Indonesia is predicted to be the seventh largest economy in the world by 2030. It makes sense that the UK election result has caused a stir amongst businesses and markets in Indonesia as a result. Technology companies in particular can be sensitive to global events and upsets as their markets usually extend to other countries as well as their own. Here are some of the potential impacts of the UK election on Indonesian technology companies.
Indonesia has enjoyed strong economic performance in recent years, with main imports and exports consisting of machinery, transport equipment and fuel commodities amongst others. As a high end, lucrative industry, technology thrives on a strong economy, and Indonesia provides fertile ground for startups to begin their technological ventures.
The UK election has so far had very little impact on the Indonesian markets, even though the GBP/IDR rate dropped from 17,233 to 16,942 after the results came in. It is still early days in this respect, and some of the effects on the economy could well occur further down the line.
Trade With Britain
With the fall in GBP’s value, Indonesian tech companies may well have the opportunity to exploit a weakened pound by purchasing British goods at cheaper prices. This could prove to be beneficial to various Indonesian markets, as Britain already exports a lot of machinery and equipment to the country.
The British companies which operate in Indonesia, however, may well take a hit from the election results, which have not only weakened the pound but also cast a great deal of uncertainty over the UK’s economic outlook for the future. It remains to be seen whether their operations in Indonesia will be adversely affected by this.
Technology companies don’t just thrive on investment, they need it regularly to survive, as the industry is both fast paced and volatile. One of the longer-term effects the UK election result could have on such companies is creation of a potential lack of investment opportunities which may result from economic instability.
It could now be slightly more difficult for British startups to set up their enterprise in Indonesia, as the weakened pound will make initial moving costs more expensive. If the election ends up having an impact on Asian markets, investment opportunities in the country could be hurt.
Arguably the most significant impact of the election results is the ensuing uncertainty surrounding Britain’s political and economic future. With negotiations due to start in a matter of weeks, Britain has showed it is completely divided over Brexit.
This has already been the cause of significant market volatility, and there is now even less certainty over the potential global implications when Britain leaves the EU. Indonesian technology companies may not react well to this, as it will be far harder to make business decisions if the market becomes even more volatile.
For the majority of technology companies in Indonesia, it will be business as usual for now. The technology sector has always been innovative and resilient, constantly having to adapt to a fluctuating global economy. The most significant effect of the UK election will be on Brexit negotiations, which will undoubtedly have global consequences once finalised.