So far in 2018 a total of 51 Indonesian companies made their trading debuts on the Indonesia Stock Exchange (IDX), hence effectively completing their initial public offering (IPO). This is a remarkable number as well as a significant increase from 37 successful IPOs in 2017, and 14 in 2016. Moreover, the big number of IPOs in Indonesia this year is particularly remarkable considering there is plenty of uncertainty lurking about in global and domestic markets.

Meanwhile, economic growth in Indonesia has been rather stagnant in recent years around the 5% (y/y) level, which is often attributed to subdued consumer purchasing power in Southeast Asia’s largest economy, while weak global demand causes Indonesian exports to underperformed.

Moreover, forecasts for future economic growth in Indonesia and the world are not too optimistic. This would surely not be the ideal context to seek new funds for business expansion through an IPO. Weak domestic and global demand (which may not improve in the near future) make it not the best time to think about business expansion.

On the other hand, the fragile rupiah makes it less attractive to seek foreign-denominated loans, while rising interest rates at home (Bank Indonesia having raised its benchmark interest rate from 4.25% to 6%) makes it more expensive to borrow money. Meanwhile, we should also not forget that an IPO has more advantages than simply collecting new funds (although the primary objective is indeed raising capital).