Urip Hudiono, Jakarta – The country's state-owned-enterprise (SOE) sector is still in poor shape, with its overall financial performance in 2005 only showing a slight improvement over the previous year.
A total of 108 out of 139 SOEs – or 77 percent – booked combined profits of Rp 40.6 trillion (US$4.3 billion) last year, State Minister for State Enterprises Sugiharto told a House of Representatives hearing Monday, while 31 (22 percent) suffered combined losses of Rp 6.11 trillion.
Although the number of profitable SOEs in 2005 in percentage and profit terms increased from the previous year, the number in the red also increased.
In 2004, 114 out of 158 SOEs (71 percent) enjoyed total profits of Rp 37.7 trillion, while 27 (17 percent) suffered losses of Rp 4.8 trillion.
"Last year was a bit better for our SOEs, with 82 having improved their performance – 68 that booked profits in 2004 further increased them, while 14 that experienced losses managed to reduce those losses," Sugiharto said.
Last year's SOE financial performance snapshot included 45 unaudited and preliminary financial results. The State Ministry for State Enterprises expects all the SOEs to have submitted their audited accounts by June 30.
Sugiharto explained that last year's unfavorable economic conditions – with major fuel price hikes, high inflation, soaring interest rates and a volatile rupiah – were the main reasons for the only slight improvement in the performance of the country's SOEs, which the government is actually relying on to beef up budget revenues.
"Fuel-sensitive SOEs were burdened with higher operating costs last year, with state power firm PLN being the worst affected," he said.
"Several state lenders were also affected by Bank Indonesia's stricter lending rules and legislation forbidding them from adopting more flexible debt restructuring schemes," he said.
The government's failure to address rampant corruption and inefficiency in many of the country's SOEs over the years may also be a contributing factor in their poor performances.
Debt-ridden state airlines Garuda Indonesia and Merpati Nusantara could even be grounded by the end of this year without a bailouts. The State Ministry's efforts to raise money for this from more profitable SOEs is hampered by their own unconvincing performances, Sugiharto said.
SOEs contributed Rp 12.7 trillion in dividend payments to last year's budget, only slightly higher than the Rp 12 trillion target set for them. They are expected to contribute Rp 23.2 trillion this year.
The government is also hoping to make Rp 1 trillion from SOE privatizations this year. The State Ministry canceled last year's Rp 3.5 trillion privatization target, citing the unfavorable market situation and a reluctance to press ahead due to nationalistic sentiment, and decided to try to boost SOE profits instead.