Stefanno Reinard Sulaiman, Jakarta – Since President Joko "Jokowi" Widodo assumed power in 2014, he has made infrastructure development one of his main programs, with many state-owned enterprises (SOEs) involved in most of the projects.
The decision of the administration to give SOEs the infrastructure projects has left the business community with a question about fairness.
Meanwhile, there are also questions about the financial performance of these state-owned companies and the situation of the state budget regarding the financing of those projects.
Less than two months before the April 17 presidential election, the government hosted a meeting in Jakarta with leaders of about 150 SOEs, reminding them about how supportive the government is for their activities.
SOE Minister Rini Soemarno emphasized that the support for the SOEs started at the beginning of President Jokowi's tenure in 2014.
"The goal is to illustrate that for the last four years [until 2018], we [SOEs] have been fully supported by Jokowi, especially in the first days of the government when he made capital injections into SOEs," she said."[The capital injection] allowed us to invest and to complete many of the government's programs, especially for connectivity."
The total capital expenditure (capex) of the SOEs was Rp 221 trillion (US$15.6 billion) in 2015, which doubled to Rp 487 trillion in 2018, according a document obtained by The Jakarta Post.
The capex was mainly for infrastructure projects, which had been the main mission of the Jokowi administration for the last four years before it changed its focus to human development this year.
The government debt, however, rose 84.2 percent from Rp 1.2 trillion in 2015 to Rp 2.3 trillion last year and then its third-party funds (DPK) also rose 30.3 percent from Rp 2.4 trillion in 2015 to Rp 3.2 trillion.
"[Growing debt] is normal, just like [for] any other growing company," SOE Ministry secretary Imam Apriyanto said. "The amount of debt is still at a safe level."
Meanwhile, the total assets of SOEs as of December 2018 were worth Rp 8.09 trillion, 40.4 percent higher than their total assets worth Rp 5.7 trillion in 2015.
The profits of SOEs grew 25.3 percent to Rp 188 trillion last year, up from Rp 150 trillion in 2015, making their contribution to the state budget in the form of taxes, non-tax revenues and dividends Rp 422 trillion, a 39.2 percent increase from 2015.
"By the end of this year, we aim to book Rp 200 trillion in profits, a 6.3 percent [increase] from last year's Rp 188 trillion," Imam said.
When asked about the number of SOEs that are still recording losses, Rini said there were fewer than a dozen. Imam explained that two of them were the state-owned PT Merpati Nusantara Airlines and the state postal service, PT Pos Indonesia.
"The clear message from the minister to them [the SOEs in a loss position] is that there must be no more cases of salary payment delays, especially cases of unpaid salaries," he said.
Back in November, it was reported that Merpati had a total debt of Rp 10.95 trillion: Rp 1.09 trillion owed to preferential creditors, Rp 5.99 trillion to concurrent creditors and Rp 3.87 trillion to separate creditors.
Meanwhile, the latest news about Pos Indonesia's financial problems was that workers were not paid their salaries for at least a month earlier this year.
In the energy sector, Imam said state-owned energy holding company Pertamina and state-owned electricity firm PLN still booked profits last year. He did not disclose the exact amounts.
Pertamina finance director Pahala Mansury said last year the firm booked at least Rp 5 trillion in profits. "We'll wait for the final audit from the Supreme Audit Agency [BPK] and hopefully it could by published by end of March," he said.
In previous years, the company was able to book profits of at least Rp 20 trillion, so Rp 5 trillion would be only 25 percent of the norm.
Imam of the SOE Ministry said the government has not yet devised a plan to privatize SOEs in a bid to increase their capital this year, but only focused on completing the program to set up "holding" programs.
"[The programs to set up holding companies that are] in the pipeline are for infrastructure, housing, pharmaceuticals and asset management. By doing this, we could speed up the process of getting extra funds and avoid the use of the state budget," he said.
Commenting on the performance of SOEs under the four years of Jokowi's tenure, an SOE expert from the University of Indonesia, Toto Pranoto, said the establishment of holding companies has proven to be effective.
"In some parts, the holding company has shown a positive trend, but there's still room for improvement. Cement and fertilizer holdings have gone well, but the plantation holding company still lacks improvement," he said.
Fertilizer and cement holding companies were set up before the 2000s under the names of the Pupuk Indonesia Holding Company (PIHC) and PT Semen Indonesia.
The move was followed by the setting up of a plantation-forestry holding company under the name PTPN III in 2014, three years later by the Pertamina energy holding company and four years later by the PT Indonesia Asahan Aluminium mining holding company.
Another task, Toto said, is to slim down the cost structures of several SOEs, especially of SOEs that have big leverage, such as PLN, state-owned steel producer Krakatau Steel, national flag carrier Garuda Indonesia and Pertamina.
Toto said he believes the aim of having total profits from SOEs of Rp 200 trillion this year would not be easy as the growth of revenues is not big enough because of global factors, such as growing trade protectionism.
"So [to achieve the target] they need to radically repair the cost structure [in each SOE], or basically make all activities more efficient as that would compensate for the low growth in revenues." he said.
Source: https://www.thejakartapost.com/news/2019/03/11/how-are-soes-performing-under-jokowi.html