The capital injections will be used to save several toll road projects being built by heavily indebted state-owned construction and property developers.

PT Hutama Karya whose major projects include the trans-Sumatra toll road racked up cumulative losses of Rp 4.9 trillion between 2020 and 2022 before it made profits amounting to Rp 1.9 trillion in 2023. It had received a capital injection totaling Rp 47.4 trillion from the government.

PT Waskita Karya, another state-owned construction company, has been losing money since 2019, and its cumulative losses stood at Rp 19.6 trillion as per 2023. Its debts have reached Rp 60 trillion or nearly six times its equity, and it is currently in negotiation with 21 banks on restructuring its Rp 41.2 trillion in debts.

The government has also given Rp 3.2 trillion in additional capital injection to PT Kereta Api Indonesia (PT KIA) to be used to cover the cost overrun in the construction of the Jakarta-Bandung High Speed Railway, estimated at $1.49 billion caused by delays, accidents and cost miscalculations.

SOEs in the construction industry have been involved in highly leveraged infrastructure projects that have resulted in cash flow mismatch and debt default. This is because once SOEs start investing in the projects they are exposed to liquidity risks as they wait for their infrastructure projects to become operational and to generate cash flow.

But not all SOEs have experienced financial distress. SOEs in finance and energy performed well last year. State-owned banks have produced robust profit growth. The two largest SOEs in the energy sector Pertamina, the state oil company, and state electric company PLN have also performed well.