From Government of Indonesia

State Firms Encouraged to Invest

The government will encourage state-owned companies to increase investment in the country to spur the real sectorís growth, State Minister for State Enterprises Minister Sugiharto said on Wednesday (25/4/07).

"In discussions on the governmentís 2008 work plan and an evaluation of developments in 2007, both the president and the vice president hoped that state-owned companies will not only pay dividends and taxes to the state but also encourage the real sectorís growth," he said. He projected state firmsí capital expenditures in 2007 at Rp114 trillion and expected the figure to increase to Rp150 trillion in 2008.

The figure represented a significant increase compared to 2006 when it stood at about Rp70 trillion, he said. "We expect the realization of state firmsí capital expenditures will reach 90% to 92% so it can boost the growth of national industry," he was quoted as saying by Antara.

He said state firms play a significant role in encouraging the economy, particularly the real sector, as most of them are engaged in the infrastructure, financing, natural resources and transportation sectors.

Citing an example, he said the construction of coal-fired power plants with a combined capacity of 10,000 MW, scheduled for completion in late 2009 or early 2010 at a total cost of Rp8.5 trillion ($9 billion), would encourage the inflow of Rp62.5 trillion in investment.

The presence of power plants would raise coal demand by 21 million metric tons per year so that it would attract new investment in coal mining businesses, he said.

"The presence of 10,000-MW power plants will encourage investment in coal mining businesses, transportation to loading and unloading ports, recipient ports and new ships to carry coal," he said.

The other side-effect of the project is that the national industry would have access to cheaper power as the power rate would fall to $0.04 from $0.06 previously, he said.

The minister said state firmsí performance in the past two years have already been on the right track in terms of their contribution to the state budget.

State firmsí contribution to the state budget continued to increase over the past five years, jumping to Rp68.8 trillion in 2006 from Rp41 trillion in 2002, he said.

In total, state firms posted a profit of Rp54.4 trillion in 2006 from Rp42.3 trillion a year earlier with the number of profit-making state firms increasing to 114 in 2006 from 103 in 2005, he said.

Meanwhile, the number of losing state firms fell to 20 in 2006 from 31 in 2005 with total losses estimated at Rp2.27 trillion in 2006 compared to Rp6.6 trillion the year before, he said.

The profit-making state firms included Pertamina, Telkom, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI), Bank Mandiri, Semen Gresik, Aneka Tambang, Pusri and Jamsostek.
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