Indonesia's Nickel Sector, XLSMART Merger, and Digital Economy Collaboration

In this episode, Michelle delves into key economic issues shaping Southeast Asia. She starts with an overview of top stories, focusing on Indonesia's nickel industry, exploring environmental challenges and China's investment dynamics. The discussion moves to economic pressures in Indonesia, highlighting Danantara's financial strategy to navigate these challenges. Michelle also examines the XLSMART merger, detailing its implications and future prospects. The episode further explores regional collaboration and initiatives in the digital economy, emphasizing their significance for Southeast Asia's growth. The episode concludes with closing remarks and a call to action, encouraging listeners to stay engaged with the evolving economic landscape.

Episode Transcript

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Welcome back to the Southeast Asia MarketsDaily Brief.

(00:03):
I’m your host, AI Michelle.
Here are our top stories today...
First, Indonesia’s nickel boom presents adefining opportunity in the global green
transition, says EBC Financial Group.
Second, market jitters and state fundDanantara’s gamble: Can Indonesia win back

(00:25):
investors?
Third, shareholders approve XLSMART merger,with Axiata and Sinar Mas set to advance
regional collaboration.
Our first story dives into Indonesia’sburgeoning nickel industry, which is rapidly
becoming a cornerstone of the global greentransition.
The EBC Financial Group has highlightedIndonesia's nickel boom as a pivotal

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opportunity for sustainable growth, investmentdiversification, and an integral part of the
global energy transition.
As the world moves toward electrification,Indonesia's nickel reserves are positioning the
nation as a strategic player in the future ofsustainable mobility.
Nickel is crucial for electric vehiclebatteries, and with Indonesia holding one of

(01:13):
the largest reserves globally, it's no surprisethat the country is emerging as a significant
player in the electric vehicle supply chain.
This boom is not just about economic growth; italso underscores Indonesia's potential
leadership in aligning its nickel ambitionswith environmental stewardship and long-term
national priorities.

(01:34):
The EBC Financial Group's analysis points outthat while this transformation reshapes
Indonesia’s economy, it's also influencingglobal markets and opening new channels for
traders to engage with sustainable, regionallydriven growth.
The expansion of Indonesia's nickel sectormarks a shift in national development,

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supporting the global energy transition whilealso opening new industrial frontiers at home.
Yet, this growth comes with a sharedresponsibility.
As Indonesia's nickel industry expands, so doesthe need for responsible environmental
management.
Concerns such as deforestation, water stress,and carbon intensity are part of a broader

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commitment to elevate environmental standards,ensuring that progress is equitable and
sustainable.
China has played a significant role inIndonesia's nickel story, with investments
surpassing fifteen billion dollars and controlover about seventy-five percent of production
capacity.
These investments have acceleratedinfrastructure development and downstream

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processing, solidifying Indonesia's role in theglobal electric vehicle supply chain.
Looking ahead, Indonesia aims to diversify itsinvestment base, complementing its foundational
partnerships with a mix of technology andlong-term alignment with its national
interests.
Major players like Hyundai, LG, and Foxconnhave also entered the market, highlighting

(03:01):
Indonesia's strategic importance in the cleanenergy economy.
As the industry grows, Indonesia is shaping aspace where broader international collaboration
can thrive, welcoming diverse expertise andinnovation.
This evolving balance between nationalambition, global cooperation, and sustainable
development will continue to shape not onlymarkets but also the values defining the next

(03:26):
chapter of industrial progress.
It has been a turbulent first quarter forIndonesia, Southeast Asia's largest economy.
The nation is grappling with significantpressures, as the rupiah has plummeted to its
lowest level since the Asian financial crisis,and the recent equity market meltdown has only
intensified concerns.

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With foreign institutional investors pullingout amid uncertainties over Indonesia's
economic outlook and emerging politicaltensions, the question arises: is there any
hope on the horizon?
The Jakarta Composite Index, a key marketindicator, has seen a concerning drop of 8.4
percent since the beginning of the year, with astaggering 1.83 billion United States dollars

(04:12):
in foreign capital exiting the market.
Much of this downturn was exacerbated by a 7percent decline in the index benchmark just
last week.
Investors are increasingly cautious, adopting arisk-off approach due to escalating tariff wars
and the evolving policies of the United StatesFederal Reserve.

