Indonesia will provide Rp 42.38 trillion (US$2.95 billion) in state capital injections (PMN) for state-owned enterprises (SOEs) in 2021 to boost their role in supporting the country’s economic recovery.
Finance Ministry state assets director general Isa Rachmatarwata the PMN for SOEs was expected to spur economic recovery, adding that the government would oversee the disbursement of the funds by the SOEs.
“We want to see SOEs participating in reviving the economy, creating jobs and conducting business activities that will have a multiplier effect,” he told reporters in a press briefing on Friday.
The government will inject Rp 5 trillion into state electricity giant PLN, which will use the funds to develop transmission infrastructure and electricity distribution in villages, according to Isa. Meanwhile, state-owned construction company PT Hutama Karya will receive Rp 6.2 trillion to continue developing the trans-Sumatera toll road and Indonesian Eximbank is planned to get Rp 5 trillion.
“These injections are part of the efforts to speed up economic recovery.”
Indonesia fell into recession for the first time in two decades as the economy shrank by 3.49 percent in the third quarter this year, a second consecutive drop following a 5.32 percent contraction in the second quarter, due to the pandemic.
The economy is expected to shrink by 0.6 percent to 1.7 percent this year, but the government is hopeful that the economy would rebound by 5 percent in 2021.
Deputy SOE Minister Kartika “Tiko” Wirjoatmodjo said in October that the economic crisis induced by the COVID-19 outbreak has taken a toll on SOEs, particularly in the energy, transportation and infrastructure sectors.
Oil and gas firm Pertamina, for example, booked an Rp 11.29 trillion loss in the first half of 2020, against a Rp 9.7 trillion profit in the same period last year.
This year, the government has earmarked Rp 24.1 trillion in PMN, as well as Rp 19.6 trillion in loans and investments to help SOEs this year, according to the latest Finance Ministry presentation. Both are part of the government’s gargantuan COVID-19 stimulus package of Rp 695.2 trillion.
Meanwhile, from the PMN allocation next year, the government will also provide Rp 20 trillion — the largest amount — for insurance holding company Indonesia Financial Group (IFG), previously known as Bahana Pembangunan Usaha Indonesia (BPUI), mostly to rescue ailing insurance company PT Asuransi Jiwasraya.
Jiwasraya is embroiled in a corruption and money laundering case following its failure to pay out Rp 18 trillion in matured policies due in May to its policyholders.
The Attorney General’s Office (AGO) accuses the insurer of investment mismanagement when it invested its premium revenue from the JS Saving Plan, one of the company’s unit-linked products, in pump-and-dump stocks.
The government will also provide Rp 2.25 trillion to secondary mortgage market company PT Sarana Multigriya Finansial (SMF) to help the company fund house ownership loans (KPR) through housing loan liquidity facilities (FLPP).
“All of the funds will be used to finance the government’s housing program for low-income people,” SMF president director Ananta Wiyogo told The Jakarta Poston Friday, adding that the company aimed to provide 150,000 houses next year.
The government will also inject Rp 1.2 trillion into port operator Pelindo III to develop Benoa port in Bali, Indonesia’s main tourist spot, as part of the Bali Maritime Tourism Hub program.
Another tourism SOE, state-owned Indonesian Tourism Development Corporation (ITDC), will also receive Rp 470 billion next year, which is expected to finance the infrastructure development in Labuan Bajo, East Nusa Tenggara, for the scheduled G20 Summit in 2023.
The government will also inject Rp 1.28 trillion into shipbuilder PT PAL Indonesia to build submarines, as well as Rp 977 billion into developer PT Kawasan Industri Wijayakusuma (KIW) to develop the Batang Industrial Park in Central Java.
"The capital injection would provide the stimulus needed to revive the economy. Otherwise, the country would struggle to recover," Center of Reform on Economics (CORE) Indonesia economist Piter Abdullah told The Jakarta Post. "Therefore, the government must take this initiative to bolster economic activity."