This is the biggest single event this year! Is your retirement fund involved? What it will cost you if they aren’t

You know me. I’m always looking out for the biggest, largest, most expensive thing in the news. For me, this always provides a clue on what’s going on in the cycle.

But today’s news is a bit different to the items I’ve written about before: it’s an election.

A big election; in fact, the biggest one-day election in the world. And it’s taking place this week, on the 14th.

And it’s happening someplace that’s near and dear to me: Indonesia with its 200 million citizens of a voting age. As the following infographic demonstrates, it will be a phenomenal event.

It is one of several very important and high-profile elections being held this year across the world.

You need to be across the most important of these I feel, hence today’s newsletter topic.

Whilst it is a macro topic, what happens in Indonesia, and these other important elections, will most definitely shape the kind of real estate cycle peak we expect later this decade.

Let me explain why that is.

But first, I will give you a brief history behind what’s going on now.

Indonesia’s President Joko “Jokowi” Widodo has now completed his term limit (two terms), and Indonesians will now vote for their next president and vice president, as well as representatives of both houses of the national parliament, and provincial legislators.

The candidates are Anies Baswedan, Prabowo Subianto, and Ganjar Pranowo.

Polls show up to 80 per cent of Indonesians approve of the job Jokowi did in his decade as president, and this long-standing popularity could bode well for the Prabowo ticket.

Why is that? Because Prabowo’s running mate is Gibran Raka, President Widoko’s son.

Outwardly, Indonesia has a policy of non-alignment. All three candidates also subscribe to this, but there are big differences in how they’d do it.

And from the perspective of where I sit – in Australia – this is indeed very important context behind who my government (not that they have a say) would prefer to win.

Our trade and investment links are closely tied to who eventually prevails. And a pro-western president would not only benefit Australia, but the US as well.

It explains why all the most powerful nations on earth are watching this election closely.

So, what is Indonesia place in all this?

The country has stated aspirations of achieving its often-articulated goal of becoming a high-income country in time for its 100th anniversary in 2045. That requires it to treble its current gross national income per person (according to the World Bank).

If that goal remains today, there is only one realistic way to get there: they need foreign direct investment, and they need a lot of it.

But that same investment needs to produce an educated, skilled workforce and attract and develop industries that will produce jobs for them. Luckily for Indonesia, there is a neighbouring country that has some of the world’s highest rated universities which can help develop that workforce.

That neighbour, of course, is Australia.

And as universities benefit from generous government subsidies and grants for their educational work, I’d say that both will work hand in hand to dramatically expose these learning institutions’ footprint in Indonesia.

Another possible benefit of this would be streamlining the visa processes for Indonesia students.

Only a few hundred thousand residents travel to Australia on visas (compared to the million plus tourists who flocked to Indonesia [mainly, Bali] from Australia last year).

It does appear that things are trending this way. The current government mandated the following in terms of trade and investment into the region:

Australia… “should be a larger trade and investment partner of South-East Asia. For Australia, an active, whole-of-nation effort will be required to make the most of current and emerging opportunities”.

So, what would this investment look like? What form of capital would Indonesia be seeking to help it achieve its stated aims?

Here is where we have a collision of truly seismic proportions occurring.

Really, it shouldn’t surprise you where the next tranche of investment funds may come from if you follow the clues.

Canadian pension funds have been investing directly into toll roads via the Indonesian Investment Authority (INA). This is in the form of public/private partnerships which sees the Indonesia government partake and guide which wholly Indonesian assets they can invest in.

These represent the first movers here. But they also show that the main risks stopping investment by Western-backed funds – such as regulatory and corruption issues – have been resolved.

The INA sovereign wealth fund hopes to reach a goal of $100 billion worth of assets.

So, is it any wonder it is trying to tap into the almost four trillion dollars’ worth sitting in Australian superannuation/pension funds?

While the country has benefitted, and will continue to do so, from Chinese direct investment, the Chinese way of doing business is now starting to grate with Indonesian officials.

Lax environmental standards around Chinese wholly/part owned nickel mines is now a major election issue. Likewise, Chinese companies’ tendencies to bring in their own workforce thus denying locals of jobs and opportunities.

This is also costing Indonesian exports of critical material to the US, as high Chinese involvement and blatant environmental damage is blocking access to very generous tax incentives enshrined in the American Inflation Reduction Act.

Australian super fund managers bring none of those issues. They simply need to know the door is fully opened for them to do business.

And here lies the opportunity. And if you are an Australian-based reader, know that its ‘your’ super monies that will drive this, so you should be taking note here.

And my goodness, what an opportunity here.

For starters, with Jakarta sinking into the Java Sea, the country is building a brand-new capital city in the province of East Kalimantan, on the island of Borneo. This will cost $45 billion dollars to complete. The scale is truly epic.

Below is a picture of work underway on the presidential palace.

I mean, seriously? Disneyworld doesn’t need this much land! But look further afield, see anything? Nothing but jungle. Now ask just how much this land increases in value once the palace is completed.

This is why the election results here are important to track. We advocate that our members find ways to invest with, and not against, the real estate cycle. And if retirement funds are welcomed into Indonesia by the new government, then as you can see from the above image, it means one thing.

A massive land play. Right at the start of the most speculative stage of the cycle. That’s bullish!

Exposure to land from now on is a sure-fire way to produce outperformance in your portfolio.

Researching which super or retirement funds are prepped to move in here could really expose your retirement funds to a welcomed boost in earnings.

But you are a busy person right now, what hope do you have on keeping abreast of all this? Via a membership to the Boom Bust Bulletin (BBB).

Every month I will bring to you all the latest and important news about the cycle as it continues to turn. And help you develop a market edge only possessed by those who study the land markets.

Toll roads, presidential palaces. What do they all need? That’s right, they all require land to build. Lots of it. Which means eventually all the gains, once manifested, will be absorbed by the land too.

This is why super funds are interested here. There is no better return on capital for them.

But what happens to those same super funds, you know the ones you’re banking your retirement future upon, when the real estate peak turns to bust?

Would it be prudent for you to be across that issue? Would knowing the timing that underpins the cycle save your retirement before it’s too late!

That is what is at stake here.

Don’t guess what to do, know what to do and when to do it.