Indonesia plans US$8.6bil bailout for 12 state firms

  • Economy
  • Monday, 18 May 2020

Govt aid: A file picture showing a Garuda Indonesia Airbus A330 aircraft parked at Airbus headquarters in Colomiers near Toulouse, France. The airline will receive 8.5 trillion rupiah in working capital investments, according to the documents. — Reuters

JAKARTA: Indonesia is planning an US$8.6bil bailout for 12 state-owned firms, to reduce the impact of the coronavirus pandemic, mostly as cash compensation and working capital investments, according to government documents reviewed by Reuters.

The government has proposed to parliament to provide 128.04 trillion rupiah (US$8.63bil) in financial support to the companies, according to Ministry of Finance documents that was presented in a May 11 meeting with parliament’s financial commission.

A finance ministry spokeswoman confirmed yesterday the authenticity of the documents and that they were used in the parliament presentation.

But, the documents were used in an early stage consultation with lawmakers and still need President Joko Widodo’s approval, she said.

National flag carrier Garuda Indonesia, which is trying to restructure US$500mil worth of Islamic bonds that mature next month amid a plunge in passengers, would receive 8.5 trillion rupiah in working capital investments, according to the documents.

Kartika Wirjoatmodjo, deputy minister of state-owned enterprises, told Reuters last week that the government was arranging a US$500mil bridging loan for Garuda.

Power utility Perusahaan Listrik Negara would receive cash compensation of 35.42 trillion rupiah this year, while oil and gas firm Pertamina would get 43.91 trillion rupiah paid in instalments through to 2022, the documents showed.

Both companies have previously said sales of electricity and fuel declined because of curbs on travel and work to control the coronavirus outbreak, which as of Saturday has infected 17,025 and killed 1,089 in the South-East Asian country.

Steelmaker Krakatau Steel would also receive three trillion rupiah in working capital investment under the plan.

Outright capital injections of 7.5 trillion rupiah and six trillion rupiah are each planned for construction firm Hutama Karya and insurance holding company Bahana Pembinaan Usaha Indonesia.

Bahana’s subsidiaries are tasked to provide credit guarantees for micro, small and medium companies.

The bailout funds will be provided on top of capital injection plans made before the pandemic.

The documents also showed the government plans to help commercial banks restructure souring loans by making 35 trillion rupiah of funds available to the banking industry. — Reuters

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