2021 Expenditure Financing: Government Steps On To Hunt For Debts And Attract Investors

Minister of Finance, Sri Mulyani Indrawati. (Photo: Ministry of Finance)

JAKARTA - The government at the beginning of this year immediately stepped on the gas to look for sources of financing for the 2021 state budget expenditure. The state through the Ministry of Finance seems to want to maximize the potential for raising funds from the domestic community rather than having to spread debt securities in foreign markets.

Most recently, the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance, again issued Retail State Bonds (ORI) with the ORI019 series, today Monday, January 25.

This ORI019 is one of the state securities instruments that can be purchased by retail by any individual Indonesian citizen. Public investment funds obtained from the issuance of ORI019 are used to meet the 2021 APBN financing target, including efforts to deal with Covid-19 through vaccination.

"The government's consistency in issuing retail SBN (state securities) is expected to be a safe investment alternative for the community, as well as increase awareness of the culture of investing and contribute to the realization of the nation's independence to finance development," explained the Director General of Financing and Risk Management Luky Alfirman.

ORI019 itself is issued with a coupon rate of 5.57 percent which is high compared to other government bonds (SUN). However, the yield on ORI019 is still lower than ORI018 which has a coupon of 5.7 percent.

Meanwhile, out of the five issuances of State Retail Bonds, ORI015 in 2018 with a coupon of 8.25 percent became the instrument that received the best response from the public with a value of issuance by the government of IDR 23.3 trillion.

Then in a row ORI016 (2019) with a coupon of 6.8 percent of IDR 8.2 trillion, ORI017 (2020) with a coupon of 6.4 percent of 18.3 trillion, and ORI18 (2020) with a coupon of 5.7 percent of IDR 12. , 9 percent.

Attract investors

The state-owned financial services institution PT Bank Mandiri Tbk officially published the initial implementation of the 2021 Mandiri Investment Forum which is scheduled to be held on February 1 to 5, 2020.

Bank Mandiri Director of Treasury & International Banking Panji Irawan said this activity was the first major economic agenda to be held after the outbreak of the COVID-19 pandemic that hit Indonesia.

"Mandiri Investment Forum is a step to create synergy between business actors, investors, and the government as stakeholders to support economic recovery and growth efforts," he said virtually, Monday, January 24. this cross-sectoral meeting.

"This event is also a place for all of us to support government policies and is a signal to give confidence to businesses and investors to invest in Indonesia," he said.

For information, the organizer claims to be able to suck up around 10 thousand investors in the 5 scheduled series days. This number includes around 500 foreign investors, either individuals or groups / companies.

Citing the official website of the organizers, the Mandiri Investment Forum will be attended by well-known national officials, including Minister of Finance Sri Mulyani, Minister of State-Owned Enterprises Erick Thohir, Governor of Bank Indonesia Perry Warjiyo, and Minister of Education and Culture as well as Founder of Gojek Nadiem Makarim.

Meanwhile, the Investment Coordinating Board (BKPM) is reportedly participating as a government representative who is ready to provide direction and information to investors regarding strategic sectors that can be worked on. This year, BKPM is expected to realize an investment target of Rp900 trillion.

"The 2021 period is a time of recovery, and now is the right time to start investing and expanding," concluded Panji.

Investment Management Institution (LPI)

As if gaining momentum, the Ministry of Finance initiated the establishment of the Investment Management Institution (LPI) which is a mandate of Law Number 11 of 2020 concerning Job Creation.

In this regulation, it is stated that the establishment of an investment management institution is given special authority or one that is sui generis in the context of managing government investment.

"LPI operates by establishing a master fund, sub fund and joint venture, especially through a co-investment scheme with foreign investors to attract foreign direct investment in Indonesia," said Finance Minister Sri Mulyani during a working meeting with Commission XI of the DPR-RI, Monday, January 25th.

Minister of Finance added that the formation of the LPI was also marked by the issuance of Government Regulation (PP) Number 74 of 2020 concerning the LPI.

This PP regulates the governance and operations of the Investment Management Institution. In this regulation, there are several main policies that are regulated, including regarding the status of the LPI Institution as a legal entity owned by the government and responsible to the President.

The LPI organizational structure is a 2 tier board that represents sovereign status but also professionalism or independence, consisting of a Supervisory Board and a Board of Directors. The Supervisory Board is the Minister of Finance, the Minister of BUMN and 3 professional supervisory boards who will strengthen the independence of the LPI / INA.

"Currently, the Supervisory Board, after the Presidential Decree was issued by the President, carries out a process for the recruitment of the board of directors. The selection process is ongoing and it is targeted to be completed soon because the President wants to see that the LPI can run immediately, "he added.

The purpose of the functions and duties of the LPI is an institution that is given special authority in the context of investment management as stipulated in the law, so the aim is to increase and optimize investment values that are managed in the long term, in order to support sustainable development.

Meanwhile, its duties and functions are to manage investment and the LPI is in charge of planning to supervise and control and evaluate the investment.

Meanwhile, the authority given is to place funds in financial instruments, carry out asset management activities, collaborate with other parties including entities in trusts or in this case trust funds, administer assets, determine potential investment partners and provide and receive loans.

"In exercising this authority, LPI can collaborate with investment partners, investment managers of BUMN, government agencies or institutions and entities at home and abroad," concluded the Minister of Finance.