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Govt should expect less from debt-laden SOEs: Analysts
The government will support "sick" SOEs, especially those handling key infrastructure projects, analysts expect, but the aid may not come in a timely manner.
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Workers of PT Waskita Sriwijaya, a subsidiary of state-owned construction firm Waskita Karya, lay a section of the trans-Sumatra toll road in Ogan Komering Ilir regency, South Sumatra, on April 3, 2023. (Antara/Nova Wahyudi)
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nalysts have advised that the government should lower its expectations for state-owned enterprises (SOEs) becoming profitable if it insists on burdening them with tasks that lack commercial viability.
Furthermore, the government may need to disburse more funds to tide over SOEs mired in financial difficulties.
Aside from their noncommercial function to provide public benefits and engage in businesses deemed unfeasible for the private sector, SOEs in Indonesia also have a commercial function to achieve profitability, according to Law No. 19/2003 on SOEs.
This dual function is stretching many SOEs, and not all should count on government help. Support is expected to be selective, and it may come too late for some.
Two SOEs operating in the construction sector, PT Wijaya Karya and PT Waskita Karya, have announced postponed repayments on some of their obligations, prompting rating downgrades for those obligations by local credit rating agency Pefindo.
The news has raised concern about cash flows at other SOEs, especially those building infrastructure.
According to Abra Talattov, head of the Center of Food, Energy and Sustainable Development at the Institute for Development of Economics and Finance (Indef), the problem is rooted in the government's aggressive infrastructure push and in policies assigning SOEs to noncommercial projects.
