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Indonesian Corporates Face Rising Macro, Regulatory Risks, Fitch Says

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Heightened macroeconomic and regulatory risks are increasing for Indonesian companies, Fitch Ratings said in a recent release.

Consumer sectors face demand risk due to rising nonsubsidized fuel prices, interest rate hikes, and a weaker rupiah, which impact discretionary spending and credit financing, Fitch said.

Import-reliant issuers that lack the capacity to transfer costs could see margin constraints given the weaker local currency, the rating agency said.

The higher benchmark rate could also raise financing costs and make more leveraged issuers less flexible, Fitch said.

Strategic sectors such as natural resources could see pressure from changing regulations, the rating agency said.

Issuers with solid pricing power, defensive demand, diversified businesses, and prudent capital structures will fare better under the challenging conditions, Fitch said.

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