Photo: Privacy

JAKARTA (TheInsiderStories) – In the midst of slowing down the global and national economy, State-owned Enterprises (SOEs) are actually the saviors of the government finances. The fact, the management of SOEs under Rini Soemarno’ leadership is far from satisfying.

“Favorite” minister of President Joko Widodo continues to be in the spotlight because of the controversial policies and many peoples ask the president to dismiss her. Recently, Soemarno returned to the spotlight when the CEO of state-owned power producer PT Perusahaan Listrik Negara (PLN), Sofyan Basir, was named a suspect by the Corruption Eradication Commission (CEC) for his involvement in the Riau power plant project.

He is a person closed to Soemarno and in April 2018, the names of both became polemic because of the leaked recording of the conversation between the them, regarding the distribution of shares in the storage LNG project in Bojonegara, Banten, which will be built by PT Bumi Sarana Migas.

With Basir’ suspicion, Sumarno also appointed Muhammad Ali as the acting CEO of PLN, who was allegedly a person from his circle and Basir. Ali previously served as director of human capital management.

Under her’ command, SOEs, even though they lacked liquidity, seemed to be forced to make debt an instrument of forced infrastructure projects from state-owned enterprises. This may be due to the limited ceiling of the Government debt, while private companies and foreign investors who are expected to help finance infrastructure are not as expected.

According to the Ministry data, the debt of SOEs without third-party funds throughout 2018 reached Rp2,394 trillion (US$168.59 billion). That number jumped 47.5 percent compared to 2017 realization which amounted to Rp1,623 trillion.

If calculated by entering third-party funds, in total, the state company debt was recorded at Rp5,613 trillion or an increase of 16.2 percent compared to the previous year’ realization of RP4,830 trillion.

Many observers consider SOEs debt to be very worrying. Especially in the Rupiah current condition, State finances are in dangerous conditions. Non-financial SOEs debts were recorded 59 percent in foreign currencies and 53 percent held by foreigners. The burden of debt repayments and interest will weigh heavily on the company.

Of course, this is a consequence of the incessant infrastructure development which is a government assignment. SOEs are forced to withdraw debt as funds for ‘business’ infrastructure. Unfortunately, the condition of the company’s cash flow is relatively unhealthy because of the mismatch between the need for debt repayment to creditors and the capital distribution from the government to the relevant SOEs.

As a result, there is a surge in the debt ratio to earnings before interest, tax, depreciation, and amortization or income that describes the ability of a company to repay debt. The higher ratio illustrates that debt grows faster than income.

Obviously, increasing debt will be increasingly alarming. Because it not only affects the company’s finances but also the perception of investors. The world rating agency has also reminded the financial condition of SOEs involved in government assignment projects to pay attention to the cash flow.

The case of PT Pertamina’ debt, for example, has soared to Rp522 trillion, ultimately making its operating profit plummet from Rp38 trillion in 2017 to Rp5 trillion in 2018.

SOEs observer Said Didu explained the performance of the companies is worse since 2015. For example, in large SOEs such as Pertamina whose profits plummeted, PLN that lost and PT Garuda Indonesia Tbk (IDX: GIAA) also suffered losses.

Even economist Faisal Basri recommended Widodo to immediately dismiss Soemarno regarding the takeover of PT Gendhis Multi Manis by the State Logistics Agency. According to him, the takeover of the sugarcane-based sugar factory has the potential to harm the country.

Despite having a track record of his involvement in corruption cases, he was still appointed by Widodo to become a minister in 2014. Several cases of alleged corruption have also dragged Soemarno’ name like the case of purchasing Sukhoi fighter planes.

In the case of Sukhoi, she had a central role because based on President Megawati Soekarnoputri’ instructions, Indonesia bought these fighter planes by means of purchase with Indonesian agricultural products. Whereas the region is outside its authority and without the knowledge of Commission I Parliament. This case was resolved politically by being forgiven by the parliament for violating existing procedures.

In the early days of her leadership, she wanted to sell the SOEs ministry building on the pretext of efficiency. This has drawn a lot of criticism from the public and experts.

The efficiency, she meant was the efficiency of the ministry’ operational costs by selling state assets to be bought back by the Jakarta Provincial Government. The CEC and the House of Representative opposed the policy.

In the process, she was pushed back by the practitioners so that the most intense was from people’s representatives, especially PT Pelabuhan Indonesia (Pelindo) II questionnaire special committee at the House’ VI commission. She is considered a failure in leading the SOEs.

In fact, its performance as a minister has considered to no longer have the political legitimacy of the people’ representatives in the House, because, since being appointed as minister in 2014, she was never present at any working meetings in the parliament.

The examples of Soemarno’ failure includes the alleged problem of selling SOEs assets to foreign parties. She is considered to have neglected the occurrence of criminal acts at PT Pelindo II. Guarantee of three state-owned banks to the Chinese government for the stalled Jakarta-Bandung train project.

In addition, she is weak in prevention and handling so that corruption practices still occur in SOEs. The worsening performance of Garuda Indonesia. Not only that, but the SOEs performance program is also considered to be inconsistent with the Nawa Cita program initiated by President Widodo.

For this reason, the pressure to withdraw to her came from Demokrasi Perjuangan Indonesia Party, the main party supporting the government. Later the party’ step was also followed by other parties.

Political parties like to unite in voicing so that Soemarno retreats. But she is still untouchable, only she and the president knows the reason.

Written by Lexy Nantu, Email: