Support The Policy Of The Ministry Of SOEs, Asian Development Banks Give Fund Loans Of IDR 7.8 Trillion

BUMN Ministry Building. (Photo: Doc. Antara)

JAKARTA - The Asian Development Bank (ADB) agreed to disburse loan funds worth 500 million US dollars or equivalent to IDR 7.8 trillion to the Ministry of State-Owned Enterprises (BUMN).

The loan will include the first subprogram under the State-Owned Enterprises Reform Program, which will help Indonesia to improve the efficiency and resilience of SOEs, as well as strengthen the company's governance framework.

Senior ADB Public Management Specialist for Southeast Asia Yurenda Basnett assessed that SOEs play a very important role in encouraging the recovery from the COVID-19 pandemic which is inclusive and sustainable in Indonesia.

"However, in order to provide greater value for the community, the structural weakness of SOEs must be overcome. ADB is happy to be able to participate in supporting the government's efforts to reform SOEs," he said in an official statement, Friday, November 18.

He continued, this program is in line with the comprehensive and ambitious 2020-2024 BUMN Roadmap, which introduces a series of reforms to transform SOEs and ensure its contribution to Indonesia's ideals to become a high-income country by 2045.

The program will support reducing the number of SOEs, as well as requiring SOEs to focus on their core operations so that SOEs become financially feasible and can provide essential public services efficiently.

This program also supports steps to improve the quality of the BUMN board of directors, strengthen financial monitoring and openness, and help SOEs transition to business models that are climate compatible.

Meanwhile, Bank Pembangunan Jerman or Kreditanstalt Fur Wiederaufbau (KFW) will also provide joint financing (cofinancing) with loans equivalent to 300 million euros or the equivalent of 295.8 million US dollars.

Just so you know, Indonesia has more than 100 SOEs in 2021, with total assets worth US$610 billion or equivalent to around 53 percent of Indonesia's gross domestic product (GDP). SOEs provide a variety of public services, including electricity, medicines, air navigation services, food distribution, and logistics.

SOEs are an important source of state revenue through dividend payments and taxes. SOEs have become the vanguard in responding to the COVID-19 pandemic and are the main pillars in implementing the National Economic Recovery plan.

Although SOEs have also been badly affected by the COVID-19 pandemic, their financial performance continues to improve compared to consolidated net income which fell 89 percent between 2019 and 2020.

From 2020 to 2021, BUMN's consolidated net profit increased from IDR 13.3 trillion to IDR 124 trillion, while asset returns rose from 0.2 percent to 1.4 percent and equity returns increased from 0.5 percent to 4.5 percent.