Govt pins more hopes on SOE dividends

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.