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    Indonesia Power Risk/Reward Index

    May 6, 2022 - Fitch Solutions Sector Intelligence


      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      Indonesia Power Risk/Reward Index

      • 06 May 2022
      • Indonesia
      • Power

      Key View: Indonesia's Power Risk/Reward Index scores have fallen slightly for a second consecutive quarter, although it still outperforms the regional and global averages. Indonesia continues to see attractive Rewards, supported by strong macroeconomic fundamentals driving power demand and opportunities for growth in the power market. Its Risk profile also remains moderate and is expected to improve further over the coming quarters as the market continues to improve its operating and investor environment for the sector.

      Risk/Reward Snapshot
      Indonesia & Asia Region - Power Risk/Reward Snapshot

      Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions

      Global And Regional Ranks

      • Regional rank (out of 21): 7th
      • Global rank (out of 117): 17th

      Key Features And Latest Updates

      • Indonesia's Industry Rewards score outperforms the regional and global averages. This is underpinned by our expectations for robust growth in Indonesia's power sector over the coming decade, due to strong underlying demand, government commitment to develop the sector, and relatively strong investor interest across most fuel types.
      • Indonesia's Country Rewards are also attractive, as strong macroeconomic and demographic fundamentals, and a strong recovery in its manufacturing sector will support rising power demand over the coming years.
      • Indonesia's Industry Risks score has fallen notably this quarter, largely from its T&D losses indicator, as distribution losses remain relatively high in the market. That said, we expect this to improve over the coming quarters, amid strong support from the government and PLN, with robust investments to support the expansion and modernisation of the network, including interconnections across Indonesia's Islands and with Malaysia and Singapore.
      • We retain Indonesia’s score of 64.2 out of 100 in our Short-Term Political Risk Index, given that we expect the economy to experience a post-pandemic recovery in 2022. Policy continuity appears likely for now, given that President Joko Widodo enjoys still high approval ratings, and the next general elections are not scheduled until February 2024. Factors that could undermine this stability include a sudden rise in inflation amid a significant pick-up in global oil prices.
      RRI Matrix Breakdown
      Indonesia & Asia Region - Power Risk/Reward Index By Component

      Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions

      This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.


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