Indonesian government through PT Sarana Multi Infrastruktur (SMI) is providing a loan of Rp16.5 trillion (US$1.14 billion) in funds to DKI Jakarta and West Java Provinces for economic recovery due to the effects of the COVID-19 - Photo Finance Ministry Office

JAKARTA (TheInsiderStories) – Today, Indonesian government through PT Sarana Multi Infrastruktur (SMI) is providing a loan of Rp16.5 trillion (US$1.14 billion) in funds to DKI Jakarta and West Java Provinces for economic recovery due to the effects of the COVID-19. In detail, Jakarta borrows Rp12.5 trillion and West Java Rp4 trillion with a tenor of two years.

For the first year, Jakarta’ governor Anies Baswedan, proposed a loan of Rp4.5 trillion and in a second year of Rp8 trillion. While, the governor of West Java, Ridwan Kamil, proposed a loan of Rp1.9 trillion in this year and in 2021 worth of Rp2.09 trillion.

Referring to Bank Indonesia data, the economy of West Java in the first quarter (Q1) 2020 grew by 2.73 percent, lower than the growth in Q4 2019 which reached 4.11 percent. The province’ economic growth is also below the national economic growth which reached 2.97 percent in the same period.

In addition, the economic growth of DKI Jakarta in Q1 2020 was still quite strong despite slowing pace. The economy of the capital city grew by 5.06 percent in the first quarter of 2020, lower than the 5.96 percent growth in the previous quarter as a result of the pandemic.

This year, the Indonesian government has prepared funds of the National Economic Recovery Program (ERP) of around Rp641.12 trillion. In detail, part of the funds will be used to support the consumption budget of Rp172.1 trillion and interest subsidies of Rp34.15 trillion.

The ERP program, said finance minister, Sri Mulyani Indrawati, also provided tax incentives with a total amount of Rp123.01 trillion, including stimulus reserves of Rp26 trillion. The country also allocated Rp.25.27 trillion for capital injection to state-owned companies.

Then, the government provides fuel subsidies in the framework of compulsory 30 percent biodiesel worth Rp2.78 trillion. In addition, compensation payments were Rp90.42 trillion for three SOEs such as PT Pertamina at Rp45 trillion, Perum Bulog at Rp560 billion and PT Perusahaan Listrik Negara (PLN) worth Rp45.42 trillion.

For the tourism sector, the ministry is budgeting Rp3.8 trillion, for housing Rp1.3 trillion, and Rp60 trillion for expenditure. There is also support for local governments valued at Rp15.1 trillion, consisting of special allocation reserves of Rp9.1 trillion, economic recovery of Rp5 trillion, and loans to the region in the amount of Rp1 trillion.

Then, the guarantee of new working capital loans for micro, small and medium enterprises is Rp6 trillion. Indrawati revealed, the government also provided bailout funds for working capital of MSMEs worth Rp19.65 trillion and placement of funds for loan restructuring of Rp87.59 trillion.

Funding will be done through the issuance of state bonds purchased by Bank Indonesia through the primary market. Based on this decision, the ERP program can be carried out through the mechanism of placing funds, guarantees, injections of state capital, and government investment. At present, the minister said, the government has completed the design of two programs.

US$1: Rp14,500

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