House Criticizes SOE Capital 75 Trilion Rupiah is too Much

12/12/2018

The government’s plan to inject capital into several state-owned enterprises (SOEs) has hit a rough patch as the plan came under heavy scrutiny at the House of Representatives.

During a meeting held on Wednesday afternoon, lawmakers at the House’s Commission XI, which oversees finance and development planning, bombarded Finance Minister Bambang Brodjonegoro and SOE Minister Rini Soemarno with questions regarding the capital injection, commonly referred to as PMN.

Commission XI held the meeting as it must approve the disbursement of state funds through the state budget, even though SOE matters are actually within the remit of Commission VI.

Almost all of the lawmakers questioned the magnitude of the PMN, which is expected to amount to
Rp 67.7 trillion (US$5.36 billion) according to the revised draft 2015 state budget.

Of the amount, about Rp 48 trillion will be channeled to 35 SOEs, including mining company Aneka Tambang, Bank Mandiri and contractors Hutama Karya and Waskita Karya.

Maruarar Sirait, an Indonesian Democratic Party of Struggle (PDI-P) lawmaker, criticized the lack of clear economic targets that the PMN aimed to achieve.

“With such a large amount of money, how much income and tax revenues will be received? How many new jobs will be created? How long will it take for us to see all the results? These are not yet clear,” he said.

Another lawmaker, Rooslynda Marpaung of the Democratic Party, questioned the urgency of the PMN as there was no clear correlation between the fund disbursement and a potential decline in poverty rates.

In a follow-up question-and-answer session, Bambang defended the government’s plan, saying that it would help meet the country’s massive infrastructure needs.

“We have allocated around Rp 280 trillion for infrastructure spending in the state budget. Even though the figure is much larger than energy spending, we will still need more funds, considering the size of Indonesia,” he said.

Offering infrastructure projects to private firms is a challenge, according to Bambang, because many of the projects have been put out to tender but without any interested parties.

“One way to solve the problem is to conduct government intervention through SOEs,” he said, citing the Medan-Binjai toll road in North Sumatra, which has now been assigned to Hutama Karya.

Meanwhile, Rini argued that PMN to SOEs would potentially leverage their finances, as opposed to giving the funds to other ministries.

The meeting eventually ended without the lawmakers’ approval.

Commission XI chairman Fadel Muhammad, a Golkar Party politician, said that it would schedule another meeting next week, during which the government is expected to have submitted a more detailed PMN plan.

Separately, Darmadi Durianto, a PDI-P lawmaker who serves in Commission VI, said the PMN might be a “blessing in disguise” for some state firms as they happened to operate in the field that the administration was currently focused on, such as PT Perikanan Nusantara (Perinus) in the fishery sector.

Darmadi explained that Perinus had previously been given
Rp 100 billion in PMN, but most of the funds were used to pay its employees’ salaries rather than being used for productive activities. It is now proposing Rp 200 billion in another PMN to develop remote-sensing, as well as nanotechnology.

Commission VI chairman Achmad Hafisz Tohir, of the National Mandate Party (PAN), insisted that several SOEs must first address issues stated in a Supreme Audit Agency (BPK) report before being able to qualify for the PMN.

The report, dated Jan. 27, said 14 SOEs still had unresolved financial issues, spanning five years from 2009 to 2014.

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House Criticizes SOE Capital 75 Trilion Rupiah is too Much