T

he State-Owned Enterprises (SOE) Ministry is preparing a roadmap for its long-delayed establishment of SOE holding companies as the government urges state firms to play a larger role in the country'€™s economy.

SOE Minister Rini Soemarno has presented the plan to President Joko '€œJokowi'€ Widodo and the House of Representatives as the roadmap would last until 2018, according to Gatot Trihargo, the ministry'€™s deputy for business services.

'€œ[Minister Rini] presented the plan on Thursday evening to the president that there will be 16 sectors with SOE holding companies, including banking and insurance,'€ Gatot said over the weekend, while declining to mention details about the companies as many of them were publicly listed.

Gatot said the ministry would coordinate with the House and other relevant ministries, as well as with state agencies, regarding the roadmap, which consists of at least three options for the forms of the holding companies.

According to Gatot, one of the three options is to be chosen to become the first phase before the government proceeds to the long-delayed vision of having a super-holding company, like Temasek in Singapore and Khazanah in Malaysia.

'€œ[SOEs] have many stakeholders, so that we will discuss which one is better between those options. We actually have chosen one of them, but it will need a tremendous effort to begin with,'€ he said, refusing to give details about the chosen option.

Rini has previously hinted that the plan to build giant holding companies for each state firm sector when she gathered all executives from the country'€™s SOEs for a focus group discussion aboard the KM Kelud passenger ship on a visit to Karimunjawa Island, Central Java, in late November.

Rini said the meeting was meant to enhance the synergy between SOEs that could result in new mergers and the establishment of holding companies in the future, including a plan to build a state-owned holding company in the mining sector.

Currently, the country has just one state-owned holding company in the plantation sector, led by PT Perkebunan Nusantara III.

Gatot said sector-based holding companies would be essential to boost the capacity and increase the efficiency of Indonesia'€™s 199 SOEs, which own total assets worth Rp 4.2 quadrillion (US$302.2 billion), as the country'€™s state budget would be limited in supporting their growing business in the future.

'€œWe have understood that state injections [PMN] are needed for those directly related to the people'€™s needs, not the commercial-based ones.

That'€™s why we need to build holding companies,'€ Gatot said.

This year the House has approved state injections totaling Rp 34.3 trillion for 23 SOEs, lower than the proposed Rp 39.4 trillion for 25 companies.

For next year, the House of Representatives and government have agreed to impose a temporary moratorium on the disbursement of the Rp 40.42 trillion in PMN funds as three of the 10 party factions '€” namely the Golkar Party faction, the Prosperous Justice Party (PKS) faction and the Gerindra Party faction '€” have strongly argued that the funds should be used for more pressing issues, such as village infrastructure and tackling forest fires.

Both the House and government agreed to '€œfreeze'€ the funds until the two sides meet again at the beginning of next year to revise the 2016 state budget.

With the holding companies scheme, Gatot said the channeling of PMNs from SOEs to their subsidiaries could be accelerated and help the government to shorten the period of dividend pay-outs from June and July into the four quarters of each year.

'€œThey will also have better leverage in terms of a debt-to-equity ratio as they will have improvements in ratings,'€ he said.