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SOEs Ministry seeks Rp 72t fund for firms in 2022
The SOEs Ministry has proposed injecting more than Rp 72 trillion into state firms in 2022 to help an ailing public sector, but the Finance Ministry is not yet on board.
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he State-Owned Enterprises (SOEs) Ministry has proposed more than Rp 72 trillion (US$4.97 billion) in state capital injections (PMN) for state-owned companies next year, marking an increase of more than 7 percent from this year’s allocation.
Minister Erick Thohir said many SOEs, particularly in the construction sector, were too short on capital to implement government projects and that some even lacked the cash to stay afloat in the pandemic-ravaged economy. Half of the proposed funds would therefore be directed to this sector.
The rest of the funds would go to SOEs in other sectors such as banking, tourism and food and beverage, he said, with the majority engaged in government projects.
“Most of the [proposed] funding is inevitable,” Erick told lawmakers during a House of Representatives hearing on Thursday. He added that the SOEs Ministry had not yet secured the Finance Ministry’s agreement on the proposed amount, but would continue to press on nevertheless.
According to ministry data, the four construction SOEs to receive the funds are PT Hutama Karya (HK), slated to get the lion’s share of Rp 31 trillion, or 43 percent of the proposed 2022 PMN, followed by PT Waskita Karya with Rp 3 trillion, PT Adhi Karya with Rp 2 trillion and PT Perumnas Rp 2 trillion.
More than Rp 9 trillion of the 2022 PMN would go toward establishing a new state-owned tourism and aviation holding company called PT Aviasi Pariwisata Indonesia, or Aviata for short. The new holding company is to comprise at least seven SOEs in the two sectors, including flag carrier Garuda Indonesia and the Indonesia Tourism Development Corporation (ITDC).
State electricity firm PLN would receive more than Rp 8 trillion next year. Deputy SOEs Minister Pahala Nugraha Mansury told the House that the money would fund several government projects, including a new 22-gigawatt power plant for the national grid to power new priority tourist destinations.
Meanwhile, Bank Negara Indonesia (BNI) and Bank Tabungan Negara (BTN) would receive respectively Rp 7 trillion and Rp 2 trillion.
Deputy SOEs Minister Kartiko Wirjoatmodjo said that BNI was in a difficult situation after its capital adequacy ratio (CAR) fell to 16 percent in 2020, the lowest among state-owned banks, due to large amounts of nonperforming loans and an inability to generate enough profit.
Kartiko told lawmakers during the same hearing on Thursday that BNI must be helped, as it was a “systemically important bank” and its failure could trigger a financial crisis. He added that the Financial Services Authority (OJK) backed the plan.
Insurance holding company Indonesia Financial Group (IFG) would receive Rp 2 trillion next year to continue restructuring state-owned insurance company PT Jiwasraya.
In transportation, railway company PT Kereta Api Indonesia (KAI) would receive more than Rp 4 trillion to help complete the Jakarta-Bandung high-speed railway project, while bus operator Damri would receive Rp 250 billion.
And in the food and beverage industry, over Rp 1.2 trillion would be channeled to state-owned food holding company PT Rajawali Nusantara Indonesia to fund agriculture projects, notably the government’s “food estates” initiative toward building food security and independence.
New entity
PT Aviasi Pariwisata Indonesia (Aviata) is the name given to Indonesia’s newly established state-owned holding company for aviation and tourism-related enterprises.
The holding company, officially established on July 1, is in the process of acquiring seven companies that include well-known names such as air carrier Garuda Indonesia and department store PT Sarinah, Kartiko said on Thursday.
He added that the government would inject Rp 9.31 trillion (US$639.3 million) in PMN in 2022 to jump-start Aviata.
“Indeed, quite a large amount of capital is needed,” he told lawmakers during a hearing with the House on Thursday.
The holding was established through Government Regulation No. 72/2021, signed on July 1, which also renamed an old and small state-owned carrier, Survai Udara (Penas), to PT Aviasi Pariwisata Indonesia. Penas was established in 1961 as an aerial photography company.
Aviata adds to a growing list of state-owned holding companies in the pipeline as the government aims to improve SOEs’ independence and profitability. The SOEs Ministry is also working on holding companies for staple food, health and geothermal energy, among other industries.
The SOEs Ministry is waiting for another government regulation, slated to come out in the second quarter, that would add five SOEs under Aviata, namely airport operators PT Angkasa Pura I (AP I) and PT Angkasa Pura II (AP II), tourism company PT Taman Wisata Candi (TWC), hotel operator PT Hotel Indonesia Natour (Inna) and Sarinah.
Kartika said the Indonesia Tourism Development Corporation (ITDC) would be added by the fourth quarter of this year, while flag carrier Garuda Indonesia would be added by 2023, the last addition to Aviata, as the airline had to undergo a debt restructuring process.
The deputy minister said that Rp 3.5 trillion or almost half of the 2022 PMN would be directed to help Garuda’s cash flow during the restructuring process. He did not provide further details.
