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inance Minister Agus Martowardojo says Indonesian companies should be wary of foreign borrowing given the global economy’s uncertain outlook.

Agus said the weakening US dollar had attracted many local companies to raise more dollar-denominated debts either through bank loans or through global bond issuances.

However the risk of foreign borrowing was higher given global economic uncertainties, he said, especially for companies that lacked adequate foreign currency revenue streams.

“If a firm’s revenues are in rupiah and its borrowings are in foreign funds, it might create currency risks,” he told reporters after government coordination meeting held by Bank Indonesia (BI) at its headquarters in Jakarta.

“Therefore, if there’s not a good mechanism, we suggest avoiding foreign borrowing because it is individually and nationally dangerous,” he added.

Risks in the global financial market have increased amid investor concerns on a potential global economic slowdown due to debt troubles in European countries and the United States.

However, Indonesia’s economic resilience despite the recent slowdown has lured overseas creditors to offer debt to the nation’s private sector.

Indonesian debt papers have also attracted overseas investors due to attractive yields.

State-run oil and gas company Pertamina, for example, has raised US$1 billion in a dollar-denominated bond issuance earlier this year, while integrated energy outfit Medco Energi Internasional raised $50 million.

State electricity company PLN also said it aimed to raise up to $2 billion from a soon-to-be-issued global bond issuance.

As for the government, it issued $2.5 billion in global bonds in July and is preparing for up to a $1 billion dollar-denominated Islamic bond (sukuk) issuance in the third quarter.

Foreign ownership of government bonds also continued to increase, reaching a near-record high of 35 percent of a total Rp 703.1 trillion ($82.27 billion) in outstanding tradable government bonds as of Tuesday, according to the Finance Ministry’s debt management office.

The figure is nearly double the 18.6 percent level of foreign ownership recorded by the ministry in late 2009.

Indonesia’s debt-to-gross domestic product (GDP) ratio, however, remained at about 26 percent, lower than an average level of over 70 percent in European countries and the United States.

BI data shows that Indonesia’s external debt was US$214.5 billion as of April; $85.9 billion of which was owed by the private sector and the remaining $128.6 billion by government bond holders.

Recent financial market turmoil has alerted the government to the increasing possibilities of a sudden reversal of foreign funds, as global investors might destabilize the nation’s economy if funds reverse in a short period of time.

“We will focus on domestic markets,” Coordinating Economic Minister Hatta Rajasa said at the same event.

“We should closely watch companies’ debt management so that there will be no mismatch. We don’t want the 1997/1998 Asian financial crisis to repeat.”