Jokowi Infrastructure Makes 'Bolong' a BUMN BUMN Bag
IdNasional. Infrastructure projects that are still being built by President Joko Widodo in fact burden the state-owned finance. Until the third quarter of 2018, all operational cash flows of state-owned enterprises (BUMN) have recorded a negative position. In fact, the number is getting worse for some issuers.
If the operational cash flow is minus, it means that the company uses more internal cash to fund infrastructure projects. If internal cash is insufficient, the company is forced to borrow funds from the bank or do some corporate actions to reap fresh funds.
Alfred Nainggolan, Head of Capital Connection Research, said that the company's insufficient internal cash usually correlates with the increasing amount of debt. However, he stressed that the increase in corporate debt is not always bad.
"It must be seen again, how is the growth in net income. If the cash flow is negative, there is a lot of debt, but the company is still able to create a net profit, which is actually still positive," Alfred said on Monday.
On the Indonesia Stock Exchange (IDX) there are four BUMNs, including PT Waskita Karya (Persero) Tbk, PT Wijaya Karya (Persero) Tbk, PT Adhi Karya (Persero) Tbk, PT Pembangunan Perumahan (Persero) Tbk.
Based on the financial statements of each company, Wijaya Karya's and PTPP's operational cash flows are increasingly minus in the third quarter of 2018. If the net cash flow obtained and used for Wijaya Karya's operational activities in the third quarter of 2017 was only minus Rp2.69 percent, the figure was September then increased 37.54 percent to IDR 3.7 trillion.
Then, PTPP's third quarter 2018 operating cash flow was negative at Rp1.82 trillion, up 19.73 percent from the previous Rp1.52 trillion.
Meanwhile, two other issuers were lucky because they were able to reduce the negative burden of their operational cash flow. Waskita Karya, for example minus the operational cash flow during the first nine months of 2018, dropped drastically 69.68 percent to Rp1.54 trillion and Adhi Karya fell 30.79 percent to Rp2.09 trillion.
Although Waskita Karya and PTPP improved their cash flow, the liabilities of state-owned companies' issuers increased during the third quarter of last year. Only Adhi Karya succeeded in reducing its liability during this period.
Waskita Karya became the issuer with the highest increase in liabilities of 36.05 percent to Rp102.23 trillion, Wijaya Karya rose 33.68 percent to Rp41.51 trillion, PTPP increased 21.14 percent to Rp33.35 trillion. Meanwhile, Adhi Karya's liabilities edged down 1.02 percent to Rp22.23 trillion.
This additional debt makes the debt to equity ratio (DER) increase. DER can be interpreted as a debt to equity ratio or a ratio that shows the relative proportion between equity and debt used to finance company assets.
"DER Waskita Karya as of the third quarter of 2018 six times, Adhi Karya 3.6 times, PTPP 2.8 times, and Wijaya Karya three times," said Alfred.
Although it looks high, Alfred asserted that the financial state-owned listed company is still healthy because its fourth net profit still grew until the third quarter of last year. "If the DER is low, but the company loses, it's just a lie, as long as it correlates with the growth of net profit, it doesn't matter," Alfred explained.
When detailed, the majority of these construction companies posted net profit growth. If seen only PTPP whose profits decreased by 11.64 percent to IDR 874.67 billion. Meanwhile, Waskita Karya's profit rose 43.62 percent to Rp3.72 trillion, Wijaya Karya rose 26.04 percent to Rp860.45 billion, and Adhi Karya rose 63.61 percent to Rp335.53 billion.
Previously, the World Bank, through its report entitled the June 2018 Infrastructure Sector Assessment Program (InfraSAP) obtained by CNNINdonesia.com, said that the work of state-owned enterprises was vulnerable to pressure because of the higher level of savings.
This is because the government relies too heavily on state-owned companies to carry out infrastructure development. BUMNs are also considered to need to seek endless funding to support infrastructure development.
The World Bank report has been confirmed by CNNIndonesia.com. The World Bank also claimed to compile the report in collaboration with the government, but the report is still not final. However, Finance Minister Sri Mulyani and PPN / Bappenas Minister claimed to have discussed with the World Bank the contents of the report.
Alfred added, even though the financial condition of the BUMN was healthy, BUMN Karya would not be free to apply for loans again to the banks or release debt securities to gain funding.
"It is still possible to withdraw loans, but it must be accompanied by payments from the project giver and net income, if the company earns profits it can pay the debt," Alfred explained.
Meanwhile, the Center of Reform on Economic (CORE) Economist Mohammad Faisal claimed that the current position of the DER of construction issuers is already alarming. This is because the DER of the four companies has been more than twice.
"If it is above two or three times the DER is for health, non-banking SOEs are worried, if banking is indeed high," said Faisal.
BUMN Work Finance is considered to be getting sicker because operational cash flows are still negative. Although the minus for Waskita Karya and Adhi Karya's operational cash flow dropped, it still needed to be considered because the company's capital could be eroded for a long time.
"But now the government has a lot of financing alternatives so it might be able to reduce the financial burden of BUMN," Faisal explained.
Regarding the attitude of the government which is always dependent on state-owned enterprises to build infrastructure, Faisal considers that this is to facilitate the process of infrastructure development, such as land acquisition.
"For the private sector, for example, it is more difficult for land acquisition, if BUMNs are also helped by the government, it will be faster," Faisal explained.
