Investing in Indonesia – Things to Know May 2, 2019

Investing in Indonesia – Things to Know

2019 is slated to be a busy year, with a number of countries having held or scheduled to hold their elections. These countries include Thailand, Japan, Canada and Hong Kong. Indonesia, the country with the largest population in Southeast Asia, held its elections in April. With that as the backdrop, let us explore the investment climate of Indonesia and some notable companies.

Economic background

Indonesia’s average GDP growth has maintained at around 5 percent over the past few years. It is the second-best performing G20 economy, just behind China. This momentum of growth is expected to continue in 2019, as projected by the World Bank and International Monetary Fund (IMF), with an estimated growth rate of around 5.1%.1 Since the last quarter of 2015, the Indonesia Manufacturing Purchasing Managers’ Index (PMI) has been rising, surpassing the 50 mark on several occasions as seen below; indicating an expansion in the manufacturing sector.2

Image 1: Indonesia Manufacturing PMI

Investing in Indonesia – Things to Know(Source: Trading Economics)

Aside from the PMI figures and the growth rate, Indonesia’s Gross National Income (GNI) has also improved by approximately 6 times since 1990, from USD 560 in 1997 to USD 3,540 in 2017 as seen below.3

Image 2: GNI Per capita (Current US$)

Investing in Indonesia – Things to Know(Source: World Bank Group)

Government Initiatives

The Indonesia government has been focusing on driving the manufacturing, infrastructure and services sectors to help spur the nation towards being a vibrant and competitive economy. During the 2008 recession, Indonesia performed relatively well, maintaining high growth during difficult times.

Beyond the macro-economic events, back at home, the investment climate seems to have taken a positive turn. In a bid to enforce and fight corruption activities, the government set up the United Nations Convention Against Corruption (UNCAC). This has in turn helped Indonesia improve their global ranking, with the effects of this move expected to continue for many years to come. Concurrently, the government has also eased up on its policy on foreign ownership of companies from 0% to 100%, depending on business classification as seen below. This will further improve the attractiveness of Indonesia as an investment destination.4

Image 3: Foreign ownership of Indonesia Companies based on Business Classification

Investing in Indonesia – Things to Know(Source: EMERHUB)

A key driver of a nation’s economy is its people. Indonesia has the world’s 4th largest population which is growing at a rate of roughly 3 million people each year. The nation is filled with a large proportion of young and fit working adults which is an excellent demographic trend to help propel Indonesia’s growth.

Indonesia is becoming an urbanised nation at a much faster pace compared to a decade ago as seen below. The younger generation of working adults are consuming more products and services than ever before. With this increase in spending, the economy is poised to grow at a faster pace.5

Image 4: Population Growth

Investing in Indonesia – Things to Know

Indonesia’s Jakarta Composite Index (JCI) Stock Market Performance

The JCI has achieved 32.65% total return over the past 4 years, from FY2014 to FY2018, outperforming other major indices as seen in Table 1. Through the many economic initiatives, Indonesia has become one of the fastest growing economies in Southeast Asia, elevating the country’s status as an investment destination.

Table 1: Major index performance from 2014 to 2018 (rebased in USD)

Security Price Change Total Return Difference
STI Index -10.86% 5.83% -26.82%
JCI Index 19.88% 32.65%
HSI Index 8.21% 30.10% -2.55%
SHSZ300 Index 14.05% 27% -5.65%
SHCOMP Index 3.99% 16.49% -16.15%
SZCOMP Index 4.41% 8.96% -23.69%

(Source: Bloomberg)

View entire list of Global Stock Market Indices performance that are tradable through POEMS

Stock Screening of Indonesia counters

After looking at the overview of the Indonesia economy and stock market performance, we have compiled a list of large market capitalisation Indonesian companies that might have the potential to ride Indonesia’s wave of growth in Table 2. We have also included Table 3 which shows top counters based on analysts’ recommendations.

Table 2: Top 10 Listed Companies by Market Capitalisation

Ticker Short Name Market Cap (IDR) Price (IDR) Best Target Price (IDR) Best Div Yield (%) Total Buy call Total Hold call Total Sell call P/E
BBCA IJ BANK CENTRAL ASIA 674.93T 27375 28099 1.28 14 19 3 26.11
BBRI IJ BANK RAKYAT INDO 510.65T 4140 4293 3.17 26 10 0 15.64
HMSP IJ HM SAMPOERNA 437.36T 3760 4313 3.25 22 8 1 32.32
TLKM IJ TELEKOMUNIKASI 389.32T 3930 4366 4.24 27 7 0 21.10
UNVR IJ UNILEVER IND 372.73T 48850 46268 2.06 4 15 11 40.92
BMRI IJ BANK MANDIRI 346.5T 7425 8540 3.33 24 10 0 13.59
ASII IJ ASTRA INTERNATIOL 294.52T 7275 8622 3.43 26 6 1 11.68
BBNI IJ BANK NEGARA INDO 175.30T 9400 9961 3.22 25 8 1 11.68
GGRM IJ GUDANG GARAM 159.31T 82800 92555 3.12 26 3 3 20.45
ICBP IJ INDOFOOD CBP 107.29T 9200 10858 2.41 16 10 4 23.45

