BANDUNG – President Director of PT Bank Central Asia Tbk (BBCA), Jahja Setiaatmadja, thinks that Donald John Trump’s victory in the United States’ presidential election will slightly alter the dynamics of ongoing war-war, lose-lose situation between Ukraine and Russia.

Setiaadjamadja believes that Joe Biden Jr., former US President, was too emotional and thus trapping his allies, European countries.

As of now, Setiaadmadja said that Europe is the country that suffer the most. On the other hand, the US must focus on its own economic situation. If Ukraine war continues, he wonders how the US may attain gross domestic product growth target of 2.2% in 2025.

“It’s impossible, unless he (Trump) could compromise (to deescalate Ukraine war),” added Setiaadmadja during the “Economic Outlook Indonesia, Prospek Ekonomi Makro Pasar Modal dan Perbankan Indonesia” discussion at Top CEO Indonesia Awards2024 held by Tempo and IDNFinancials on Friday (15/11).

As of now, Setiaadmadja pointed out an anomaly in the US, in which the Fed has cut down interest rate by 75 basis points (bps), yet long-term Treasury Bills’ (T-Bills) yield increases 70 bps instead.

“This is the angle that I am observing; why? Because I recognise the same phenomenon,” he said.

According to Setiaadmajda, these days, Government Securities (lit. Sertifikat Berharga Negara/SBN), Indonesian Retail Bonds (lit. Obligasi Ritel Indonesia/ORI), and other instruments in the secondary market report increase in yield instead of decline.

“This is a challenge for banking industry; if SBN’s yield is 6.5-7%, then how high the deposit interest should be? It is impossible to lower it if SBN’s yield is this attractive,” he added.

Indonesia’s business climate, according to Setiaadmadja, is generally sluggish. Since the COVID, in 2020 to 2022, the purchasing power of the people has weakened. However, he believes that at that time, the people had more relatively strong purchasing power compared to now due to several factors.

First, social assistance programs were massive during COVID. The government distributed a large sum of social assistance to the masses.

Secondly, e-commerce companies in Indonesia, in one year, can spend IDR 100 trillion of fund. “That was not a small amount of money; they burned the money which originates from foreign investment in various e-commerce companies,” Setiaadmadja mentioned.

What does burning money mean, then? Setiaadmajda further explains that delivery and service costs could be reduced, prices were lower due to never-ending discounts, thus increasing the number of orders for online ride-hailers. In general, the people could save and gain more income, allowing them to purchase goods cheaper, and so on.

“The problem is that all of those have stopped. Social assistance came to an end at the same time e-commerce’s money-burning strategy was concluded,” he said.

Setiaadmadja’s full explanation is accessible here. (MT/ZH)