State firms’ Rp 17.5t stimulus to bolster growth

JAKARTA. Four publicly listed state enterprises that are expected to get a combined Rp 17.5 trillion (US$ 1.4 billion) capital injection from the government foresee higher business growth this year if the plan is approved by the House of Representatives.

The four companies — lender PT Bank Mandiri (BMRI), miner PT Aneka Tambang (ANTM), as well as construction firms PT Adhi Karya (ADHI) and PT Waskita Karya (WSKT) — will get the state capital injection (PMN) via a rights shares issuance mechanism, where they will offer new shares to their shareholders, including the government and the public.

The move is expected to support the companies’ expansion and development programs, as infrastructure and mining — as well as the finance sector to channel the funding — are among President Joko “Jokowi” Widodo’s priority sectors to be stimulated so as to achieve his economic growth target of 7 percent during his presidency.

“We are upbeat that we can increase our credit growth by between 15 and 17 percent this year from 13 percent last year [with the PMN],” Bank Mandiri president director Budi Gunadi Sadikin said on Monday.

Mandiri saw the fastest growth in micro lending and loans channeled to the construction, electricity, gas and water sectors last year and, at 30 percent, manufacturing is the bank’s biggest lending portfolio.

With Rp 5.6 trillion of PMN, the bank’s credit would hit Rp 1.5 quadrillion in 2020 compared to Rp 1.3 quadrillion without the PMN, according to Bank Mandiri’s internal data.

Bank Mandiri also calculated that the PMN would help it meet international Basel III standards of 17.5 percent in the future, Budi said. Without the stimulus, the firm’s capital adequacy ratio (CAR) would hit only 16.22 percent in 2019.

Antam president director Tato Miraza also expected that the PMN would help his firm record a better financial performance by pocketing Rp 1.5 trillion in net profit by 2018 compared to only Rp 663.09 billion without the PMN.

“We will use the injected funds to support our smelter projects in East Halmahera and Mempawah, as well as to support our anode slime project,” he went on.

Antam plans to raise a total of Rp 10.7 trillion in a rights shares offering, in which the government is expected to absorb Rp 7 trillion of the shares and the remainder are to be offered to the public.

Adhi Karya president director Kiswodarmawan, meanwhile, said that the PMN would accelerate his firm’s monorail project, aimed at improving public mass transportation in the country’s capital city.

“Once the PMN is approved, we can soon finish the [Jakarta monorail] project,” he said, adding that the first phase of the monorail construction would be completed in three years.

ADHI plans to issue new shares worth Rp 2.7 trillion in a rights issue this year, with the public being offered the opportunity to buy Rp 1.3 trillion of them.

As for WSKT, the PMN could potentially increase its net profit by around tenfold in 2019, according to company calculations.

WSKT plans to conduct a rights issue to get Rp 5.2 trillion in fresh funds, with Rp 3.5 trillion coming from the government’s PMN program.

Bahana TCW Investment Management analyst Budi Hikmat said that the PMN would help the country tackle infrastructure bottlenecks, which have hindered the country’s economy from growing to its full potential.

“If the state enterprises have enough funds, they can carry out their infrastructure-related projects smoothly. […] It will eventually spur economic growth in the country,” he said. (Khoirul Amin and Tassia Sipahutar)