Preferring Not to Go into Debt, Corporations Opt for Self-Funded Financing

Bank Indonesia (BI) notes that the majority, or 56%, of corporations in Indonesia still use their own funds as the primary source of financing as of August 2021. This figure increased from 52.4% the previous month.

Corporate financing is used, among other things, to meet operational needs, pay maturing debts, invest, and support domestic recovery.

The majority of corporations, or 71.4%, cite ease and speed as the reason for using their own capital. 8.26% use their own funds due to lower costs.

Furthermore, 6.1% of respondents use their own funds to optimize existing facilities. 4.1% chose this option to avoid exchange rate risks. Meanwhile, 2% of respondents used their own funds due to a decline in corporate securities ratings resulting from the COVID-19 pandemic.

In addition to using their own funds, 9.3% of corporations obtained financing by increasing loans from domestic banks. However, this percentage decreased from 12.2% the previous month.

Corporations utilizing relaxed credit facilities increased from 7.3% to 8%. Meanwhile, corporations using loans from their parent companies decreased from 7.3% to 5.3%.

Finally, 1.3% of corporations sold unproductive fixed assets as a source of financing in August 2021. The previous month, no corporations had done so.