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Jakarta Post

House approves $10.32b stimulus for state companies

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Fri, July 17, 2020   /   07:54 am
House approves $10.32b stimulus for state companies State-Owned Enterprises (SOEs) Minister Erick Thohir (front, left) accompanied by Deputy Minister Kartika “Tiko” Wirjoatmodjo (center) and ministry spokesman Arya Sinulingga, attends a meeting with lawmakers at the House of Representatives complex in Jakarta in this undated photo. (Antara/Galih Pradipta)

The House of Representatives has approved a plan to channel Rp 151.1 trillion (US$10.32 billion) into state-owned enterprises (SOEs) as part of the government’s national economic recovery (PEN) program.

The funds, which are lower than the government’s initial projection of Rp 152 trillion, will be disbursed to 16 state-owned firms using three schemes, namely state capital injections (PMN), government debt payments and government loans, said Aria Bima, the deputy chairman of House Commission VI overseeing SOEs, trade and industry, on Wednesday.

“The commission agreed to channel Rp 23.65 trillion via PMNs, Rp 11.5 trillion through government loans and Rp 115.95 trillion in government debt payments to SOEs as part of the economic recovery program and [these numbers] will be reported to the House budget committee,” he said during a hearing with the SOEs Ministry in Jakarta.

The allocation for the SOEs is part of the government’s Rp 695.2 trillion COVID-19 budget to help strengthen the healthcare system, provide social assistance and support the economic recovery.

Aria said the PMNs would be disbursed to seven state-owned companies, as they had agreed to add three companies to the list, namely agricultural holding firm PT Perkebunan Nusantara (PTPN) III, housing firm Perum Perumahan Nasional (Perumnas) and train operator PT Kereta Api Indonesia (KAI).

In the government’s initial proposal, the three companies were to receive government loans to help support their working capital and cash flow. However, the House agreed to give them PMNs instead, as the companies were fully owned by the government.

PTPN III will receive Rp 4 trillion via a PMN to help fund its investments and working capital to increase production, while KAI will receive Rp 3.5 trillion to help fund its operational costs, as it is currently working on the Greater Jakarta LRT project. Meanwhile, Perumnas will receive Rp 650 billion via a capital injection to help shore up its liquidity amid the slumping housing market.

As much as Rp 7.5 trillion will be disbursed to construction firm PT Hutama Karya via a PMN to finance the trans-Sumatra toll road project, while Rp 500 billion will go to the Indonesian Tourism Development Corporation (ITDC) to develop infrastructure for the Mandalika special economic zone (KEK) in West Nusa Tenggara.

The government will also provide a PMN of Rp 1.5 trillion to financing firm PT Permodalan Nasional Madani (PNM) to support the women-based finance lending development program Mekaar and give Rp 6 trillion to insurance holding firm PT Bahana Pembangunan Usaha Indonesia (BPUI) to increase its capacity to provide loan guarantees for micro, small and medium (MSMEs) and the government micro lending program (KUR).

Although the Commission VI members initially suggested giving flag-carrier PT Garuda Indonesia and steelmaker PT Krakatau Steel capital injections as well, SOEs Minister Erick Thohir insisted on providing government loans to the two companies.

“We have to find the appropriate scheme to convert the PMN schemes for the two companies because they are both publicly listed companies that have public and minority shareholders,” Erick explained during the meeting.

The funds for both companies will be channeled using a mandatory convertible bonds (MCB) scheme. Under the scheme, the bonds holder will convert their debt papers into the company’s common stocks before or on a contractual conversion date.

Infrastructure financing firm PT Sarana Multi Infrastruktur (SMI) will act as a buyer for Garuda’s MCB, while either SMI, state-owned banks or Indonesia Eximbank will be Krakatau Steel’s MCB.

Garuda has requested a Rp 8.5 trillion loan while Krakatau Steel has applied for a Rp 3 trillion loan.

The airline plans to use the loan as working capital after experiencing a 95 percent plunge in its passenger numbers amid the pandemic, while Krakatau Steel will use the loan to support its upstream industries and end-users.

The lawmakers also agreed for the government to pay its Rp 115.95 trillion in debts to nine SOEs. These debts consist of unpaid land acquisition costs to construction firms Hutama Karya, Wijaya Karya, Waskita Karya and toll operator PT Jasa Marga, and public service obligation payment shortages for KAI, fertilizer holding firm PT Pupuk Indonesia and logistic firms Perum Bulog.

“We also agreed for the government to pay Rp 45 trillion to [energy holding firm] PT Pertamina for unpaid compensation and Rp 48.46 trillion to PLN for unpaid electricity subsidies and compensation,” Aria said.

The lawmakers excluded the payment of Rp 1 trillion in government debt to pharmaceutical firm PT Kimia Farma from the PEN program as they suggested both parties should settle it by themselves. The debt is for unpaid drug costs under the Health Care and Social Security Agency (BPJS Kesehatan) and for COVID-19 patient treatment.