Malaysian companies that own plantations in Indonesia are most likely to the biggest losers if the governments plan to cap foreign ownership materialises. RHB Research said the proposed move would impact Malaysian companies such as Sime Darby Bhd, Kuala Lumpur Kepong Bhd and TSH Resources Bhd, which are receiving significant earnings contributions from their Indonesian operations. We believe such a harsh law may not become a reality, as Indonesia has just had a change of government. This is despite the previous government having introduced measures with a nationalistic slant, it said in a note today. RHB Research added the move would also be difficult to implement retrospectively, given the large number of companies that may be affected and the need to find buyers to take up those assets. Nevertheless, if implemented, we believe it would be negative for the sectors long-term growth and could weaken the rupiah further, it said.
Posted on: Mon, 18 Aug 2014 07:49:12 +0000
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