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Future of BUMN: Adaptation, Regainment, Acceleration?

After two consecutive years of pandemic-provoked market disruption, Minister of State-Owned Enterprises, Erick Thohir, stated that only 10% of BUMN companies grew positively, while the other 90% was impacted negatively. Dividends from consolidated BUMN companies were at an all-time high in 2019 reaching Rp50 trillion, then plummeting to Rp44 trillion in 2020 due to the COVID-19 pandemic, and drops even further to Rp29,5 trillion by 2021. Nonetheless, the recovery stage is currently expected to stabilize as BUMN successfully earned Rp1.983 trillion in revenue, roughly equivalent to 99% of Indonesia’s APBN. The anticipated dividend for 2022 was Rp36,4 trillion, yet it has exceeded Rp40 trillion by the second quarter, a slight decrease from 2020 and a steep increase from last year. This impressive milestone is also backed by 869% net income growth YoY, from Rp13 trillion in 2020 to Rp126 trillion in 2021. The overall significant growth of BUMN is felt within the market, which encourages the Minister of State-Owned Enterprises, Erick Tohir, to aim for Rp50 trillion in dividends as of 2024. Mandiri, Telkom, BNI, and BRI as four prominent BUMNs themselves have now reached Rp1.600 trillion in assets valuation, with their dividends continuing to rise.

With the ever-growing BUMN, additional funds are needed from the capital state equity participation (PMN) to carry out their expanding plan. The State Minister for State-Owned Enterprises proposes a PMN of Rp73.27 trillion to 10 BUMN companies for RAPBN year 2023. The PMN budget consists of a cash PMN of Rp69.82 trillion and a non-cash PMN of Rp3.44 trillion. Cash PMN of Rp3 trillion will be given to the defense BUMN Holding or Defend Industry Indonesia, while non-cash PMN will be given to Defend ID and ID Food of Rp0.83 trillion each, as a Subsidiary Loan Agreement (SLA) conversion Indonesian Bank Restructuring Agency (IBRA). The Deputy Minister of State-Owned Enterprises suggests PMN to a few companies. PT PLN was amounting to Rp10 trillion which is used for the construction of electricity program infrastructure for the generation, transmission, substation, and distribution sectors including the implementation of village electricity programs and EBT generators. PT Hutama Karya amounted to Rp30.56 trillion, which will be used for the construction of the Trans-Sumatra toll road (JTTS) infrastructure. Moreover, PT Kereta Api Indonesia is proposed to get a PMN of Rp4.1 trillion next year. This PMN will be used to carry out assignments to fulfill Indonesia's share of paid-in capital for additional financing for the high-speed railway in Indonesia (KCJB) project. The last PMN will be given to Airnav Indonesia in total of Rp0.79 trillion, as its cash flows are affected by the pandemic. PMN will be used to reach seamless Air Traffic Management (ATM) in regional areas and to support the government's strategic program through ATM modernization.

In addition to the state capital participation approach, rights issues enable companies to get additional funds. In the near future, six BUMN companies—such as PT Garuda Indonesia (GIAA), PT Cemindo Gemilang (CMNT), PT Waskita Karya (WSKT), PT Bank Tabungan Negara (BBTN), PT Krakatau Steel (KRAS)—will be injected with additional funds. Should the Suspension of Debt Payment of PT Garuda Indonesia succeeds, PT Garuda will do its rights issue twice. The first right issue allows them to receive a Rp7.5 trillion injection from the government’s state capital participation as the initial stage of PT Garuda Indonesia’s restructuration. Meanwhile, the second right issue is scheduled for completion in the final quarter of 2022 as it still requires funding from new investors. PT Semen Indonesia (SMGR) will conduct a rights issue along with the entry of PT Semen Baturaja (SMBR). The Ministry of BUMN plans to inject Rp3 trillion of state capital participation to PT Waskita Karya (WSKT), followed by Rp1 trillion in rights for the public. PT Adhi Karya (ADHI) will also receive state capital participation from the government amounting to Rp1.89 trillion, Rp1.6 trillion rights issues, and many other projects. PT Bank Tabungan Negara (BBTN) will also be injected with state capital participation from the government. BBTN requires additional funds as Bank BTN’s capital adequacy ratio (CAR) is relatively low and lacks funds of Rp2.98 trillion. Lastly, Krakatau Steel (KRAS) will also conduct rights issues where funds received will be used to develop its business rather than absorbed directly by the government. Summing up, many forthcoming plans await for BUMN’s better standing. However, these plans require cash from the state capital participation and conduct rights issues. Erick Thohir, Minister of BUMN, is optimistic that the future trend for BUMN is favorable and aims for higher achievements by 2024.



CNBC Indonesia


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