Retail, telecom firms to profit from political campaigns

Retail, telecom firms to profit from political campaigns

Rendi A. Witular, The Jakarta Post, Jakarta

Shares of publicly listed companies in the retail and
telecommunications sectors, as well as media, are projected to be
the favorites among investors this election year, due to the
intriguing political party campaign methods employed here.

Chief economist at Danareksa Research Institute Raden Pardede
said over the weekend that the 24 political parties would be busy
buying up plenty of food, medicine and household products to be
used to win potential voters' hearts and minds, as part of their
political campaigns.

"Political parties will stock up on goods to help attract
supporters, such as instant noodles, mineral water, cigarettes
and energy drinks. This will in turn help increase the sales at
retail outlets all over the country," said Raden.

In most elections here, such seemingly questionable campaign
methods have become commonplace, as a means to garner votes --
especially from poor voters and those that live in remote areas.

As would be expected such "campaigning" has often proven to be
successful, as it takes advantage of the population's chronic
unemployment and poverty.

According to Raden, the retail products would not only be used
as a sort of food-for-votes program, but also to feed their loyal
supporters during the many large campaign rallies in stadiums and
other venues.

He predicted that some of the companies most likely to benefit
from this type of campaigning were instant noodle producer PT
Indofood Sukses Makmur, household and food producer PT Unilever
Indonesia, drug producer PT Kalbe Farma, cigarette producers PT
Gudang Garam and PT HM Sampoerna, and beverage companies PT Aqua
Golden Mississippi and PT Ades Alfindo.

Aside from the food and drinks, the telecommunications sector
is also projected to yield hefty earnings this year on an
estimated surge in the use of cellular services.

"People will be increasingly reliant on their cellular phones
to gather supporters or to inform others about developments at a
given electoral event," said Raden.

Companies likely to profit in this sector are PT
Telekomunikasi Indonesia (Telkom) and PT Indosat. He also said
that media and public relations firms would see a healthy rise in
sales and advertising revenue throughout the year, and a
corresponding jump in stock prices.

Elsewhere, Samuel Tobing, investment director of state-owned
workers insurance firm PT Jamsostek, concurred with Raden, saying
shares of listed firms in the retail and telecommunications
sectors would see handsome rises this year, due to spending
during the election period. The voting will be from April to
September, but campaign preparations have already begun.

"I think companies that can provide what is needed for various
electoral events or political parties and their supporters will
gain some momentum this year," he said.

Samuel added that Jamsostek would focus on investing its money
in shares in the two sectors, as their stock prices were
projected to increase significantly.

Jamsostek, the largest local investor in the stock market,
plans this year to allocate around 10 percent of its total
investment for stocks.

The company's current assets are said to reach Rp 25 trillion
(US$2.9 billion).

During the election, voters will choose legislators on April
5, then the first round of the direct presidential election will
be on July 5, with the second round on Sept. 20.

The 24 registered political parties will be vying for the 145
million votes on offer.