Asia Essentials - 11 Jun 2026

Research evidence excerpt

Asia Essentials - 11 Jun 2026

Flashnote

10 June 2026

Equity Strategy

Indonesia Strategy ASEAN

Credibility signals improve, but execution is key

Ari Marissa

Jahja Putri

What's new

Pertamax fuel price increase

• Addressing concerns on the fiscal approach. The Ministry of Finance currently affects ~12% of national

reiterated its goal to uphold a 3% of GDP deficit cap. The government volume

therefore plans to pursue more efficient spending and increase revenues

from the natural resources sector. Developments in the free meals

programme (MBG) reinforce that execution quality is central to sustaining

investor confidence, with policymakers implicitly acknowledging gaps

in governance and efficiency. At the same time, the c.32% increase in

unsubsidised Pertamax fuel prices introduces near-term inflationary

pressure but strengthens policy credibility, signalling a willingness to

gradually normalise subsidies.

• Net-net, as growth and inflation risks build, credible policy execution

remains the key catalyst to restore investor confidence amid persistent

foreign equity outflows.

Source: Pertamina Patra Niaga, Macquarie Research,

June 2026

Why it matters

Indonesia's CPI topped ~6% in Sept

• Fiscal execution and MBG: Chatib Basri, a senior economist and member 2022 (highest since 2015) following increase in subsidised fuel prices

of the National Economic Council (DEN), emphasised that maintaining

investor confidence hinges on disciplined fiscal execution, noting that large 7.0

social programmes must be supported by strong budget mgmt to avoid 6.0

undermining market trust. Investors are focused on the quality of gov't 5.0

spending amid tighter fiscal scrutiny and external uncertainty. 4.03.0

2.0• Unsubsidised fuel price hike: Currently, price of subsidised fuel (c88% of