Nevertheless, he stressed the government should give more portion of infrastructure development to the private sector. This is so that state-owned finance is not too burdened.
"So the burden should be spread like that, the private sector and BUMN," concluded Faisal.
If the operational cash flow is minus, it means that the company uses more internal cash to fund infrastructure projects. If internal cash is insufficient, the company is forced to borrow funds from the bank or do some corporate actions to reap fresh funds.
Alfred Nainggolan, Head of Capital Connection Research, said that the company's insufficient internal cash usually correlates with the increasing amount of debt. However, he stressed that the increase in corporate debt is not always bad.
"It must be seen again, how is the growth in net income. If the cash flow is negative, there is a lot of debt, but the company is still able to create a net profit, which is actually still positive," Alfred said on Monday.
On the Indonesia Stock Exchange (IDX) there are four BUMNs, including PT Waskita Karya (Persero) Tbk, PT Wijaya Karya (Persero) Tbk, PT Adhi Karya (Persero) Tbk, PT Pembangunan Perumahan (Persero) Tbk.
Based on the financial statements of each company, Wijaya Karya's and PTPP's operational cash flows are increasingly minus in the third quarter of 2018. If the net cash flow obtained and used for Wijaya Karya's operational activities in the third quarter of 2017 was only minus Rp2.69 percent, the figure was September then increased 37.54 percent to IDR 3.7 trillion.
Then, PTPP's third quarter 2018 operating cash flow was negative at Rp1.82 trillion, up 19.73 percent from the previous Rp1.52 trillion.
Meanwhile, two other issuers were lucky because they were able to reduce the negative burden of their operational cash flow. Waskita Karya, for example minus the operational cash flow during the first nine months of 2018, dropped drastically 69.68 percent to Rp1.54 trillion and Adhi Karya fell 30.79 percent to Rp2.09 trillion.
Although Waskita Karya and PTPP improved their cash flow, the liabilities of state-owned companies' issuers increased during the third quarter of last year. Only Adhi Karya succeeded in reducing its liability during this period.
Waskita Karya became the issuer with the highest increase in liabilities of 36.05 percent to Rp102.23 trillion, Wijaya Karya rose 33.68 percent to Rp41.51 trillion, PTPP increased 21.14 percent to Rp33.35 trillion. Meanwhile, Adhi Karya's liabilities edged down 1.02 percent to Rp22.23 trillion.
This additional debt makes the debt to equity ratio (DER) increase. DER can be interpreted as a debt to equity ratio or a ratio that shows the relative proportion between equity and debt used to finance company assets.
"DER Waskita Karya as of the third quarter of 2018 six times, Adhi Karya 3.6 times, PTPP 2.8 times, and Wijaya Karya three times," said Alfred.
Although it looks high, Alfred asserted that the financial state-owned listed company is still healthy because its fourth net profit still grew until the third quarter of last year. "If the DER is low, but the company loses, it's just a lie, as long as it correlates with the growth of net profit, it doesn't matter," Alfred explained.
When detailed, the majority of these construction companies posted net profit growth. If seen only PTPP whose profits decreased by 11.64 percent to IDR 874.67 billion. Meanwhile, Waskita Karya's profit rose 43.62 percent to Rp3.72 trillion, Wijaya Karya rose 26.04 percent to Rp860.45 billion, and Adhi Karya rose 63.61 percent to Rp335.53 billion.
Previously, the World Bank, through its report entitled the June 2018 Infrastructure Sector Assessment Program (InfraSAP) obtained by CNNINdonesia.com, said that the work of state-owned enterprises was vulnerable to pressure because of the higher level of savings.
This is because the government relies too heavily on state-owned companies to carry out infrastructure development. BUMNs are also considered to need to seek endless funding to support infrastructure development.
The World Bank report has been confirmed by CNNIndonesia.com. The World Bank also claimed to compile the report in collaboration with the government, but the report is still not final. However, Finance Minister Sri Mulyani and PPN / Bappenas Minister claimed to have discussed with the World Bank the contents of the report.
Alfred added, even though the financial condition of the BUMN was healthy, BUMN Karya would not be free to apply for loans again to the banks or release debt securities to gain funding.
"It is still possible to withdraw loans, but it must be accompanied by payments from the project giver and net income, if the company earns profits it can pay the debt," Alfred explained.
Meanwhile, the Center of Reform on Economic (CORE) Economist Mohammad Faisal claimed that the current position of the DER of construction issuers is already alarming. This is because the DER of the four companies has been more than twice.
"If it is above two or three times the DER is for health, non-banking SOEs are worried, if banking is indeed high," said Faisal.
BUMN Work Finance is considered to be getting sicker because operational cash flows are still negative. Although the minus for Waskita Karya and Adhi Karya's operational cash flow dropped, it still needed to be considered because the company's capital could be eroded for a long time.
"But now the government has a lot of financing alternatives so it might be able to reduce the financial burden of BUMN," Faisal explained.
Regarding the attitude of the government which is always dependent on state-owned enterprises to build infrastructure, Faisal considers that this is to facilitate the process of infrastructure development, such as land acquisition.
"For the private sector, for example, it is more difficult for land acquisition, if BUMNs are also helped by the government, it will be faster," Faisal explained.
Nevertheless, he stressed the government should give more portion of infrastructure development to the private sector. This is so that state-owned finance is not too burdened.
"So the burden should be spread like that, the private sector and BUMN," concluded Faisal.
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