Finance ministry of Indonesia finally ratified the derivative rules of Government Regulation Number 63 of 2019 by issued the ministerial decree Number 53 of 2020 concerning Government Investment Procedures - Photo by the President Office

JAKARTA (TheInsiderStories) – Finance ministry of Indonesia finally ratified the derivative rules of Government Regulation Number 63 of 2019 by issued the ministerial decree Number 53 of 2020 concerning Government Investment Procedures. The new rule promulgated since May 20.

The new decree regulates duties, authority, membership, and implementation of the duties of the Government Investment Committee, procedures for determining public service bodies, state-owned enterprises (SOEs), other legal entities, investment planning, divestment, reporting, to the withdrawal of funds.

The new regulation also to support the National Economic Recovery Program, which also provides space for economic recovery through the government funds. The rule was passed because the government in the future wanted to focus on investments in the form of securities from earlier tends to focus on investments in the form of capital participation and lending.

In its implementation, government investment in the form of shares and debt securities is carried out by the government operator by considering the investment objectives, the level of risk and returns, and the allocation of assets or investment portfolio policies. Director general at the ministry, Andin Hadiyanto conveyed, that the implementation of the government investment in stocks and debt securities will be limited in the future.

Last month, Indonesian government prepared the Economic Recovery Program funds around Rp641.12 trillion (US$42.74 billion). In detail, part of the funds will used to support the consumption budget Rp172.1 trillion and an interest subsidy Rp34.15 trillion.

According to the minister of finance, Sri Mulyani Indrawati, 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, the government provides fuel subsidies in the framework of mandatory biodiesel 30 percent worth of Rp2.78 trillion. in addition, she continued, the compensation payment Rp90.42 trillion for three SOEs, 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.

President Joko Widodo has signed the special rule on May 11. In policy making, the coordinating minister for the economic affairs, the coordinating minister for maritime and investment affairs, the minister of finance, the governor of Bank Indonesia, chairman of the Financial Service Agency and Deposit Insurance Agency will determined the implementation strategy of the program, including in setting priorities in the business sectors affected by the epidemic.

in Article 8, its written that the capital injection is given in order to improve the capital structure of SOEs and subsidiaries affected by COVID-19. The funds can also be given to increase the business capacity of SOEs and subsidiaries, including to carry out special assignments in the implementation of the ERP Program.

In details, toll operator PT Hutama Karya Rp11 trillion, financial holding, PT Bahana Pembinaan Usaha Indonesia Rp6.27 trillion, financial services firm PT Permodalan Nasionanal Modal Rp2.5 trillion, and PT Pengembangan Pariwisata Indonesia with Rp500 billion.

Then, working capital is budgeted at Rp32.65 trillion is channeled to flight carrier PT Garuda Indonesia Tbk (IDX: GIAA) Rp8.5 trillion, plantation company PT Perkebunan Nusantara III Rp4 trillion, PT Krakatau Steel Tbk (IDX: KRAS) up to Rp3 trillion, PT Kereta Api Indonesia Rp3.5 trillion, Perum Bulog Rp13trillion, and housing developer PT Perumnas worth of Rp650 billion.

US$1: Rp15,000

Written by Staff Editor, Email: theinsiderstories@gmail.com