House likely to scrap aid for leading state firms

JAKARTA. The House of Representatives’ budget committee decided Wednesday not to approve the government’s proposal to inject capital into publicly listed PT Bank Mandiri Tbk (BMRI) and PT Krakatau Steel Tbk (KRAS) — the nation’s largest bank and its biggest steel producer, respectively. 

The committee also slashed the capital allocated for publicly listed mining company PT Aneka Tambang Tbk (Antam) by half. 

After hours of debate with executives of 35 state-owned companies slated to receive capital injections, the budget committee decided not to approve several of the proposed allocations, commonly referred to as PMN. 

“We want to channel the right amount of funding to the right state enterprises. We consider infrastructure to be a priority, as well as agriculture to support the food-security agenda,” committee deputy chairman Said Abdullah said. 

In total, the committee will only approve about Rp 40.7 trillion (US$3.2 billion) in the PMN proposed for 35 state companies, down from the earlier proposal of Rp 48 trillion. 

Bank Mandiri was previously slated to receive Rp 5.6 trillion, Krakatau Steel Rp 956 billion and Antam Rp 7 trillion. 

Antam corporate secretary Tri Hartato said that he was disappointed with the decision, but that his firm would wait for the final outcome of a hearing with House Commission VI overseeing industry and state companies and Commission XI overseeing finance and banking.

“We still hope that we will receive the Rp 7 trillion because we have budgeted the funds to support our three mega projects,” he said. 

Antam initially planned to use the PMN to finance a ferronickel smelter project in East Halmahera, North Maluku, a smelter-grade alumina facility in Mempawah, West Kalimantan, and an anode slime project. 

If the House decides to reduce the funding to Rp 3.5 trillion, Antam would not rule out moving ahead with a rights-issue plan that would sustain the government’s 65 percent stake in the company, according to Hartato.

In addition to the PMN cutbacks, the committee decided to add state electricity company PT Perusahaan Listrik Negara (PLN) to the list of PMN recipients.

Said said that PLN would be allocated Rp 5 trillion, as the firm needed to help the government realize its 35,000 Megawatt electricity target. 

“Instead of giving the funds to Bank Mandiri, we consider PLN to be more important. There is no urgency for Bank Mandiri to receive the funds,” said Said. 

Separately, Fadel Muhammad, chairman of House Commission XI, said most members of his commission were reluctant to approve the PMN proposed for many state firms because they were underperforming.

“Some of them don’t have clear business plans. It is likely that we will ask for a postponement.” 

The House will also consult with the Supreme Audit Agency (BPK) to thoroughly review the business practices of state companies with poor financial health, according to Fadel. 

Fourteen out of 35 state-owned enterprises proposed by the State-Owned Enterprises Ministry to receive PMN funds have been found not to have fully complied with BPK findings and recommendations. 

Those include PT Antam, PT Angkasa Pura, the State Logistic Agency (Bulog), PT Garam, PTPN IX, PTPN X, PT Pelni, PT Pindad, PT Kereta Api Indonesia, PT Sang Hyang Seri, Perum Perumnas, Perum Perikanan, PT Industri Kapal and PT Pelindo IV. (Khoirul Amin and Tassia Sipahutar)