Friday, July 04, 2014

Government Plans State Budget for 2015

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Fathan Qorib, Andin Aditya Rahman
Following recent crystal balling on Indonesia’s economic condition in 2015, the Government has announced its plan to include state capital participation (penyertaan modal negara) in state-owned enterprises. This plan was revealed during initial discussions on the 2015 Draft State Budget (2015 RAPBN) by Hadiyanto, Director General of State Assets at the Ministry of Finance.
There were also talks of a revolving fund for financing facilities, specifically intended for use in providing modest housing for low income groups and financial stimulus for micro, small and medium enterprises.
Mr. Hadiyanto, further explained that the said allocation is part of the Government’s policy on non-credit financing for state-owned enterprises.
“Allocating state capital participation for state-owned enterprises is for expediting infrastructure development and increasing the capacity of business activities of state-owned enterprises,” he added at the initial discussions on the 2015 RAPBN in Jakarta last Tuesday.
Other than state-owned enterprises, the Government is also planning to allocate state capital participation for international financial organizations and institutions, as well as other business entities.
The objective is to satisfy the Indonesian Government’s obligations in such international organizations and institutions and to maintain the Government’s capital ownership ratio. An exact figure for the state capital participation for this purpose, however, was not determined during the discussions.
Elaborating further on the proposed state capital participation in state-owned enterprises, Mr. Hadiyanto indicated that only state-enterprises that fulfill certain requirements will be eligible.
The first eligibility requirement is that the state-owned enterprise must implement a mandate or government policy that is of primary concern to the general public, such as providing goods or services that are essential for the livelihood of the general public.
The second requisite is that the state capital participation will be allocated for improving business capacity of the state-owned enterprises, and maintaining their soundness and capital structure in accordance with prevailing laws and regulations.
A third condition is the maintenance of the Government’s capital ownership percentage in the respective state-owned enterprise, to enable government control over the enterprise in question.
Despite these prerequisites, Johnny Allen Marbun, member of the Budget Office at the House of Representatives (Banggar), emphasized that the allocation of state capital participation in state-owned enterprises must be in accordance with prevailing laws and regulations.
He further added that any Government plan to provide state capital participation in state-owned enterprises should not be undertaken if it is not in accordance with the law.
“I disagree if it is not based on the law,” said Mr. Marbun.
Revolving Fund
Other than state capital participation allocation in state-owned enterprises, the 2015 RAPBN draft will also include revolving funds for financing facilities. These financing facilities will primarily aim to satisfy the demand for modest housing for low income groups and provide financial stimulus for micro, small and medium enterprises.
“Revolving funds in 2015 are planned to be allocated to improve the public economy,” said Mr. Hadiyanto.
On this point, Achsanul Qosasih, another member of the Banggar, confirmed that the Government’s revolving fund program has been a success, even though it may be somewhat premature to say so, considering that the revolving fund program has only been implemented over the last 5 years.
Nevertheless, Mr. Qosasih believes that if the revolving fund program was to be continued in 2015, a special agency is needed to assist the entities that have already been funded by the Revolving Fund Management Agency (LPDB).
“Do not let the IDR 4 trillion in funds for the LPDB,  equal to IDR 1 trillion every year, be opaque in its system and financing targets. I will submit the technicalities to the Government,” concluded Mr. Qosasih.
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