JAKARTA (TheInsiderStories) – Directorate general of state wealth at the finance ministry, announced an additional capital injection for three state firms with total amount Rp8.57 trillion (US$607.80 million) in this year. The additional injection was regulated through the Minister of Finance Decree Number 500 of 2020.
The director general, Isa Rachmatarwata, said in a meeting with parliament, two state financing firm, Indonesia Eximbank will receive Rp5 trillion and PT Penjamin Infrastruktur Indonesia Rp1.57 trillion. Then, the drug-maker, PT Bio Farma will get fresh fund Rp2 trillion. This year, the government has prepared capital injection Rp35.05 trillion in 2020 State Budget.
Until Nov. 10, the disbursement amounting to Rp16.95 trillion and was given to five state-owned enterprises (SOEs). In details, toll road operator PT Hutama Karya has received Rp3.5 trillion, PT Perusahaan Listrik Negara worth of Rp5 trillion, PT Permodalan Nasional Madani (PNM) Rp1 trillion, PT Sarana Multigriya Infrastruktur Rp1.75 trillion, and PT Geo Dipa Energi Rp700 billion.
Earlier, finance minister, Sri Mulyani Indrawati, has issued the decree Number 500 of 2020, which increased the capital injection allocation from initially Rp36.48 trillion to Rp45.05 trillion. The increase in the allocation ceiling was triggered by the addition of two firms and the entry of new receiver based on the Presidential Regulation Number 72 of 2020.
While, President Joko Widodo has signed a regulation related to the addition of capital injection to PNM through a Government Regulation Number 63 of 2020 on Nov. 2. The financing company received Rp1.5 trillion from the government. The allocation of these funds was part of the corporate financing program in the national economic recovery program (ERP), which was allocated Rp62.2 trillion.
So far, said Indrawati, the realization of the ERP had reached Rp383.01 trillion or 55.1 percent of the ceiling provided by the government with total valued of Rp695.2 trillion. International Monetary Fund has warned Indonesian government some SOEs are also struggling and adding to the burden on government finances.
Globally, state-owned enterprises’ assets are worth $45 trillion, equivalent to half of global GDP. SOEs are present in all countries. In some, like China, Germany, India, and Russia, they number in the thousands. They are major players in many economies. For example, the state firms undertake 55 percent of total infrastructure investment in emerging and developing economies.
Governments, such as in Brazil, Canada, Germany, and India have asked their public banks to help alleviate the impact of the current pandemic. However, many public banks have a poor record in promoting economic development (their main goal) and may take excessive risks, which leaves economies and people more vulnerable to crises.
The countries also struggle to effectively monitor state firm. Many lack the capacity to do so. Poor transparency in public banks’ and enterprises’ activities remains an obstacle to accountability and oversight. This can lead to a buildup of large and hidden debts with governments having to bail them out, sometimes costing taxpayers more than 10 percent of GDP.
It said, well-governed and financially healthy state-owned enterprises can help combat crises such as the pandemic and promote development goals. However, to deliver on these, many need further reforms. Otherwise, the costs to society and the economy can be large.
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