Indonesian government plans $8.6 billion coronavirus bailout for state firms

(C) Reuters. General view of the main road at the business district after Indonesia’s capital begins a two-week emergency period to prevent the spread of coronavirus disease (COVID-19) in Jakarta

JAKARTA (Reuters) – Indonesia is planning an $8.6 billion 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 ($8.63 billion) in financial support to the companies, according to Ministry of Finance documents presented in a May 11 meeting with parliament’s financial commission.

A finance ministry spokeswoman on Sunday confirmed 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 (JK:GIAA), which is trying to restructure $500 million 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 the government was arranging a $500 million 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 Southeast Asian country.

Steelmaker Krakatau Steel (JK:KRAS) would also receive 3 trillion rupiah in working capital investment under the plan.

Outright capital injections of 7.5 trillion rupiah and 6 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.