Krakatau Operation Should Be Maintained, Garuda Should Fly

KOMPAS/ PRIYOMBODO

President Director of PT Krakatau Steel (Persero) Tbk Silmy Karim gave information related to the steel industry in the country during his visit to Kompas Daily Editorial in Kompas Tower, Central Jakarta, Monday (29/7/2019).

JAKARTA, KOMPAS – The Covid-19 outbreak has had a severe impact on various economic sectors, including steel and airline industries. The government’s bailout funds for a number of state-owned enterprises (SOEs) are expected to support the country’s economic recovery.

According to the Finance Minister’s data issued on Wednesday, five SOEs have received capital injections from the government. They include Garuda Indonesia, PT Krakatau Steel, PT Kereta Api Indonesia PT Perkebunan Nusantara and Perumnas.

The president director of Krakatau Steel, Silmy Karim, said on Tuesday the harsh impact of the Covid-19 outbreak on the economy since April 2020 had caused a decline in steel demand by about 50 percent.

"This has severely affected working capital of industrial players because they have to bear the financial burden during the past three months to keep their business afloat,” Silmy said via text message.

Also read : Understanding Economic Phenomenon during the COVID-19 Outbreak

Kompas/Dwi Bayu Radius

A Krakatau Steel employee monitors the manufacture of hot steel sheets in Cilegon, Banten.

Due to limited working capital, many industry players face difficulties in buying raw materials and finance their operating costs. The downstream industry, especially steel users, may be forced to shut down their operations if the business condition worsens further and no measures are taken to solve their financial problems.

Krakatau Steel, with government support, has taken an initiative to help the downstream industry, especially the steel user industry, to enable them to continue operations. The initiative is expected to revive the supply chain within the upstream and downstream industries, which will in turn support the national economic recovery program.

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Arya Sinulingga, an aide to State-Owned Enterprises Minister Erick Thohir, said it was normal if the government provided bailout funds for Krakatau Steel, which operates in the upstream steel industry. If the company further suffered financial losses, it would bring multiple impacts on industrial players in the downstream sector, he said. “If the company collapses, Indonesia as a whole will suffer loss. So it is quite normal if the government bails out the company,” he added.

KOMPAS/Lasti Kurnia

President Director of PT Garuda Indonesia (Persero) Tbk Irfan Setiaputra.

Arya said that state-owned companies (SOEs) must still seek funds from other parties to pay debts. The SOEs cannot utilize the injection of bailouts from the National Economic Recovery to pay debts.

Separately, in an online discussion organized by a forum of transportation journalists on Tuesday, the president director of Garuda Indonesia, Irfan Setiaputra, said the airline should be able to fly in any condition because it was the task of the airline to provide flight services in the country.

"We must be as creative as possible in dealing with the situation while looking for ways to restore business and speed up recovery,” he said.

According to Irfan, there must be confidence that the hard times caused by the Covid-19 outbreak will end. The faster the outbreak passes, the faster economic recovery will be.