"We estimate that we will earn around Rp 75 trillion (US$6.2 billion) in net profits from our enterprises last year, below the targeted Rp 81 trillion," secretary to the SOE minister, Said Didu, said on Friday.
The estimated net profits of 2008 are only around 4.7 percent up on that of the year 2007, and sluggish when compared to the 32 percent net profit growth in 2007.
According to BUMN (SOE) Watch reports, profits from state firms reached Rp 71.59 trillion (US$7.9 billion) in 2007, a 32 percent rise from the Rp 54.4 trillion booked in 2006.
He said the weakening rupiah against the dollar last year led to currency losses which could amount to Rp 12 trillion, hence, undermining the ministry's net profit target.
"In January, the rupiah opened at Rp 9,300 but by the end of the year it had closed at around Rp 11,900," he said.
He said that enterprises that relied on dollars to finance their operations and state publicly listed companies were the ones that suffered the most in these conditions.
State enterprises like PT Pupuk Sriwidjaja (Pusri) suffered around Rp 2 trillion in currency losses, while PT Pupuk Kujang (Kujang) lost about Rp 1 trillion. PT Perusahaan Gas Negara (PGN) suffered considerable losses due to its exposure to exchange losses, Said added.
Based on their contracts with gas suppliers, state fertilizer enterprises like Pusri and Kujang are required to purchase gas for production in US dollars and to provide a certain amount of standby cash guarantees, the figure for which generally depends on the amount of fertilizer to be purchased.
Meanwhile, despite PGN's good performance, profits and revenues last year, the company was left damaged by the local and regional stock market collapse in October last year, and resorted to buying back its own shares in order to help restore market confidence and liquidity.
Given the widespread currency losses by SOEs last year, the ministry is taking more cautious steps on the planning of this year targets.
"This year, we'll be expecting a decrease in net profits from last year's target, but we still can't say for sure how much," Said said.
"However, we will continue to expand our businesses despite last year's currency loss," he added.
At least 63 of the largest SOEs have increased their capital expenditure by an average of 22 percent, totalling Rp 146.9 trillion this year, in order to boost the growth of the real sector.
The ministry is hoping that this increase in capital expenditure will help absorb up to 318,000 new jobs this year.
The ministry would also support construction of sugar factories, palm oil factories and plantation expansion, as well as disbursing
Rp 12.1 trillion in loans this year to promote small and medium enterprises under the People's Business Loan (KUR) program.
The 2009 program is forecast to support 1,139,000 small business credits and 3,417,000 jobs. (fmb)
