Government considers converting loans to equity
Nani Afrida, The Jakarta Post, Jakarta | Sat, 08/14/2010 11:14 AM
The government may convert funds borrowed by state companies under the Investment Account Fund (RDI) and Subsidiary Loan Agreement (SLA) facilities into equity, says an official.
RDI and SLA were government loan facilities during the era of former president Soeharto that used funds from development agencies such as the World Bank and the Asian Development Bank.
“These companies have a total of Rp 3.2 trillion [US$358.4 million] and US$3.6 million under RDI and SLA loan facilities,” State-Owned Enterprises Ministry secretary Said Didu told reporters on Friday.
Said said the companies were fertilizer producer PT Pupuk Iskandar Muda, industry firm PT Rajawali Nusantara Indonesia (RNI) and aircraft manufacturer PT Dirgantara Indonesia.
RNI owes the government Rp 1.7 trillion in bad debt while Dirgantara Indonesia owes Rp 1.2 trillion.
Said said that the government would opt to restructure the companies’ debts by converting the loans into equity in the form of state capital participation (PMN).
“One possible option is to convert the loans into PMN, rather than asking those companies to pay the debts gradually,” he said.
Said said there were 40 state firms that had to repay government loans valued at Rp 18.6 trillion, 19 of which had restructured their loans, as of last year.
“Two firms have settled their debts, while seven other firms have agreed to pay their debts gradually,” Said said, adding that 10 firms had restructured their bad debt as PMN.
He said that the government was trying to settle the bad loans to help the companies expand their business and obtain new loans from investors.
“Bad loans create serious problems for the companies’ cash flow. We plan to restructure the bad debts as soon as possible to help the companies’ existence,” Said said.
According to Said, several state firms were on the brink of bankruptcy because they could not settle bad debts, including ship maker PT Industri Kapal Indonesia (IKI), PT Jakarta Llyod and PAN Multifinance,” Said said.
Indonesia currently has 141 state companies in various sectors of the economy.
During the first half of this year, their profits grew 18.26 percent to Rp 45.3 trillion from Rp 38.3 trillion in the same period of last year.
The government targets to make Rp 92.6 trillion in net profits this year, up from Rp 88 trillion last year.
