JAKARTA (TheInsiderStories) – The Financial Services Authority (FSA) sees that fundraising in the capital market only reach Rp100 trillion (US$6.80 billion), less than this year’ target of Rp160 trillion due to the impact of the COVID-19 pandemic, the official reported on Monday. Last year, fundraising through public offerings reached Rp166.8 trillion from 60 new issuers.
In a virtual conference, chief executive at FSA, Hoesen, for next year, he confident the fundraising amount around Rp160 trillion. He reported until end of September, fundraising in the capital market worth of Rp85.9 trillion with 46 new issuers listed.
At the same period, he announced, foreign capital outflow from Indonesian stock market during amounting to Rp47.3 trillion. According to the chairman, Wimboh Santoso, now there were improvements in the financial industry even though the pandemic was not over.
A number of global and domestic indicators have provided positive support to the financial markets. Based on the FSA data, he noted, the Jakarta Composite Index rose 5.3 percent in October, after a 7 percent drop in September.
To support the domestic market, in June FSA and finance ministry has signed a joint decree on the National Economic Recovery Program (ERP). The decree focused on the coordination implementation of placement of funds and interest subsidies for the companies.
“This joint agreement shall take effect as from the date of stipulation until by Dec. 31, 2021,” said the statement released on June 11.
This joint decree is mandated by the Government Regulation Number 23 Year 2020 and aims to facilitate coordination between the both parties as well as optimizing the provision of information from FSA in the context of placement funds and the provision of interest subsidies, specifically in the determination participating banks, placement of funds or extension of placement of funds at the participating banks, as well provision of interest subsidies.
As known, in May, President Joko Widodo has signed a special rule Government Regulation Number 23 of 2020 regarding ERP. The regulation written that the government can carry out capital injection to state-owned enterprises (SOEs), placement of funds, government investment, and guarantees for the program. The program can also be implemented through state expenditure.
Finance minister, Sri Mulyani Indrawati explained, the government prepared the ERP Funds around Rp641.12 trillion. In detail, part of the funds will used to support the consumption budget Rp172.1 trillion and an interest subsidy Rp34.15 trillion. The government also provided tax incentives with total amount Rp123.01 trillion, including stimulus reserves amounting to Rp26 trillion.
The country also allocates Rp25.27 trillion for capital injection to the SOEs. Then, provides fuel subsidies in the framework of mandatory biodiesel 30 percent worth of Rp2.78 trillion. in addition, the compensation payment Rp90.42 trillion for state energy firm, PT Pertamina amounting to Rp45 trillion, food operator Perum Bulog at Rp560 billion and power producer, PT Perusahaan Listrik Negara (PLN) worth of Rp45.42 trillion.
For the tourism sectors, her ministry budgeted Rp3.8 trillion, housing Rp1.3 trillion, and spending Rp60 trillion. There are also support for local government worth of Rp15.1 trillion, consisting of special allocation reserves Rp9.1 trillion, economic recovery up to Rp5 trillion, and loans to the regions as much as Rp1 trillion.
Moreover, guarantee of new working capital loans for micro, small, and medium enterprises (MSMEs) Rp6 trillion. Indrawati revealed, the government also provides a bailout fund for MSMEs working capital worth of IDR19.65 trillion and a placement of funds for loan restructuring Rp87.59 trillion.
Funding will be carried out through the state bond issuances purchased by Bank Indonesia through the primary market. Director general at the ministry, Luky Alfirman added, the policy has been ruled by the Presidential Decree Number 23 of 2020
Based on the decree, the economic recovery program can be carried out through the mechanism of placement of funds, guarantees, state capital injection, and government investment. At present, said the minister, the government has completed the design of two programs.
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