SOEs targeted to no longer receive State Budget funding by 2022
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily: BUMN ditargetkan tak lagi terima kucuran APBN
15 June 2020
By Triyan Pangastuti
Jakarta – State-Owned Enterprise (SOE) Minister Erick Thohir is targeting SOEs to no longer receive funds from the state budget in the next two years or by 2022. The operational cost of SOEs will rely on 1% of their dividends.
According to Erick, this plan has been approved by Finance Minister Sri Mulyani Indrawati and President Joko Widodo. “We are trying and thank God the President and the Finance Minister approve. In the next two years, SOEs will no longer receive [funding from] the state budget, but we will stay alive by [relying on] 1% of the dividends,” he said during a virtual discussion on Saturday (13/6).
Erick said that the SOE Ministry would make sure all SOEs will have the same vision, so the performance of the SOEs could be boosted. Hence, SOEs can provide a larger contribution to the state. Besides that, by taking that step, businesses of state-owned corporations can continue.
According to him, he had affirmed that there were four crucial aspects that he prioritised in implementing his duty in the SOE Ministry. Firstly, SOEs must return to their core business that is in line with their expertise. Secondly, making sure that SOEs are professional and transparent and not based on projects, but prioritising the business process.
“Then, the third aspect is that, if SOEs are a cluster, we want to decrease their numbers. 68% of SOEs can be consolidated. This is good for regional businesses and small to medium business as their lands would not be acquired by SOEs,” he said.
He said that SOEs must have a significant impact to the economy as a third of the country’s economy was supported by SOEs. Hence, he wants to maintain the business sustainability of state-owned corporations
“Lastly, any changes must be based on positive values. Therefore, AKHLAK is important for SOEs, which stands for amanah (trusted), kompeten (competent), harmonis (harmonious), loyalitas (loyal), adaptif (adaptive), and, kolaboratif (collaborative),” he explained.
Almost every year, the government provides state capital injections (PMN) to SOEs. From 2015 to 2018, the government has allocated Rp130.3 trillion PMN for SOEs. PMN is provided to SOEs to support national priority programs.
Five SOEs
In the 2020 state budget, the government has allocated Rp17.7 trillion PMN for at least eight SOEs. However, as the Covid-19 pandemic occurred, the PMN allocation is adjusted to only Rp15.5 trillion that is focused on five SOEs due to the National Economic Recovery program.
The five SOEs are PT Hutama Karya (Persero) which is set to receive Rp7.5 trillion, PT Permodalan Nasional Madani (Persero) which is set to receive Rp1.5 trillion, PT Bahana Pembinaan Usaha Indonesia (Persero) which is set to receive Rp6 trillion, and Indonesia Tourism Development Corporation (ITDC) which is set to receive Rp0.5 trillion.
“PMN is provided for SOEs that carry out national strategic projects, support the economic recovery of micro, small, and medium enterprises (MSME), and the economic recovery of companies that are significantly affected by Covid-19,” Erick explained.
Some time ago, Erick revealed that he wanted subsidies for energy, such as electricity and fuel, to be provided directly to citizens without SOEs. This step is taken so that subsidies can be more transparent and SOEs can function fully as a corporation.
According to him, there was a meeting with Finance Minister Sri Mulyani Indrawati and Energy and Mineral Resources Minister Arifin Tasrif that discussed the energy policy for the future. During the meeting, subsidies for electricity, oil, and LPG (liquid petroleum gas) were discussed. “In the future, we do not want SOEs to still receive subsidies, so it can be provided directly to citizens,” he said.
With that policy, Erick hopes that SOEs can focus on managing their corporations and running their businesses. The policy is expected to prevent window dressing practices in the stock exchange. “If subsidies were provided directly to citizens to be transparent, SOE president directors can focus on their corporations. This also changes the leadership paradigm of SOEs and ministries,” he said.
