SOE Must be Part of the Solution

Kompas

Proposed Government Stimulus for SOEs. 11% Inclusion of state capital, 14% bailouts, 75% Disbursement of government debt.

The government will inject Rp 118.15 trillion into 12 state-owned enterprises (SOEs). The public wants the assistance to be accountable.

The funds will be injected under the national economic recovery scheme into 10 state-owned enterprises as well as under the compensation funds scheme for oil and gas company Pertamina and electricity company Perusahaan Listrik Negara (PLN). The latter two SOEs will receive compensation funds totaling Rp 76.08 trillion.

In a working meeting held on Tuesday (9/6/2020) with House of Representatives (DPR) Commission VI, SOE Minister Erick Thohir said five SOEs would receive loans that had to be paid back with interest. The funds cannot be converted into government capital participation. The five SOEs are national flag carrier Garuda Indonesia, railway company Kereta Api Indonesia (KAI), plantation company Perkebunan Nusantara (PTPN), steel producer Krakatau Steel and housing provider Perum Perumnas.

Also read : Krakatau Operation Should Be Maintained, Garuda Should Fly

The government has a set of criteria to determine which SOEs may receive the loans, which take into consideration the firms’ impact on the lives of many people, their total assets, the government’s ownership in the business, their exposure to the financial system and the role of an SOE as a sovereign wealth fund.

Our state-owned enterprises have existed since the colonial period. They have business operations, among other sectors, in finance, plantations and railroads. Those business entities were nationalized when Indonesia gained independence.

An SOE is intended to act as an agent of development and to carry out government assignments, such as building infrastructure to overcome regional inequality and developing projects that are not attractive enough for the private sector but are needed by the people.

Also read : Preventing a Bigger Outbreak in Regions

KOMPAS/TATANG MULYANA SINAGA

Minister of State Owned Enterprises (BUMN) Erick Thohir (left) held a dialogue with West Java Governor Ridwan Kamil at Pakuan Building, Bandung City, Thursday (21/5/2020). Erick handed over food aid and medical devices for handling Covid-19 in West Java

SOEs can also be aimed at raising state investment funds. This is commonly done, but not always, by countries that have nonrenewable natural resources, so that the benefits can be enjoyed by future generations. Examples of this are Singapore, Malaysia, Saudi Arabia and Norway.

However, an SOE can also work as a regular business entity. As such, an SOE should help keep the wheels of the national economy spinning, especially during the current Covid-19 pandemic.

The SOE Ministry is in the process of reorganizing 107 SOEs and their subsidiaries. In this effort, the objectives, roles and tasks of each SOE and their classification need to be clear.

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We want a clearer division of roles between the SOE Ministry and the technical ministries so that the SOE’s performance and accountability are clear. The SOE Ministry should draft and issue policies and strategies for developing SOEs, while the technical ministries provide technical consultation for the SOEs they deal with.

Before giving financial funds, there must be clarity about the problems faced by the state-owned companies that will receive the money. We know that some of the SOEs were facing financial problems even before the Covid-19 pandemic.

The injection of government funds, which originally come from taxpayers, must be accountable. The objectives must be clear, namely to restore the national economy. We want the SOEs to be part of the solution, not of the problem.