Indonesia to inject funds into ailing state firms

Indonesia plans to provide 2.19 trillion rupiah (241 million U.S. dollars) for several troubled state-owned enterprises, but officials insist they are not handing out blank checks.

Secretary to the State Minister for State Enterprises, Muhammad Said Didu, said the enterprises must provide concrete business plans for the use of the funds.

"The funds are to help make the state companies financially healthy, and are not simply bail-out funds," Jakarta Post daily Saturday quoted the Didu as saying.

The secretary said that the managements of national flagship airline Garuda Indonesia and pioneer airline Merpati Nusantara will be required to come up with concrete plans to settle their companies' mounting debts, which have put the two state-owned carriers on the verge of bankruptcy.

The House of Representatives' Budget Committee and the government earlier this week agreed to set aside so-called "state equity participation" funds for 15 ailing enterprises as part of a mid-year revision of the 2006 state budget. The bulk of the funds will go to Garuda and Merpati.

Garuda will receive 1 trillion rupiah (about 100 million U.S. dollars), half of which to be disbursed immediately and another half later next year, after the airliner has settled all liabilities and asset transfers arising from the debt restructuring scheme.

A special-purpose entity or the government's Asset Management Company (PPA) will take over 644 million U.S. dollars of Garuda's 794 million U.S. dollars total debts, along with six of its aircraft. Garuda will then repay within 10 years.

Merpati will receive similar treatment for its debt of 1.7 trillion rupiah (about 170 million U.S. dollars. It will get 450 billion rupiah (some 45 million U.S. dollars) in funds.

Disbursements will also go to some other companies worth of about 68 million U.S dollars.

Source: Xinhua