Table 3: Top listed counters by Analyst Recommendation

Ticker Short Name Best Analyst Rating (5 highest score) Total Analyst Recommendation Market Cap Price Best Target Price P/E Total Return YTD
JPFA IJ JAPFA COMFEED INDO 5.00 20 28.14T 2400 2761 12.13 11.63
ANTM IJ ANEKA TAMBANG 4.93 14 23.19T 965 1155 26.66 26.14
WTON IJ WIJAYA KARYA BETON 4.79 14 4.9T 565 642 10.48 50.27
MAPI IJ MITRA ADIPERKASA 4.77 22 17.93T 1080 1170 30.52 34.16
EXCL IJ XL AXIATA 4.74 35 27.25T 2550 3274 28.79
PTPP IJ PP PERSERO 4.73 22 12.77T 2060 2756 8.43 14.13
WIKA IJ WIJAYA KARYA 4.70 23 16.82T 1875 2306 12.41 13.29
ERAA IJ ERAJAYA SWASEMBADA 4.69 13 6.41T 2010 3130 7.80 -8.64
PWON IJ PAKUWON JATI 4.61 23 30.34T 630 753 13.70 1.61
UNTR IJ UNITED TRACTORS 4.61 28 97.36T 26100 34679 8.74 -4.57

(Source: Bloomberg)

Here are two Indonesia companies from the above 2 tables that are worth highlighting.


Since its incorporation in 1895, BBRI has a network spanning 19 regional offices. The bank’s priority is to serve their key businesses in the micro, small and medium enterprise segments. They are poised to reinforce their leading position by developing new innovations in the industry.

BBRI is the second largest bank in Indonesia based on market capitalisation, with a low price to earnings ratio (P/E) of 15.64 as compared to their closest rival Bank Central Asia’s P/E of 26.11. BBRI generates almost 54% of their net income from micro and program business segments, one of the bank’s main pillars and also an area which the bank will continue to focus on.

In FY2018, the business performed well, recording a steady growth of 34.1% in their micro loan business, a key revenue driver, placing it well on track to achieve its long term growth plan. The main growth driver comes from the micro, consumer and small commercial businesses. Non-interest income from fee based and recovery income are also another highlight as it grew from 15.5% and 25% respectively. The bank also saw improvement in their nonperforming loan coverage ratio to above 200%, helping to bump up their net profit to 11.36% YOY with a stable ROA of 3.68% and a ROE of 20.49%.6

JAPFA Comfeed (JPFA)

PT Japfa Comfeed Indonesia Tbk is an Indonesia-based company primarily engaged in manufacturing animal feed. The company is headquartered in Singapore, with operations in 5 growing Asia markets, namely Indonesia, Vietnam, Myanmar, China and India. It is the 2nd largest poultry and day-old-chick (DoC) player in Indonesia with its business classified into the following divisions: poultry feed, DoC, commercial farming and consumer products, aquaculture, cattle and others. The below shows an overview of Japfa’s business.

Image 5: Japfa Overview

Investing in Indonesia – Things to Know(Source: JPFA Annual Report)

Indonesia’s GDP per capita is projected to grow for years to come. Based on image 6, as GDP per capita grows, protein, specifically poultry, stands to play a bigger role in consumer preference. Poultry is expected to become the “Meat-of-choice”, in turn increasing protein consumption from the country’s carbohydrate-heavy lifestyle. The potential increase in consumption of poultry, coupled with the fact that Indonesia currently has one of the lowest poultry consumption per capita in Asia, places JPFA in an excellent position to benefit from this shift in consumption.

Image 6: Poultry Consumption in Asia and Correlation between GDP per Capita and Poultry Consumption

Investing in Indonesia – Things to Know

Revenue increased 14.9%, mainly from poultry feed, of which sales volume increased approximately 6%. Breeding operations higher productivity, coupled with a lack of supply in Indonesia, created a win-win situation for JPFA as seen from the exceptionally strong profits recorded by the company in FY2018.7 Commercial farm operation and aquaculture feed similarly recorded growth in sales figures. FY2018 Profit After Tax (PAT) is at IDR 2,253billion, which is an increment of 116% from FY2017.8

Investing in Indonesia – Things to Know(Source: JPFA Annual Report)

With good economic projections, healthy demographic tailwinds and a stronghold in the industry following its exceptional performance growth in 2018, JPFA looks to have more good years to come.


With projections pointing to continued growth for Indonesia in 2019, investors can consider investing in the Indonesia Stock Market to take advantage of the growth potential, as well as to make it part of their portfolio diversification strategy.

Information is accurate as of 2 Apr 2019.



All data presented are from Phillip CFD and accurate as of end February 2019. All foreign indices are represented in their respective local currencies.

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066