World Bank Reveals Infrastructure Makes BUMN Confused to Find Funds
JurnalHub. The World Bank considers that the assignment of infrastructure projects to State-Owned Enterprises (SOEs) actually makes the state-owned companies nervous about seeking funds. Because, assignments are given without certainty regarding the source of funding.
The statement was contained in a World Bank report entitled Infrastructure Sector Assessment Program released in June 2018 ago. In the report, the World Bank gave an example of the Trans-Sumatra toll road project undertaken by PT Hutama Karya (Persero) Tbk, when the assignment was given without any clarity regarding funding sources.
Finally, Hutama Karya issued corporate bonds with government guarantees to fund the project. According to the report, HK worked on 24 segments of the Trans Sumatra toll road reaching a length of 2,700 kilometers (km).
However, the funds that HK has are still not enough to complete the project, so the project has the potential to be exposed to high risk financially.
"This creates additional risks for SOEs. If the risks cannot be managed properly, then this creates an additional burden on SOEs," the report was quoted as saying Friday.
This condition, according to a World Bank report, is often ignored by SOEs because they consider the government will definitely support BUMNs that get assignments. In fact, the funds owned by the State Budget (APBN) are certainly not enough to continue injecting capital into SOEs.
On the other hand, internal funding of SOEs is also inadequate. BUMN profits even had to continue to tumble and not in accordance with the growth of its assets.
The World Bank noted, BUMN profits against Gross Domestic Product (GDP) decreased from 22 percent in 2013 to 15 percent in 2016. Meanwhile in the same period, BUMN assets rose 185.48 percent from Rp2,266 trillion to Rp6,469 trillion.
The decrease in BUMN profits was also seen from contributions to the government from dividends. In 2016 alone, the contribution of state-owned dividends to the government was recorded at Rp 200 trillion, down from Rp213 trillion in the previous year.
"As a result, SOEs are not incentivized to maximize the profit or efficiency of capital expenditure in their core business and instead focus on developing their portfolios and assets," added the report.
As a result, BUMNs are also considered to be more happy to choose financing from banks because the BUMN cash flow has stalled. This can be seen from the case of PT Waskita Karya (Persero) Tbk, which bought several stalled toll road concessions from private investors. Finally, Waskita Karya's debt position was recorded at Rp. 65.7 trillion or doubled from the previous one.
Therefore, the World Bank asked SOEs not to be 'lazy' to use their assets to gain income. This is also intended for SOEs to save capital expenditure and increase the yield value of their assets.
In fact, the World Bank also asked BUMNs to restructure, divest, or dissolve BUMN subsidiaries that have no relationship with the core business owned by their parent company.
The money from the sale is expected to be able to fund infrastructure projects in the future.
"The use of these assets is a political process. This requires commitment from the leadership of the government. Decisions about who assets are sold, at what price, and the conditions must certainly be supported by the government so that there is no conflict of interest," concluded the report.
"These articles cite a World Bank report that is currently being finalized in collaboration with the Government of Indonesia. This report is titled Indonesia Infrastructure Financing Sector Assessment Program (InfraSAP)," wrote the World Bank.
Separately confirmed, Finance Minister Sri Mulyani and National Planning and Development Minister (PPN / Bappenas) Bambang Brodjonegoro also claimed to have discussed the World Bank report. The core of the report, according to Bambang, is to strengthen PPP (Government Cooperation with Business Entities) related to the provision of infrastructure.
"It was discussed with us at that time. So, what we got from the World Bank report is that we need to continue to strengthen the PPP scheme and give confidence to potential investors that the scheme in Indonesia has investment and provides certainty," Bambang said.
The statement was contained in a World Bank report entitled Infrastructure Sector Assessment Program released in June 2018 ago. In the report, the World Bank gave an example of the Trans-Sumatra toll road project undertaken by PT Hutama Karya (Persero) Tbk, when the assignment was given without any clarity regarding funding sources.
Finally, Hutama Karya issued corporate bonds with government guarantees to fund the project. According to the report, HK worked on 24 segments of the Trans Sumatra toll road reaching a length of 2,700 kilometers (km).
However, the funds that HK has are still not enough to complete the project, so the project has the potential to be exposed to high risk financially.
"This creates additional risks for SOEs. If the risks cannot be managed properly, then this creates an additional burden on SOEs," the report was quoted as saying Friday.
This condition, according to a World Bank report, is often ignored by SOEs because they consider the government will definitely support BUMNs that get assignments. In fact, the funds owned by the State Budget (APBN) are certainly not enough to continue injecting capital into SOEs.
On the other hand, internal funding of SOEs is also inadequate. BUMN profits even had to continue to tumble and not in accordance with the growth of its assets.
The World Bank noted, BUMN profits against Gross Domestic Product (GDP) decreased from 22 percent in 2013 to 15 percent in 2016. Meanwhile in the same period, BUMN assets rose 185.48 percent from Rp2,266 trillion to Rp6,469 trillion.
The decrease in BUMN profits was also seen from contributions to the government from dividends. In 2016 alone, the contribution of state-owned dividends to the government was recorded at Rp 200 trillion, down from Rp213 trillion in the previous year.
"As a result, SOEs are not incentivized to maximize the profit or efficiency of capital expenditure in their core business and instead focus on developing their portfolios and assets," added the report.
As a result, BUMNs are also considered to be more happy to choose financing from banks because the BUMN cash flow has stalled. This can be seen from the case of PT Waskita Karya (Persero) Tbk, which bought several stalled toll road concessions from private investors. Finally, Waskita Karya's debt position was recorded at Rp. 65.7 trillion or doubled from the previous one.
Therefore, the World Bank asked SOEs not to be 'lazy' to use their assets to gain income. This is also intended for SOEs to save capital expenditure and increase the yield value of their assets.
In fact, the World Bank also asked BUMNs to restructure, divest, or dissolve BUMN subsidiaries that have no relationship with the core business owned by their parent company.
The money from the sale is expected to be able to fund infrastructure projects in the future.
"The use of these assets is a political process. This requires commitment from the leadership of the government. Decisions about who assets are sold, at what price, and the conditions must certainly be supported by the government so that there is no conflict of interest," concluded the report.
"These articles cite a World Bank report that is currently being finalized in collaboration with the Government of Indonesia. This report is titled Indonesia Infrastructure Financing Sector Assessment Program (InfraSAP)," wrote the World Bank.
Separately confirmed, Finance Minister Sri Mulyani and National Planning and Development Minister (PPN / Bappenas) Bambang Brodjonegoro also claimed to have discussed the World Bank report. The core of the report, according to Bambang, is to strengthen PPP (Government Cooperation with Business Entities) related to the provision of infrastructure.
"It was discussed with us at that time. So, what we got from the World Bank report is that we need to continue to strengthen the PPP scheme and give confidence to potential investors that the scheme in Indonesia has investment and provides certainty," Bambang said.
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