Indonesia will provide 42.38 trillion rupiah ($2.95 billion) in state capital injections (PMN) for state-owned enterprises (SOEs) next year to boost their role in supporting the country’s economic recovery.

Finance ministry state assets director-general Isa Rachmatarwata said the PMN for SOEs was expected to spur economic recovery, adding that the government would oversee the disbursement of the funds by the SOEs.

“We want to see SOEs participating in reviving the economy, creating jobs and conducting business activities that will have a multiplier effect,” he told reporters in a press briefing on Friday.

The government will inject five trillion rupiah into state electricity giant PLN, which will use the funds to develop transmission infrastructure and electricity distribution in villages, according to Isa.

Meanwhile, state-owned construction company PT Hutama Karya will receive 6.2 trillion rupiah to continue developing the trans-Sumatera toll road and Indonesian Eximbank is planned to get five trillion rupiah.

“These injections are part of the efforts to speed up economic recovery.”

Indonesia fell into recession for the first time in two decades as the economy shrank by 3.49 per cent in the third quarter this year, a second consecutive drop following a 5.32 per cent contraction in the second quarter, due to the pandemic.

The economy is expected to shrink by 0.6 per cent to 1.7 per cent this year, but the government is hopeful that the economy would rebound by five per cent next year.

Deputy SOE minister Kartika “Tiko” Wirjoatmodjo last month said the economic crisis induced by the Covid-19 outbreak has taken a toll on SOEs, particularly in the energy, transportation and infrastructure sectors.

Oil and gas firm Pertamina, for example, booked an 11.29 trillion rupiah loss in the first half of this year, against a 9.7 trillion rupiah profit in the same period last year.

This year, the government has earmarked 24.1 trillion rupiah in PMN, as well as 19.6 trillion rupiah in loans and investments to help SOEs this year, according to the latest finance ministry presentation. Both are part of the government’s gargantuan Covid-19 stimulus package of 695.2 trillion rupiah.

Meanwhile, from the PMN allocation next year, the government will also provide 20 trillion rupiah – the largest amount – for insurance holding company Indonesia Financial Group (IFG), previously known as Bahana Pembangunan Usaha Indonesia (BPUI), mostly to rescue ailing insurance company PT Asuransi Jiwasraya.

The Jakarta Post (Indonesia)/ASIA NEWS NETWORK