Need for More Capital Injections into Indonesia's ‘Bleeding’ State-Owned Enterprises
On 8 June 2021 Indonesian Minister of State-Owned Enterprises Erick Thohir told Commission VI of the House of Representatives (DPR) that he proposes to raise the budget for capital injections into state-owned enterprises (SOEs) in 2022. The main reason is that the SOE Ministry wants to inject (additional) capital into 12 SOEs.
If agreed, then the government’s total budget for capital injections into SOEs in 2022 will reach IDR 72.45 trillion (approx. USD $5 billion), a significant increase from the target in Indonesia’s 2021 State Budget (that was set at IDR 42.3 trillion, or, approx. USD $3 billion).
There are two main reasons why these SOEs require capital injections: (1) the need for bigger equity to handle projects assigned to by the central government, and (2) restructuring in the context of the COVID-19 crisis that has caused revenues to drop dramatically over the past 15 months or so.
Thohir added that around 80 percent of these additional capital injections are in the context of projects awarded by the government. As is widely known, the government of Indonesia (under President Joko Widodo) has been using the SOEs as ‘agents of development’, in particular for infrastructure development (as the private sector is not keen on decades-long, capital-intensive projects – in an uncertain investment environment – that may not even be commercially viable).
[...]
Order our July 2021 report to read the full article. This report can be ordered by sending an email to info@indonesia-investments.com or a message to +62.882.9875.1125 (including WhatsApp).
Price of this (electronic) report:
Rp 150,000
USD $10,-
EUR €10,-
Take a glance inside the report here!
.
Bahas
Silakan login atau berlangganan untuk mengomentari kolom ini