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View all search resultsDanantara takes over capital injection role for SOEs
Before Danantara’s formation, any SOE seeking additional capital had to submit a PMN proposal for approval by the House and the Finance Ministry, a process that was anything but swift.
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Global investment: A sign for sovereign wealth fund Danantara Indonesia is seen on Feb. 28 in front of its headquarters in Jakarta. (Reuters/Willy Kurniawan)
S
tate asset fund Danantara is stepping in to provide capital support for state-owned enterprises (SOEs), marking a shift away from direct state-funded injections. While the move is expected to ease the fiscal burden, experts have raised concerns about a potential lack of transparency.
Speaking at an event on Wednesday, Danantara chief operating officer (COO) Dony Oskaria stated “no more state capital injection (PMN) for SOEs”, explaining that future support would flow directly from Danantara as the operational holding managing SOEs assets and dividends.
“We won’t need [PMN] anymore. Why? Because the dividends are no longer pulled back [to the state treasury], they are consolidated, reinvested and used to strengthen our SOEs,” Dony said, as quoted by Kompas.com.
Established in February, Danantara has brought 844 SOEs under its operational umbrella. This year, it is projected to generate around US$7 billion from SOE dividends, which would be used to support other SOEs and invested in promising domestic projects aimed at delivering solid returns and creating quality jobs.
Before Danantara’s formation, Dony explained, SOEs were owned by the Finance Ministry, and their dividends went straight into the state budget. Any SOE seeking additional capital had to submit a PMN proposal to the Finance Ministry, a process that was anything but swift.
Proposals required House approval, Dony noted, and the disbursements often failed to match the actual needs of the SOEs, stunting their growth.
“For example, when we wanted to help Indofarma, we had to submit a PMN proposal to the House of Representatives and the Finance Ministry. If we asked for Rp 1 trillion, there was no guarantee that the full amount would be approved. As a result, it’s hard for these companies to tackle challenges and survive,” Dony said.
