05/02/2025

BIZ & FINANCE WEDNESDAY | FEB 5, 2025

18

Indonesia to set up state investment agency

JAKARTA: Indonesia is setting up a state investment agency that will manage government holdings in some of the country’s biggest firms, after Parliament yesterday approved the vehicle which is intended to operate like Singapore’s investment arm Temasek. The creation of the Daya Anagata Nusantara Investment Management Agency, or Danantara, was announced soon after President Prabowo Subianto took office in October, with the aim of improving the performance and returns from state investments. Danantara’s initial capital will be at least 1,000 trillion rupiah (RM271 billion), and Parliament deputy speaker Sufmi Dasco Ahmad told reporters it will take over all government holdings in state companies from the State-Owned Enterprises (SOE) Ministry. State companies, which in 2023 had a combined assets worth 11,684.3 trillion rupiah, play a dominant role in Southeast Asia’s biggest economy. They paid 82.1 trillion rupiah in dividends to the finance ministry in 2023, official data showed.

o Venture could boost SOEs, but susceptible to political influence: CreditSights

Danantara’s office did not respond to requests for comments. Toto Pranoto, a University of Indonesia lecturer who was a consultant for the Bill, told Reuters that Danantara will set up two entities – a “superholding” that manages state companies and an investment firm that manages dividends and leverages assets. In a January note, CreditSights, Fitch Group’s debt research firm, said if Danantara could efficiently and effectively consolidate SOEs, it would bring about better funding access and operational improvements as well as better access to global markets. But it also warned the agency

could be susceptible to political interference. “We see some risks upon the establishment of Danantara, including potential political influence on the utilisation of the fund, the integration process, and influence of Danantara on the strategic direction of the SOE, could affect investor confidence in the portfolio companies,” it said, adding that Danantara was still seen as a modest credit positive event for the concerned SOEs. Deputy speaker Dasco said the government’s focus on creating a strong legal framework for Danantara should ease any investor worries. – Reuters

Indonesia and cement maker Semen Indonesia. The idea behind Danantara is to replicate the success of Singapore’s Temasek, which had a portfolio value of US$284 billion in investments globally as of last March and a 14% total shareholder return since its inception in 1974, according to its website. Lawmakers and government officials did not provide details for Danantara’s plans going forward.

“Danantara is officially set up and formed in order to consolidate the management of state-owned companies and optimise the management of dividends and investments,” SOE Minister Erick Thohir told Parliament. The state companies include leading lenders Bank Mandiri , Bank Rakyat Indonesia, and Bank Negara Indonesia, electricity utility PLN, miner MIND ID, energy firm Pertamina, telco company Telkom

Manila declares ‘food security emergency’ MANILA: The Philippines, among the world’s largest rice importers, declared a food security emergency to bring down the cost of rice, which it said has stayed elevated despite lower global prices and a reduction in rice tariffs last year. The declaration, which was widely expected, will allow the government to release buffer stocks to help bring down retail prices of the national staple, Agriculture Secretary Francis Tiu Laurel said in a statement, adding it would remain in effect until the price situation improves. Despite efforts to liberalise rice imports and reduce tariffs, the agriculture department said, the domestic market has been slow to respond, with retail prices surpassing expectations. Half of the 300,000 metric tons buffer stock the National Food Authority currently holds could be released over the next six months to ensure supply for emergencies and disaster response, it added. The annual rate of increase in rice prices in the Philippines hit a 15-year high of 24.4% in March last year, but has since moderated to 0.8% in December, helping keep overall inflation for 2024 within the government’s 2% to 4% target. Last year, the Philippines lowered tariffs on rice and extended existing tariff cuts on some other commodities to combat inflation and ensure ample supply. – Reuters Turkish inflation slows to 42.1% in January ANKARA: Annual inflation slowed in Turkiye in January for the eighth consecutive month, official figures showed on Monday. Consumer prices rose by 42.1% year-on-year, compared with 44.3% a month earlier, figures from Turkiye’s TUIK statistics institute said. Turkiye has experienced double-digit inflation since 2019, making life increasingly more expensive for millions of people, notably hitting the cost of education, housing, healthcare and restaurants and hotels. The annual rate peaked at 75% in May before starting to ease from June. On January 23, Turkiye’s central bank lowered its key interest rate to 45% from 50% in December, saying its efforts to tame sky-high inflation were starting to pay off. The official figures are disputed by the ENAG group of independent economists, which gave a January year-on-year estimate of 81%. – AFP

Chung and Altman posing for photographs during a press conference to announce the partnership in Seoul. – REUTERSPIC

OpenAI inks deal with Kakao after DeepSeek upset SEOUL: OpenAI CEO Sam Altman inked a deal with tech giant Kakao in South Korea yesterday as the US firm seeks new alliances after Chinese rival DeepSeek shook the global AI industry. Kakao’s millions of users and work together to integrate our technology into services that transform how Kakao’s users communicate and connect,” said Altman. “Kakao has a deep understanding of how technology can enrich everyday lives.” that the company was “monitoring industry trends considering various scenarios” when asked about DeepSeek. DeepSeek’s performance has sparked a wave of accusations that it has reverse-engineered the capabilities of leading US technology, such as the AI powering ChatGPT.

Kakao, which owns an online bank, South Korea’s largest taxi-hailing app and KakaoTalk, announced a partnership allowing them to use ChatGPT for its new artificial intelligence services, joining a global alliance led by OpenAI amid intensifying competition in the sector. Altman’s company is part of the Stargate drive announced by US President Donald Trump to invest up to US$500 billion in AI infrastructure in the United States. But AI newcomer DeepSeek has sent Silicon Valley into a frenzy, with some calling its high performance and supposed low cost a wake-up call for US developers. “We’re excited to bring advanced AI to

Kakao’s CEO Shina Chung said the company was “thrilled” to establish a “strategic collaboration” with OpenAI. Also on Altman’s agenda were meetings with two top South Korean chipmakers, Samsung and SK hynix, both key suppliers of advanced semiconductors used in AI servers. Altman met with SK Group chairman Chey Tae-won and SK hynix CEO Kwak Noh-jung in Seoul to discuss collaboration on AI memory chips, including high bandwidth memory (HBM), and AI services. Jaejune Kim, executive vice-president of Samsung’s memory business, said last week

OpenAI warned last week that Chinese companies are actively attempting to replicate its advanced AI models, prompting closer cooperation with US authorities. OpenAI says rivals are using a process known as distillation in which developers creating smaller models learn from larger ones by copying their behaviour and decision-making patterns – similar to a student learning from a teacher. The firm is itself facing multiple accusations of intellectual property violations, primarily related to the use of copyrighted materials in training its generative AI models. – AFP