State-Owned Enterprises to Get $4b to Encourage Infrastructure Spending
Jakarta. President Joko Widodo unveiled plans on Monday to inject nearly $4 billion into state companies in the infrastructure sector and the biggest bank by assets, in a bid to begin allocating funds after slashing fuel subsidies.
As much as Rp 48 trillion ($3.7 billion) will be injected into state-owned enterprises this year, the president said on Monday.
The funds will be allocated to state companies such as port operator Pelabuhan Indonesia, construction firm Wijaya Karya and airport operator Angkasa Pura, Joko told reporters.
“After we redirect the fuel subsidies, there’s a lot of room in our budget,” Joko said.
Later on Monday, State-Owned Enterprises Minister Rini Soemarno said Indonesia will increase the capital of state-owned Bank Mandiri by Rp 9 trillion partly to fund infrastructure expansion.
Bank Mandiri will raise Rp 5.6 trillion through a rights issue and the government will inject Rp 3.4 trillion into the bank, she said.
This will be subject to approval from the House of Representatives, she added.
“Bearing in mind that there will be an expansion in infrastructure funding, there will be an increase in capital from state-owned banks,” Rini said.
She added that Bank Mandiri is being prioritized as its dividend payout is “quite large” and it will be difficult for all state-owned banks to tap the capital market at the same time.
The government owned 60.6 percent of Bank Mandiri as of September 2014, according to Thomson Reuters data.
Bank Mandiri was not immediately available for comment.
“If these rights issue and capital injection do roll out, loan growth should be accelerated,” said Teguh Putra Hartanto, an analyst with Bahana Securities.
Reuters
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