SOEs debt ratios worsen: S&P
The Jakarta Post
Standard & Poor Global Ratings has said the debt to earnings before interest depreciation and amortization (EBITDA) ratios of state-owned enterprises (SOEs) have been worsening in recent years.
S&P analyst Xavier Jean said SOEs, whose debt to EBITDA ratios were worsening, particularly those that were involved in the government’s infrastructure projects like electricity power plants and other construction work, as they needed a large amount of capital.
He said the ratio of 20 SOEs listed on the bourse and assessed by S&P increased by five times.
“We are monitoring the trend. I think the trend will continue and may increase in 2018 and prior to the 2019 elections,” Jean said as reported by kontan.co.id on Thursday.
Improving the country’s infrastructure is a priority of President Joko “Jokowi” Widodo. The government estimates that the infrastructure projects need US$450 billion from 2014 to 2019.
However, SOEs involved in the projects had to seek financial support for their working capital and for the salaries of their workers. Meanwhile, their projects, particularly those in remote areas, do not produce immediate revenue for the companies.
“It is not clear for us if the investments by the companies outside of Java, in the areas where the population is less dense, will be profitable projects or not,” Jean added. (bbn)
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