What slump? Indonesia’s businesses prosper as economy picks up

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Hello there,

As most of our readers know, Tech in Asia’s Bali offsite drew to a close last week. Battling post-vacay blues, I’m already fondly recalling sipping piña coladas and knocking back a few bintangs (and the occasional orange juice) with my colleagues by the picturesque beaches of the tourism-reliant island.

Talk of economic slowdowns has sent central banks around the world scrambling for solutions. However, none of that was evident on the bustling streets of Bali, where business appeared to be booming as travel-hungry tourists looked to let off some steam.

It should come as no surprise then that Indonesia is one of the few economies that are actually growing (about 5.44% on an annual basis in the second quarter, to be exact). Encouragingly, the archipelago’s central bank is also holding off on hiking interest rates so as to not curb demand and spending.

The benefits of Indonesia’s macroeconomic well-being now seems to be propping up the balance sheets of some of its big-name businesses.

Image credit: Timmy Loen

Bukalapak (BUKA, IDX), for instance, more than doubled its second-quarter revenue courtesy a strong performance from its SME-serving Mitra Bukalapak business. The online-to-offline arm contributed 55% of Bukalapak’s Q2 topline and registered 14.2 million users as of June.

Check out: Bukalapak’s financial performance in 7 charts

However, the Indonesian tech giant continues to lose money, as it posted an adjusted EBITDA loss of US$24.2 million in Q2. Meanwhile Bank Neo Commerce (BBYB, IDX) hit the profitability milestone for the first time, albeit only for a month.

A 3x jump in Q2 interest income and almost double the amount of loan disbursement compared to the same period last year helped the Akulaku-backed digibank clock US$400,000 in operating profit for June.

This was hardly straightforward and, in fact, it was in that month my colleague, Aditya, provided a holistic view of the task at hand by detailing how the firm has turned to consumer loans to reverse its fortunes in this premium story.

Matters aren’t so rosy for the world’s second-largest economy. Despite displaying signs of recovery, China has found itself fending off persistent Covid-19 outbreaks, imposing lockdowns, and tackling a property slump that shows no sign of easing.

While it is worth noting that China is a considerably larger and more mature market than its Southeast Asian peers, the tough environment is taking a toll on its biggest businesses as well.