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State plantation, forestry firms expected to improve
The countryâs state plantation and forestry companies are expected to perform much better following the signing of a government regulation on the establishment of holding companies for both sectors
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he country's state plantation and forestry companies are expected to perform much better following the signing of a government regulation on the establishment of holding companies for both sectors.
Under the signed regulation, PT Perkebunan Nusantara (PN) III will serve as a holding company for the plantations, acting as the parent company for 12 other state plantation firms.
State forestry firm Perum Perhutani will become the parent company for several state forestry companies including Perhutani and PT Inhutani I, II, III, IV and V.
'The regulation has been signed by Mr. President,' State-Owned Enterprises Minister Dahlan Iskan said recently, adding that the plan to establish the two holding companies had been around for 12 years.
The establishment of the holdings would help boost the financial performance of the state-owned enterprises (SOEs) concerned, he said.
'State plantation enterprises grow on average by only around 3.4 percent, far below the average growth of private plantation firm PT Astra Agro Lestari, which grows by 14 percent,' Dahlan said.
SOEs Ministry secretary Imam A. Putro said that the establishment of holdings would significantly boost the financial performance of concerned SOEs in the future, including their profits, assets and capital.
The ministry estimated that the net profit of the plantation holding company could reach up to Rp 21 trillion (US$1.7 billion), with total assets of Rp 121 trillion in 2019, he said.
'Meanwhile, for the forestry holding firm, we predict that the net profit will hit Rp 566 billion with total sales of Rp 7.8 trillion in 2019,' he said.
Perhutani, whose financial performance is the best compared to other state-owned forestry firms, booked only Rp 3.86 trillion with a net profit of Rp 204.9 billion last year.
SOEs expert Said Didu said the establishment of plantation and forestry holding companies was a good sign of progress.
The idea to form SOEs holdings has been actually around for more than 15 years, initially developed by former Indonesian SOEs minister Tanri Abeng in 1998.
Tanri, who helmed the SOEs Ministry in 1998-1999, made a road map to slash the number of state companies to 10 sectoral holding companies under one super-holding firm, similar to Malaysia's Khazanah and Singapore's Temasek.
The plan, however, was not realized during his tenure, except for merging four ailing state-owned banks ' Bank Bumi Daya (BBD), Bank Dagang Negara (BDN), Bank Expor Impor (Exim) and Bank Pembangunan Indonesia (Bapindo) ' into Bank Mandiri.
The establishment of Bank Mandiri in 1998 was part of the government's bank restructuring program following the financial crisis.
'The establishment of state holding companies is important to make Indonesia's SOEs bigger and stronger,' he said.
However, the chairman of House Commission VI overseeing SOEs, Airlangga Hartarto, said separately that not all SOEs have to be consolidated through the establishment of a holding company.
'Forestry and plantation holdings can lead to the release of the firm's assets because a large portion of their assets can be converted into properties, which have high value,' he told The Jakarta Post.
