Erick Thohir: My Instruction to SOEs is Optimal, Measured, and Needs-Based Dollar Purchases

April 19, 2024 - The adversity in reducing inflation levels in the US is partly due to the rise in energy prices. The current war situation makes it challenging for global energy prices to decrease. Consequently, central banks worldwide will respond by delaying the possibility of cutting benchmark interest rates.

As a result, there is a capital outflow from developing countries, leading to bond yields, market interest rates, and ultimately, credit increase. Currently, the yield on government bonds stands at 6.98%.

Erick mentions that SOEs affected by imported raw materials and those with significant foreign debt (in US dollars), such as Pertamina, PLN, pharmaceutical SOEs, and MIND ID, to make dollar purchases wisely, prudently, and according to priorities to meet their needs.

"My instruction to SOEs is to optimize dollar purchases, meaning they should be measured and based on needs, not hoarding. The essence is not to overdo it; we must be wise in dealing with the current rise in the dollar," said Erick.

Erick adds that this is also in line with what Minister of Economic Affairs Airlangga Hartarto and Deputy Minister of Finance Suahasil Nazara have communicated in anticipating the continued impact of geopolitical and global economic upheavals. The government already has instruments in the form of export earnings that it wants to place domestically. Additionally, the government wants consumptive imports to be restrained for the time being.

"Therefore, SOEs' spending and import control must be prioritized and aligned with the most urgent needs," Erick emphasized.

Especially for SOEs with import exposure and debt denominated in US dollars. Erick warns SOE directors to be more vigilant and not excessively buy and stockpile dollars.

Pertamina, as a leading company in the energy transition, is committed to supporting the Net Zero Emission 2060 target by continuously promoting programs that directly impact the Sustainable Development Goals (SDGs) achievement. All these efforts align with Environmental, Social, and Governance (ESG) implementation across all Pertamina's business lines and operations.**