Indonesian government will injected fresh capital to seven state companies with total amount Rp17.73 trillion (US$1.26 billion) - Photo by Finance Ministry Office

JAKARTA (TheInsiderStories) – The government had allocated a state capital injection worth Rp1 trillion (US$71.42 million) in the state budget in a bid to strengthen the current account balance, finance minister Sri Mulyani Indrawati said on Monday (12/02). According to her, the funds will be given as a policy breakthrough to boost exports and curb imports.

“Specifically oil and gas imports through investments in state-owned enterprises,” said the minister at a joint working meeting with the House of Representatives’ Finance Commission in Jakarta.

Bank Indonesia recorded the current account deficit (CAD) in the 2019’s third quarter amounted to $7.7 billion or 2.7 percent of the Gross Domestic Product (GDP), which was lower than that of in the previous quarter at $8.2 billion or 2.9 percent of GDP.

The ministry’s state asset director-general, Isa Rachmatarwata, said the funds would be disbursed to state-run companies. However, he stopped short of detailing the names of the firms. “We are still discussing it,” she said.

According to Rachmatarwata, state firms that will receive the capital injections are those capable of producing the capacity so that Indonesia will no longer import commodities or those who can trim imports or find import substitution.

On another occasion, President Joko Widodo quipped that many people were happy should Indonesia keep importing oil, which caused the country’s CAD issue to linger to date.

Month ago the president has lamented the fact that Indonesia still imports hoes, a low-complexity item that local craftsmen should have been able to produce in spades. The president told the government goods and services procurement policy agency to encourage local small and medium enterprises to produce hoes and other simple tools that are in great demand domestically.

Indonesia has suffered from trade deficits in the past months, as demands for natural commodities, such as palm oil and coal – the country’s largest exports – continue to decline and bring down prices.

“The countries we’re importing from are having a good time. Meanwhile, we’re running a current account deficit, a trade balance deficit. We keep importing because their prices are cheaper,” Widodo said.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com