Riska Rahman and Adrian Wail Akhlas, Jakarta – Several ailing state-owned enterprises (SOEs) are still in the dark over how to raise funds to finance their operations and pay debts despite trillions of rupiah worth of government guarantees.
State-owned flag carrier Garuda Indonesia president director Irfan Setiaputra said the company was in talks with the Finance Ministry on how it would raise the funds needed to keep its business afloat.
"The use of the funds is also still being discussed, but it's supposed to be used as our working capital," he told The Jakarta Post on Tuesday.
Similarly, state-owned steelmaker PT Krakatau Steel said in a statement that the mechanism of the government investment stipulated in Government Regulation (PP) No. 23/2020 on the national economic recovery was still being discussed by the authorities.
"We hope to get the best mechanism to support the national economic recovery," president director Silmy Karim said in the statement.
Following the issuance of the regulation, the government plans to channel more than Rp 150 trillion (US$10.57 billion) into SOEs through several means, such as state capital injections (PMN), accelerated compensation payment and government investment guarantees.
The investment guarantee will be channeled especially to five companies, namely Garuda, train operator PT Kerata Api Indonesia (KAI), housing firm PT Perumnas, Krakatau Steel and agriculture holding PT Perkebunan Nusantara (PTPN), as some of them had been struggling to handle the impact of the COVID-19 pandemic on their businesses.
Garuda will receive the biggest amount at Rp 8.5 trillion, while the other four SOEs will receive guarantees of amounts ranging from Rp 650 billion to Rp 4 trillion.
On Wednesday, however, Finance Minister Sri Mulyani Indrawati stopped short of specifying the guarantees for Garuda and Krakatau Steel when she announced the new figure of the country's COVID-19 stimulus budget, which has reached Rp 677.2 trillion from the initial Rp 641.17 trillion.
"There are two SOEs, which Pak [SOE Minister] Erick Thohir will elaborate on, namely Garuda and Krakatau Steel, which will be given investment guarantees. The SOE minister will decide on the best scheme to support the two companies," she said during a teleconference after a limited Cabinet meeting.
Erick, however, was not among the high-ranking officials making statements in the briefing.
Arya Sinulingga, an aide to Erick, said on Tuesday that the government would not inject money directly into the five SOEs but rather only provide guarantees for their loans.
"This investment will not come from the state budget. The government merely provides a guarantee for Garuda and the other SOEs and they will seek external funding themselves [using the guarantee]," he said during an online press briefing.
He said the raised funds could be in the form of bank loans or other means of fundraising, and that the companies would be responsible to pay the loans themselves.
Garuda Indonesia is asking for a three-year extension on $500 million worth of global sukuk due on June 3 and going to ask for approval from bondholders for the extension during their meeting on June 10.
Krakatau Steel, meanwhile, has been struggling to pay its debts even long before the outbreak hit the economy. Earlier this year, the company received the green light from its creditors, mainly local banks like state-owned Bank Mandiri and Bank Negara Indonesia, to restructure its loans totaling $2 billion in a bid to avoid bankruptcy.
Finance Ministry State Assets Director General Isa Rachmatarwata said on May 20 that the investment would be channeled through the ministry's special missions vehicle (SMV), as every SOE had different problems.
Institute for Development of Economics and Finance (Indef) researcher Abra Talattov said on Wednesday that the SOEs receiving the government investment should work to raise their own funds, whether through bond issuance or bank loans.
"Some of these SOEs have been having debt problems before the COVID-19 pandemic, so investors are likely to be more careful in investing in them due to their high-risk nature," he told The Jakarta Post over the phone.