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Indonesian state firms yet to receive capital injections

Thursday, May 21, 2015 - 18:51

[JAKARTA] Indonesia's state-owned enterprises have yet to get billions of dollars in capital promised them by President Joko Widodo, because bureaucratic hurdles stand in the way.

In February, Mr Joko's government said it would pump almost 40 trillion rupiah (US$3.04 billion) into state firms so they could leverage the funds to refurbish Indonesia's creaky ports, roads and power plants.

But Finance Minister Bambang Brodjonegoro said the money had not been handed out because the government had to issue a regulation to cover each capital injection. "We hope to finish these soon, so that it can help infrastructure development and economic growth," Mr Brodjonegoro told a media briefing on Thursday.

Mr Brodjonegoro wants 25.6 trillion rupiah distributed to state enterprises, including construction firms PT Waskita Karya Tbk and PT Adhi Karya Tbk, by the end of June.

Stalled government spending was one of the main reasons why first-quarter growth in Southeast Asia's largest economy slipped to its slowest pace since 2009.

By May 15, the government's capital spending stood at 10.92 trillion rupiah, or just 3.7 per cent of the full-year budget.

Public Works Minister Basuki Hadimuljono said nearly half of his ministry's projects, covering most of Mr Joko's infrastructure upgrades, had been tendered already, with the rest to be tendered by the end of June.

REUTERS