JAKARTA – Indonesia is experiencing a debt spike due to the COVID-19 pandemic. According to data from the Ministry of Finance (Kemenkeu), the debt to Gross Domestic Product (GDP) ratio has penetrated 40.49% as of May 2021.



Overall, the value of government debt as of May 2021 is at the level of Rp6,418.15 trillion. The Budget Agency (Banggar) of the House of Representatives (DPR) of the Republic of Indonesia encourages the government to boost the performance of the Indonesia Investment Authority (INA) so that domestic development can be based on investment, no longer debt funds.



Chairman of the Banggar DPR RI, Said Abdullah, assessed that the government would find it difficult to carry out development because the funds had been sucked up by the handling of COVID-19. Therefore, INA is considered by Said to be the most effective catalyst as a development instrument.


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“Various project schemes do not have to depend on the state budget. The establishment of the Indonesia Investment Authority (INA) is aimed at reducing the dependence on government program financing from debt sources,&#8221; Said commented in a written statement received by Trenasia.com, Monday, July 5, 2021.



Minister of State-Owned Enterprises (BUMN), Erick Thohir, said as much as 75% of the development funds will come from INA investments. Meanwhile, Erick claims that only 25% will drain the State Revenue and Expenditure Budget (APBN) as a source of development funding.



The Ministry of Finance noted that the budget ceiling for infrastructure development in the 2020 State Budget reached Rp419.2 trillion. The fund is equivalent to 15.3% of the government&#8217;s spending ceiling last year which was Rp2,739.2 trillion.



“Our infrastructure is not based on debt, but capital. Various countries, from Dubai, Canada, to the Netherlands believe that INA can collect and manage development capital,&#8221; Erick said in a dialogue, Monday, July 5 2021.



Investors’ Belief



To attract investment, Bank Permata chief economist, Josua Pardede, said that INA needs to work hard to build the confidence of foreign investors. This is clearly supported by economic stability in the country.



Josua acknowledged that INA has abundant potential in attracting investment as well as being a source of financing for development in Indonesia. Nevertheless, continued Joshua, INA cannot work alone.



The government&#8217;s economic policy in handling COVID-19 remains the game changer that can influence investors&#8217; decisions. The reason is that according to regulations, the presence of the Job Creation Act has made it easier for investment permits in the country.



&#8220;How do we show investor confidence and INA needs to be an alternative to infrastructure financing and can encourage this project based on capital, not debt,&#8221; said Josua in a virtual discussion held by the Ministry of Finance some time ago.



Writer:&nbsp;<a href="https://www.trenasia.com/author/arfan/">Muhamad Arfan Septiawan</a>

Pekerja beraktivitas di proyek pembangunan Sykbrige CSW, Jakarta, Minggu 4 Juli 2021.Proyek pembangunan skybridge untuk integrasi Halte Transjakarta CSW di Stasiun MRT Asean terus dikebut setelah mengalami kemunduran dari target awal. Foto : Panji Asmoro/TrenAsia

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JAKARTA – Indonesia is experiencing a debt spike due to the COVID-19 pandemic. According to data from the Ministry of Finance (Kemenkeu), the debt to Gross Domestic Product (GDP) ratio has penetrated 40.49% as of May 2021. Overall, the value of government debt as of May 2021 is at the level of Rp6,418.15 trillion. The [&hellip;]

Encouraging Indonesia Investment Authority Performance to Release Debt

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