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Working Paper Collection of LPEM-FEBUI

Author: Denny Irawan, Tatsuyoshi Okimoto Executive Summary   Capital structure is one of the most critical decisions for firms in business. This study examines the role of macro (economic and non-economic) uncertainties in affecting firms’ capital structure management. Three prominent capital structure theories are tested for global resource firms: (1) static trade-off, (2) pecking order, and (3) market timing theory. The results suggest that no single theory prevails, although both pecking order and market timing theories have certain explanatory power to explain sample firms’ financing behaviour. The pecking order theory is strongly supported by the results of the leverage target adjustment model. However, the downward cyclical patterns of pecking order coefficients suggest that the resource firms tend to choose debt financing less and less over time, particularly after 2008. The market timing theory holds strong, as indicated by the significance of macro condition (uncertainties) variables in determining sample firms’ capital structure, especially after 2008 and for non-renewable firms. However, the main proxies of the cost of debt are not statistically significant. In conclusion, this study finds that resource firms have a particular pecking order preference when they need financing, and the influence of macro uncertainties are vital in determining their capital structure.…
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Author: Nauli A. Desdiani, Fachry Abdul Razak Afifi, Amalia Cesarina, Syahda Sabrina, Meila Husna, Rosalia Marcha Violeta, Adho Adinegoro, and Alin Halimatussadiah Executive Summary The establishment of national climate policy targets has forced the local government to set ambitious climate goals supporting the national government to achieve its proposed target. Besides low awareness of climate change and environmental risk impacts, the biggest challenge faced by the local governments to exert climate actions lies in the financing of the programs. This paper aims to analyze the current local government budget on climate and environmental activities and identify available potential financing sources to finance local government climate and environmental initiatives. We found that the local budget allocation for environmental spending increased from 1% in 2016 to 3% in 2020, yet it is still relatively low and insufficient for achieving the climate target. With a limited budget, local governments must find additional potential financing sources for financing their climate actions. Through case study analysis, insights from several regions that have gained harness of potential from various climate and environmental financing initiatives to overcome environmental issues in their areas and reach climate and environmental goals were attained. To address local budget shortages problem for climate and environmental activities, several strategies for the local government are proposed: (1) optimizing and improving the quality of spending from intergovernmental fiscal transfer; (2) adopting Climate Budget Tagging (CBT); (3) increasing local-own source revenue from natural resource and environmental based activities; (4) valuing regencies and/or cities with high ecological…
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Author: Dhaniel Ilyas Executive Summary Using micro commuting data in 2015, I estimate travel demand of Denpasar greater area. Motorcycle and car are still more preferred greatly compare to public transport. Faster travel time are the most important factor that drive the use of motorcycle and car in Denpasar greater area. Younger people seems to use the public transport more, including the Trans Sarbagita BRT. An incentive in pricing for older group of people and improving the bus scheduling might help increase the use of public transport.…
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Author: Denny Irawan, Tatsuyoshi Okimoto Executive Summary This study examines the conditional capital surplus and shortfall dynamics of renewable and non-renewable resource firms. To this end, this study uses the systemic risk index by Brownlees & Engle (2017) and considers two conditional systemic events, namely, the stock market crash and the commodity price crash. The results indicate that generally, companies in the resource sector tend to have conditional capital shortfall before 2000 and conditional capital surplus after 2000 owing to the boom of the commodity sector stock and the moderate-to-careful capital structure management adopted by these companies. This finding is especially valid for resource firms from developed countries, whose observations dominate the dataset used in this study. Furthermore, the analysis using the panel vector autoregressive model indicates a positive influence of commodity price, geopolitical, and economic policy uncertainties on the conditional capital shortfall. These uncertainties have also been proven to increase the conditional failure probability of firms in the sample. Lastly, the performance analysis shows that potential capital shortfall is positively related to market return, reflecting a high-risk high-return trade-off for this sector.…
