Govt pins more hopes on SOE dividends

Urip Hudiono, The Jakarta Post, Jakarta

Upbeat that this year will be a profitable one for state-owned enterprises (SOEs), State Minister for State Enterprises Sugiharto says the government will maximize their dividend payments, rather than pushing for their privatization, to help finance the budget.

"Our focus in collecting revenues from SOEs for this year is to increase the share of their profits that they pay to the government," Sugiharto said during a hearing on Monday with the House of Representative's Commission VI for trade, industry and SOEs.

"We will still consider selling stakes in the SOEs, but only under favorable market conditions. If the conditions are not suitable for privatizing the SOEs, then we will not push ahead with it."

Therefore, Sugiharto said, focusing on dividend-derived revenue would be more reasonable and viable as the government estimated that SOEs would do well this year, thus boosting their revenues and profits.

"We expect that dividend payments from SOEs will exceed the target for this year, reaching somewhere between Rp 10.5 trillion and Rp 12 trillion," he said.

In the amended 2005 budget, the government has agreed with the House budget commission on the collection of a total of Rp 12.4 trillion (some US$1.3 billion) in revenues from SOEs, consisting of Rp 8.9 trillion from SOE dividend payments and Rp 3.5 trillion from privatizations.

Sugiharto explained, however, that the dividends would start to flow within the next two or three months, after all of the country's 158 SOEs had held their shareholders meetings.

"Many will be holding their shareholders meetings at the end of this month, when they will present their annual financial reports and dividend proposals," he said.

With regard to the privatization drive, the government would still have to consider this as the state budget included SOE privatization proceeds in its calculations.

"We are currently discussing this with the finance minister as privatization proceeds have been included as revenue to cover the deficit, while SOE dividend payments make up the main non-tax state revenues," he said.

Sugiharto declined, however, to say which SOEs would be put up for sale this year.

"Let's just say that privatization will be an ongoing process, with the timing, size and price of the sell-offs being adjusted to take account of market conditions," he said.

The issue of SOE privatization has recently become a topic of public debate after Vice President Jusuf Kalla said that selling government stakes in SOEs would be the government's lowest priority and that the government would not submit to privatization demands from donor institutions in return for their loans.

Coordinating Minister for the Economy Aburizal Bakrie, meanwhile, insisted that the government had committed itself to raising Rp 3.5 trillion in privatization proceeds and had to sell three major SOEs by the end of this year.

Possible SOEs that could be sold include the three publicly listed state banks -- Bank Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia -- and three mining companies -- PT Aneka Tambang, PT Tambang Batubara Bukit Asam and PT Tambang Timah.

Wrapping up the hearing, the Commission said that should privatization be undertaken, it should not only be carried out so as to plug the budget deficit, but also so as to improve the performance of the SOEs concerned.