Jakarta: The Government has provided Rp2.5 trillion in capital injection to the Indonesia Export Financing Institution (LPEI) or Indonesia Eximbank in a bid to boost export through the National Export Financing Including the Special Assignments scheme.
The decision was formalized through the issuance of Government Regulation Number 44 of 2019 on Additional State Capital Injection of the Republic of Indonesia to the Capital of Indonesia Export Financing Institution signed by President Joko 'Jokowi' Widodo on June 25.
The Government Regulation came into effect on the date of its promulgation on June 26 by Minister of Law and Human Rights Yasonna H. Laoly.
"The capital injection is financed by the 2019 State Budget," the Cabinet Secretariat said in a press statement released on Monday.
According to the Government Regulation, Rp1.5 trillion is allocated to increase business capacity of the Indonesia Export Financing Institution. In the meantime, the remaining Rp1 trillion is allocated to carry out Special Government Assignments to the Indonesia Export Financing Institution in accordance with the provisions.
Based on a report from Bank Indonesia (BI), a general softening of national economic growth has occurred during the second quarter of 2019 as a corollary of declining export performance.
The recent escalation of international trade tensions has undermined export performance in Indonesia due to restrained global demand and lower commodity prices despite relative improvements for a number of commodities, including chemicals, iron and steel, coal as well as vegetable oil.
Non-building investment has thus far failed to increase significantly as a consequence of flagging exports notwithstanding positive building investment growth. Meanwhile, consumption is expected to pick up on the back of maintained public purchasing power and consumer confidence. Limited domestic demand gains have fed through to lower imports. Moving forward, efforts to stimulate domestic demand shall be increased in order to mitigate the adverse impact of global economic moderation stemming from international trade tensions.