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Third economic package ready for next week
The government plans to launch its third economic policy package next week, with the intention of boosting investment, spurring exports and maintaining peopleâs purchasing power
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he government plans to launch its third economic policy package next week, with the intention of boosting investment, spurring exports and maintaining people's purchasing power.
Finance Minister Bambang Brodjonegoro said on Friday that the government expected to achieve two of those three goals through the Indonesian Export Financing Agency (LPEI).
'We are looking to support exports through the financing activities of the LPEI. Export-oriented companies and other firms that support them may access more affordable financing from the LPEI,' he told reporters after a meeting at the Coordinating Economic Ministry.
The cheaper financing would allow these companies to maintain and even boost exports amid the current economic slowdown, he said, adding that the financing rate would be offered at the same level as Bank Indonesia's (BI) benchmark rate.
'It [the LPEI] has obtained a state capital injection of Rp 1 trillion [US$67.98 million] this year and that will enable the agency to disburse cheaper loans, cheaper than those offered by commercial banks,' Bambang said.
At present, the BI rate is set at 7.5 percent and is lower than the lending rates offered by commercial banks. Various data available shows that the prime lending rate at the top 10 banks ' in terms of asset size ' exceeds 10 percent for all credit segments.
Bambang added that another ambition expected to be aided by the LPEI was maintaining people's purchasing power. Export-oriented companies on the brink of massive layoffs may apply for financing from the LPEI to resume their business activities.
'They must be labor-intensive firms, especially at the small and middle level. They can access the financing on the condition that they refrain from firing their employees. We will help by providing subsidized loans,' he said.
The government also expects that people's purchasing power can be sustained by a lower oil price.
President Joko 'Jokowi' Widodo earlier asked state-owned oil-and-gas company Pertamina to weigh the possibility of lowering oil prices to ensure that people can benefit from cheaper oil prices in the world market.
Speaking after the same meeting on Friday, Pertamina president director Dwi Soetjipto said the company was currently evaluating the possibility, even if it would have to temporarily face losses from the price cut.
No details were immediately available on the government's plan to boost investment with the upcoming package.
Meanwhile, LPEI executive director Ngalim Sawega said the financing scheme in the future package would be part of the National Interest Account (NIA) program.
The program tasks the LPEI with commercially non-viable export financing. For the NIA to run effectively, projects must be approved by several ministries, have long-term export development prospects, boost value addition and competitiveness, and run during a specific period of time.
'The financing will be disbursed as an incentive for those companies for a six-month period,' he said.
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