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However, it seems that domestic issues arecausing even more apprehension among investors.
Amidst this backdrop, state fund Danantara ispreparing to receive a substantial influx of
cash, thanks to a wave of dividends fromstate-owned enterprises set to bolster its
coffers in the coming weeks.
This financial windfall presents Danantara witha critical opportunity to restore investor

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confidence and stabilize the market.
Danantara's strategy involves leveraging thesefunds to support key sectors and stimulate
economic growth.
By targeting infrastructure projects andinnovation-driven industries, the fund aims to
showcase Indonesia's potential for long-term,sustainable development.
This approach could help counteract theprevailing investor skepticism and demonstrate

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the country's commitment to economic resilienceand modernization.
Nevertheless, the road to recovery is fraughtwith challenges.
Indonesia must navigate complex geopoliticallandscapes, manage domestic policy shifts
effectively, and address the underlying issuesthat have eroded investor trust.
The government's ability to implementconsistent and transparent economic policies

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will be crucial in reassuring both domestic andinternational investors.
In conclusion, while Indonesia faces a dauntingeconomic landscape, the strategic deployment of
Danantara's substantial financial resourcescould serve as a catalyst for renewed investor
interest.
By aligning investment efforts with nationalpriorities and fostering a stable economic

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environment, Indonesia has the potential toreclaim its position as a formidable player in
the regional and global markets.
Our final story today revolves around a majordevelopment in Indonesia's telecommunications
sector.
Shareholders have approved the merger of PT XLAxiata Tbk, PT Smartfren Telecom Tbk, and PT

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Smart Telcom, forming a new entity namedXLSMART.
This strategic merger is a significantmilestone, poised to reshape Indonesia's
digital landscape by enhancing service qualityand expanding network reach.
The merger, which received formal approvalfollowing Extraordinary General Meetings of
Shareholders held on March 25, 2025, marks apivotal moment for the telecommunications

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industry in Indonesia.
This move comes after receiving in-principleregulatory approvals from Indonesia's Ministry
of Communication and Digital Affairs, as wellas the Indonesia Stock Exchange and Financial
Services Authority.
The consolidation highlights the confidence ofshareholders in the potential synergies of
combining XL Axiata's extensive infrastructurewith Smartfren's digital innovations.

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With a subscriber base exceeding 94.3 millionand projected annual revenues of 45.8 trillion
Indonesian Rupiah, XLSMART is positioned tolead the next phase of growth in the
telecommunications sector.
The merger is expected to realize significantcost synergies, estimated at a pre-tax annual

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run-rate of 300 to 400 million United Statesdollars post-integration.
This financial robustness will enable XLSMARTto enhance customer experience, expand digital
services, and contribute to the growth ofIndonesia's digital economy.
Axiata Group and Sinar Mas will become jointcontrolling shareholders, each holding a 34.8

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percent stake in XLSMART, with equal influenceover its strategic direction.
This partnership is strengthened by two Lettersof Intent signed earlier this year, focusing on
synergies in advanced 5G solutions, enterpriseservices, digital infrastructure, and fintech
innovations.
These efforts are part of a broader strategy toaccelerate digital transformation across

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Southeast Asia.
Rajeev Sethi has been appointed as PresidentDirector and Chief Executive Officer of
XLSMART, bringing with him extensive experiencein transforming telecommunications companies in
emerging markets.
Under his leadership, XLSMART will aim toexpand network coverage, enhance service
quality, and drive digital innovation,unlocking opportunities in mobile broadband and

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enterprise services to meet the evolving needsof Indonesia's telecommunications market.
The merger represents not only a businessintegration but also a strategic collaboration
between Malaysia and Indonesia in the digitaleconomy sector.
As two of Southeast Asia's largest economies,these nations share a vision of fostering
digital inclusion and leveraging technology foreconomic growth.

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This partnership exemplifies how cross-bordercollaborations can create value for businesses
and economies alike.
With XLSMART, Axiata and Sinar Mas reaffirmtheir commitment to driving innovation and
supporting regional digital agendas.
The merger sets a new standard fortelecommunications partnerships, integrating

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expertise and resources to deliver innovativeand customer-centric solutions.
This collaboration aligns with national andregional digital economy agendas, ensuring that
the telecommunications sector remains a keyenabler of economic progress.
Alright, that's a wrap for this episode.
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Thanks again for listening, and hope to catchyou next time.