State owned enterprises (SOEs) have increased capital expenditure up to a total of Rp 146.9 trillion (US$12.49 billion), in order to boost the growth of the real sector which has been slowing down due to the global economic downturn.
State minister for state enterprises Sofyan Djalil said on Monday the speeding up of state enterprises investment programs was intended create new jobs and absorb unemployment.
“The increase in SOE capital expenditure will create a multiplier effect that will boost the state economy,” said Sofyan during a Monday meeting with lawmakers, adding that the SOE are forecast to absorb up to 318,000 new jobs this year.
The ministry is projecting a 22 percent increase in total capital expenditure this year covering the activities of the 63 largest SOEs, involving several key sectors.
Last year, the total capital expenditure from mining and energy, plantations, farm and forestry, and electricity and gas, plus the processing industry, transportation and telecommunications, finance companies, and the construction, trade, and hotel sectors reached a total of Rp 120.7 trillion.
The processing industry is the sector with the highest increase in capital expenditure, increasing by around 817 percent, up from Rp 732 billion in 2008 to an estimated 6.7 trillion for 2009. The ministry has estimated that the sector will create 11,713 new jobs.
Meanwhile, the state owned electricity and gas sector is the biggest spender of capital expenditure, around Rp 60.2 trillion, up by 51 percent as compared to Rp 39.8 trillion last year. Around 70,000 new jobs will be created by the sector, the ministry estimated.
The transportation and telecommunication is the highest sector in terms of employment absorption. The ministry estimates that 129,000 people will join the workforce.
The finance and company sector showed the most sluggish growth, up by only 8 percent to Rp 2.12 trillion as compared to Rp 1.96 trillion last year. The ministry estimated that the sector would only create about 4,000 new jobs.
Apart from the SOEs under disciussion Sofyan said further that the ministry would support construction of sugar factories, palm oil factories and plantation expansion, “Because those projects can absorb employment,” Sofyan said.
The Ministry is now doing a feasibility study to construct biodiesel and bioethanol factories in 2009 worth a total of Rp 587.5 billion, expected to create around 200 jobs.
The ministry is also looking to increase production capacity in North Sumatra’s Sei Mangkei palm oil factory to 75 tons per hour from 30 tons per hour previously, with a total investment of Rp 182 billion, and to construct two biomass powered electricity generators with a capacity of 6 megawatts each, with an investment worth Rp 212 billion in total.
Revitalization of state owned sugar enterprises is also one of the ministry priotities to boost the real sector.
The ministry plans to increase sugar production from 1.76 million tons to 2.61 million tons by 2012.
Apart from increasing capital expenditure, the ministry is also planning to disburse Rp 12.1 trillion in loans this year to promote small and medium enterprises under the People’s Business Loan (KUR) program which is forecast to support 1,139,000 small business credits and 3,417,000 jobs. (FMB)
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