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Author: Teuku Riefky, Faizal Rahmanto Moeis, Yusuf Sofiyandi, Muhammad Adriansyah, Anas Izzuddin, Aqilah Farhani, Sendy Jasmine Executive Summary Indonesia is in the middle of its long-term development challenge to escape the ‘middle-income trap’. As often as developing countries face the same challenge, one common strategy to be implemented by the Government of Indonesia (GoI) is to develop a massive infrastructure plan across the country. Despite the ambitious development and planning of infrastructure in Indonesia, Indonesia’s current state of infrastructure is under threat due to natural disasters. Natural disasters cause damage to infrastructure, which affects the infrastructure’s ability to provide benefits for the society and economy. The geographical position of Indonesia and climate-related factors have raised the exposure of environmental risks and climate change to Indonesia’s infrastructure. In general, the current infrastructure conditions in Indonesia are simply not resilient enough to endure future disaster and climate change risks. Therefore, to mitigate and adapt to these risks, Indonesia should build resilient infrastructures, which are able to withstand damage or disruptions, but if affected, can be readily and cost-effectively restored (Scalingi, 2007). Indonesia has created several national-level development plans for resilient infrastructure development, such as the 2014 RAN-API, 2012 RAN-MAPI, and the 2020–2024 RPJMN that complement each other, emphasize resilient infrastructure to reduce losses due to disasters. Regionally, several districts have their own climate change adaption disaster risk reduction plan, such as Makassar City and Kupang City, that accommodate local disaster and climate risks. However, not all districts have designed their climate change…
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9 Agustus 2021 Author: Atiqah Amanda Siregar, Faizal Rahmanto Moeis, and Wildan Al Kautsar Anky   Abstract Providing access of decent work for all can push the attempt of poverty eradication. However, the decent works will not be attainable without the support of inclusive and equitable education, particularly for people with disability (PWD). To date, PWD still faces challenges in obtaining minimum education, decent work, and adequate supporting infrastructure. Thus, this study aims to analyze; (1) the probability of PWD in getting employment; (2) how much the earning handicap of PWD compare to PWOD group, and (3) how the pandemic of COVID-19 affects the PWD workers. Our study suggests that more experienced, educated, and trained labour force will improve the likelihood of working and having wages. PWD tend to have lower educational attainment and training participation compared to PWOD which provide barriers to achieve jobs that are more productive and end up earning lower wages. Moreover, the reduction of wages are highest among PWD with mobility-related disabilities. Yet, the discussion of factors affecting the low wage of PWD remain inconclusive. Further, in the time of COVID-19 pandemic, all participants of Kartu Prakerja Program from PWD group, who managed to finish the training, perceived that the program increased their skill. Despite of other remaining issues, this is encouraging as the value-added skills can be useful in the labour market, particularly for PWD.…
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7 Agustus 2021 Author: Yusuf Sofiyandi, Yusuf Reza Kurniawan, Khoirunurrofik Khoirunurrofik, Prayoga Wiradisuria, and Dikki Nur Ahmad Saleh   Abstract This paper studies the impact of mobility restriction on daily mass rapid transit (MRT) ridership in Jakarta-Indonesia, and its implication for the farebox revenues during the pandemic COVID-19 outbreak. For the analysis, we primarily used the fare cost and daily passenger datasets of 156 origin-destination pair routes from April 2019 to May 2021. Three types of mobility restrictions are examined: (i) 50% of maximum passenger capacity setting, (ii) station closures, and (iii) changes in service operating hours. A panel dynamic fixed-effects regression model was fitted to quantify the economic losses on farebox revenue due to the mobility restrictions. We find that the average daily MRT ridership decrease by 56.6% due to capacity restriction, 32.6% due to station closures, and 1.7% due to a one-hour decrease in service operating hours. The station closures lead to a route diversion with a significant increase in ridership among other stations. While the effects of capacity restriction and changes in service operation hours have a larger impact during weekdays, the effect of station closure is more pronounced during the weekend. Our estimation results also reveal that the mobility restrictions during the COVID-19 pandemic have caused a loss of IDR 179.4 billion or equal to USD12.4 million in terms of potential farebox revenues to the MRT train service operator. This amount could contribute to 65.6% of total realized farebox revenues in 2019–2020. This finding suggests the…
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