After Federal Reserve Chairman Ben Bernanke, in late May 2013, started to speculate about a winding down of the USD $85 billion per month bond-buying program, international investors were quickly pulling money out from emerging economies. Indonesia was one of the most badly affected emerging economies as the country has been coping with high inflation after the government raised prices of subsidized fuels in June 2013 as well as a record high current account deficit of USD $9.9 billion in the second quarter of 2013 (equivalent to 4.4 percent of the country's GDP). Inflation remains high at 8.22 percent (year on year) in January 2014 but is expected to ease markedly in the months ahead, while the current account deficit has been moderating more quickly. By the end of 2013, the deficit is expected to have declined to about 3.5 percent of GDP.

Garuda Indonesia

Garuda Indonesia, the country's only publicly listed airline, reported a 90 percent plunge in net income to USD $11 million in 2013 (from USD $110.6 million in 2012). Besides feeling the impact of the weak rupiah exchange rate as around 60 percent of the company's costs were in US dollars, intense competition within Indonesia's aviation sector has pushed down profit margins significantly. Several airlines, including Garuda Indonesia, Lion Air and AirAsia Indonesia, have invested heavily in purchases of new airplanes. Although air passenger growth in the Asia Pacific continues to show robust growth, the arrival of many new airplanes also raises concern about whether the industry is leading to overcapacity.

Perusahaan Listrik Negara

Perusahaan Listrik Negara (PLN) is the fully state-owned company that is tasked with supplying electricity to the people and industries. The company in fact has a monopoly on the distribution of electricity in Indonesia. Although private investment in electricity generation is allowed (and very welcomed by the government as the country needs to increase its electricity supply), it is mandatory to sell electricity output to PLN before it can be further distributed to households. It is also interesting to note that PLN depends heavily on government subsidies to maintain its business as the company sells electricity at rates that are below production costs. In 2014, the Indonesian government allocated IDR 81.7 trillion (USD $6.8 billion) for electricity subsidy spending in the State Budget (APBN), down from IDR 100 trillion in 2013 as electricity tariffs were raised last year and this year.

On Monday (10/02), PLN's Finance Director Setio Anggoro Dewo stated that PLN recorded a net loss of IDR 30.9 trillion (USD $2.5 billion) in 2013, an enormous decline from the company's net profit of IDR 3.2 trillion (USD $264.5 million) in 2012.  

The company's foreign-exchange denominated debts were the main cause for this downslide. Based on PLN's financial statements, the company has total outstanding debt of IDR 466 trillion (USD $38.5 billion), 30 percent of which is foreign-denominated. These foreign-denominated debts are in the form of loans (from the World Bank, Asian Development Bank, and Japan International Cooperation Agency) and global bonds.

Further Reading:

Company Profile of Garuda Indonesia
Company Profile of Perusahaan Listrik Negara (PLN)
Full Year 2013 Financial Results Indonesian Companies