Saratoga's Uno sees long-term benefits for Indonesian PE - AVCJ Forum

Addressing the AVCJ Indonesia Forum in Jakarta, Uno identified tight monetary policy, a weaker currency and low commodity pressures as the major drag factors. However, he noted that economic growth forecasts for 2015 have been revised upwards from 5.5% to 5.8%, while the fuel price declines are dampening inflation, which should lead to a loosening in monetary policy later in the year.

Uno was also complimentary of certain initiatives that have been rolled out following the election of President Joko "Jokowi" Widodo last year, although he noted that fortune has been on the administration's side.

"Jokowi has been very lucky. Oil prices are low, he is loved by the people... he really is a rock star," Uno said. "Everyone asked him during the election campaign how he was going to reform fuel subsidies and he said he would do it in three years, one third each year. But in the first three months he has completely reformed the system. Maybe it is better to be lucky than smart."

Fuel subsidies have long been a problem in Indonesia, which is a net importer of oil. For example, in 2013 a depreciating rupiah pushed up fuel costs but subsidies meant the burden was not passed on to consumers through increased prices, so demand remained high. Low global oil prices have made it easier for the Jokowi to address the issue.

In addition to praising the move to consolidate regulatory agencies into a single permit board, Uno was bullish about plans to focus national spending on improving domestic infrastructure. This is an area in which Saratoga Capital expects to be particularly active, with construction, power plants and telecom all drawing interest.

"Saratoga is likely to focus on infrastructure because consumer deals are very difficult and expensive," Uno said. "Is private equity suitable for long-term infrastructure projects? We have put money into a toll road by structuring it as a mezzanine piece with an equity-type return."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Southeast Asia
• Regulation
• Investments
• Infrastructure
• Saratoga Capital Group
• Indonesia
• Southeast Asia
• regulation
• Infrastructure
• Sandiaga S. Uno