T

he government plans to get more state-owned enterprises to float shares on the stock market, so that they will no longer rely on state capital injections to finance their growing investment needs.

A number of state-owned companies were being prepared to float their shares on the stock market through initial public offerings (IPO), but at present only aluminum producer Indonesia Asahan Aluminium (Inalum) was well prepared to do so, State-Owned Enterprises Minister Rini Soemarno said in Jakarta on Monday.

'€œWe are currently studying whether there are companies that we can encourage to go public this year,'€ she told reporters following the official launch of trading activities on the Indonesia Stock Exchange (IDX) following the year-end break.

Besides asking more state firms to conduct IPOs, the government would also encourage listed state-owned companies to carry out rights issues, so that the investing public would have a chance to increase their ownership in state firms, Rini said.

'€œWe are also studying the possibility of increasing public stakes in state companies that are already listed on the stock market,'€ she added.

With regard to Inalum, which was formerly owned by a consortium of Japanese companies, Rini said that the company was among the state firms with the greatest potential.

'€œThere are a lot of things that can be developed from Inalum, given the company is currently working on a number of downstream projects,'€ she explained.

Inalum president director Winardi Sunoto said that as a state-owned company, the aluminum maker was ready to go public anytime the government wanted.

Winardi said that his company needed around US$3 billion for a five-year investment plan, which included a plan to double its production in 2020 from current output of 260,000 tons and to provide necessary infrastructure '€” such as power plants and seaports.

Conducting an IPO was among a number of options that were being assessed by Inalum, which has total assets of $1.2 billion, in seeking additional funds to finance its expansion, Winardi said.

'€œWe are prepared to go public anytime. However, holding an IPO requires a process, which includes securing approval from the House of Representatives,'€ Winardi told The Jakarta Post.

IDX president director Tito Sulistio said that complicated bureaucratic procedures had discouraged state-controlled companies from carrying out IPOs. According to him, a state firm must obtain approval from 25 agencies in order to list on the stock market.

He cited the case of national flag carrier Garuda Indonesia, which needed around four years to go public '€” in comparison to only around three months needed by private companies.

Tito said that he would propose a scheme to significantly expedite the IPO process for state firms to around 20 weeks.

Ahmad Hafiz Thohir, chairman of House Commission VI, which oversees state-owned firms, said that Rini and Tito'€™s plans should be discussed by House members, adding that the commission opposed any plan to sell the shares of profitable and high-potential state-owned companies to the public.

'€œWe can only sell state-owned companies that do not bring significant benefits for the country,'€ he added.

This year'€™s capital injections amounting to Rp 40.42 trillion for 24 state-owned enterprises were put on hold as lawmakers argued that the figure set for 2016 was too large and that this year'€™s capital injections had not even been optimally disbursed. A rights issue held by a listed state-owned firm without being preceded by a state capital injection will lead to the government'€™s shares being diluted.

There are 20 state-run companies and two state-run enterprise subsidiaries listed on the IDX, compared with the country'€™s total 119 state-owned firms and more than 700 subsidiaries.

According to IDX documentation, state-run firms account for 24 percent of the bourse'€™s market capitalization, despite their numbers making up less than 5 percent of the 517 companies listed on the bourse.
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