Govt squeezes SOEs to cope with food prices

Desy Nurhayati ,  The Jakarta Post ,  Jakarta   |  Fri, 02/01/2008 4:00 AM  |  Business

The government has told state-owned enterprises (SOEs) to help people cope with the soaring prices, through spending their Rp 1.3 trillion (about US$140 million) CSR budget and boosting their dividend payments.

State Minister for State Enterprises Sofyan Djalil said Thursday after a meeting with the President that all SOEs should start distributing the budget in February and should target short-term and long-term programs that had already been prepared to cope with soaring prices.

The short-term programs, he said, would include discount bazaars and cheap markets, while long-term programs would be in the form of microfinancing for SMEs in the food sector, as well as financial support for professional training.

"We will also intensify the use of state plantation areas to increase the production of staple foods and help local farmers," he said.

Finance Minister Sri Mulyani Indrawati said that SOEs needed to increase their dividend payments from the previously agreed amount of Rp 23 trillion to Rp 31 trillion this year, so as increase the capacity of the state budget to deal with the food price crisis.

She said state income from business sectors that earned windfall profits, including mining and other sectors that had benefited from the rising prices of their commodities, had to be optimized.

"The government will give more subsidies to non-energy sectors especially food, while control over subsidies for energy sectors should come from the consumption side."

She said the key factor to minimizing subsidies without increasing prices was by improving the efficiency of state oil firm Pertamina and the state electricity company, PLN.

"We call on the two enterprises to remain on track in budget spending so there will be no discrepancies or exceeding the allocated budget," the minister said.

Sofyan said the government's policy to increase dividend payments from SOEs should not disrupt their performance.

"The most important thing is that the obligation to pay more dividend does not hamper enterprises in expanding their businesses," he said.

Sofyan said the government would also charge more tax, including export duties, on products whose prices had increased over recent months.

He said SOEs should also be more efficient in using energy. The government had called on SOEs to audit on their energy consumption and continuously monitor it because their consumption would affect the amount of subsidy, he said.

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