S&P upgrades Indonesia credit after Widodo election win

Official results last week confirmed Joko Widodo, center, won 55.5 percent of the vote in the April 17 election. (AFP)
Updated 31 May 2019

S&P upgrades Indonesia credit after Widodo election win

  • The upgrade reflects Indonesia’s strong economic growth prospects
  • The long-term rating was increased to BBB from BBB minus

JAKARTA, Indonesia: Ratings agency Standard & Poor’s said Friday it has upgraded Indonesia’s sovereign credit rating following the election of Joko Widodo to a second term as president.
The organization said the upgrade reflects Indonesia’s strong economic growth prospects, which “we expect to remain following the reelection of Joko Widodo recently.”
The long-term rating was increased to BBB from BBB minus and potentially makes it easier for the government to borrow abroad and at lower interest rates.
Official results last week confirmed Widodo won 55.5 percent of the vote in the April 17 election. His opponent Prabowo Subianto has alleged massive fraud but not provided any credible evidence. The Subianto campaign has submitted a Constitutional Court challenge to the election result.
“Although this dispute and isolated pockets of unrest associated with it add some uncertainty to Indonesia’s political settings over the near term, we do not expect it to have a material impact on the long-term policy environment or economic outlook,” S&P said.
Seven people were killed in what police said was orchestrated rioting in the capital Jakarta last week following announcement of the official results.
The ratings agency said Indonesia’s per capital economic growth has averaged 4.1 percent over the past decade compared with an average of 2.2 percent for countries at a similar income level.
Analysts forecast the country, the world’s fourth most populous, to be among the biggest economies by 2030.


Saudi defense contractor to invest up to $16 million to further localize services

Updated 18 November 2019

Saudi defense contractor to invest up to $16 million to further localize services

DUBAI: Saudi-based defense contractor Middle East Propulsion Company (MEPC) plans to invest between $13 million and $16 million over the next two years to build test cells for aircraft engines and establish new production lines.
These expansion activities should complement the company’s objective to localize high-tech repairs and combine them in one roof for the Saudi defense ministry, which is a major customer, CEO Abdullah Al-Omari told Arab News.
Instead of sending aircraft engines and engines modules overseas for further servicing, thus take up more time before military assets return to actual service, localization not only cuts the turn-around period but also reduces Saudi government spending for the repairs.
“We have accomplished more than 1,600 engine and engine modules [since 2001, they] have been maintained totally in Saudi Arabia,” Al-Omari said at the sidelines of the Dubai Airshow. “The engines consume 45 percent of what you spend on aircraft.”
The company works on 150 to 160 engines and engine modules every year.
MEPC is the first specialized MRO (maintenance, repair and overhaul) company operating in the Middle East, according to its website. It has invested over $26 million during the previous two years for the localization of its MRO services.
“We used to send these parts to outside, it takes 6 months to 24 months sometimes … in case of the Apache engines, minimum turn around is 24 months,” Al-Omari said, but their localization efforts have greatly improved their capability by cutting the turn-around period to only 150 days.
The speed at which MEPC is able to repair engines and modules, boosts the readiness of Saudi military, Al-Omari added.
The company is in talks with major defense contractors, including Honeywell for the Abrams talks and GE T700 engines, for possible tie-ups to further improve their capability, he said.
“Currently there is a potential with the Kuwait army to provide them with similar services [being delivered to the Saudi defense ministry],” Al-Omari said, and expects that cooperation would start “within the next two years or so.”