212 396 058 Email: info@karnapartnership.com Web: karnapartnership.com
The 2024 political year in Indonesia, when the presidential and legislative elections were held, has had a nuanced impact on the M&A land - scape. Historically, election periods in Indonesia have been associated with a degree of inves - tor caution, resulting in a temporary slowdown in investment activities, including M&A trans - actions. Investors tend to have “wait and see” approach due to uncertainties surrounding potential policy changes and their impact on the business environment. It was indicated in past elections that investment growth experienced modest fluctuations as investors awaited clearer political outcomes. Nevertheless, Indonesia remains an attractive destination for investors. Strong economic fun - damentals and ongoing reforms aimed at improv - ing the ease of doing business are key factors in maintaining a conducive investment climate. This confidence is reflected in Indonesia’s consistent economic growth at 5.03% in 2024 (mirroring the growth rate in 2023), which also stands as part of its efforts to attract foreign direct investment. The technology and telecommunications sector is one of the key industries driving the growth of M&A activities. The strengthening of tech - nology, particularly in relation to the digital
economy, and the expansion of existing market share are among the main reasons. In 2023, the state-owned telecommunications service pro - vider PT Telkom Indonesia (Persero) Tbk (IDX: TLKM) reorganised its business by merging its internet service provider subsidiary, Indihome, with another subsidiary, Telkomsel, the largest mobile network service provider in Indonesia. Most recently, PT Smartfren Telecom Tbk (IDX: FREN) has been in the process of merging with PT XL Axiata Tbk (IDX: EXCL), where EXCL will be the surviving entity. FREN’s controlling share - holder is Sinar Mas, one of the largest conglom - erate groups in Indonesia. Sinar Mas’s owner, Franky Widjaja, told the media that one of the main benefits of the merger will be the reduction of redundant services, which will lower expenses and improve service quality. The merger process is expected to be completed in the first half of 2025, and after the merger, both Sinar Mas and Axiata Group will jointly control EXCL. Indonesia’s position as a leading nickel produc - er has also spurred significant M&A activities in the energy and mining sectors. Indonesia holds the world’s largest nickel reserves, estimated at approximately 55 million metric tons, accounting for about 42% of global reserves. Data showed that nickel production from Indonesia amounted
873 CHAMBERS.COM
Powered by FlippingBook