Debt Of State-Owned Enterprises

Illustration of BUMN Debt by Andri Winarko (VOI)

Jakarta - State-Owned Enterprises (BUMN), especially BUMN Karya, is in the spotlight. During the first semester of 2023, five state-owned companies were recorded as having total liabilities or large debts.

The five companies are PT Waskita Karya (Persero) Tbk (WSKT), PT PP (Persero) Tbk (PTPP), PT Wijaya Karya (Persero) Tbk, PT Adhi Karya (Persero) Tbk (ADHI), and PT Hutama Karya (Persero).

If the total BUMN Karya recorded in the financial statements of the Indonesia Stock Exchange (IDX) reaches IDR 274.82 trillion. Meanwhile, BUMN Karya's debt specifically at state-owned banks reached IDR 46.21 trillion.

The following are the details of the BUMN Karya company's debt:

1. PT Waskita Karya (WSKT)

Total debt: IDR 84.31 trillion. How about a slight increase of 0.31 percent compared to the first semester of 2022. This consists of short-term liabilities of IDR 22.79 trillion and long-term liabilities of IDR 61.5 trillion. The short-term bank debt of related parties contributed the largest liabilities of IDR 27.57 trillion, followed by third-party bank debt of IDR 18.56 trillion.

2. PT Hutama Karya

Total liabilities: IDR 60.67 trillion. Down 15.18 percent from IDR 71.53 trillion in the first semester of 2022. How come it consists of short-term liabilities of IDR 19.87 trillion and long-term liabilities of IDR 40.8 trillion.

3. PT Wijaya Karya (WIKA)

Total liabilities: IDR 56.7 trillion. divided 1.14 percent compared to the first semester of 2022 worth IDR 57.57 trillion. How come it consists of long-term liabilities worth IDR 21.68 trillion and short-term liabilities worth IDR 35.01 trillion. The short-term loan of WIKA-related parties was recorded at IDR 8.9 trillion, and long-term liabilities in the bond segment was recorded at IDR 11.48 trillion.

4. PT PP (PTPP)

Total liabilities: IDR 42.72 trillion. Total liabilities decreased slightly by 0.16 percent from liabilities in the first six months of 2022 worth IDR 42.79 trillion. How come it consists of short-term liabilities worth IDR 18.41 trillion and long-term worth IDR 24.3 trillion. The segment of business debt for related parties contributed to PT PP's liabilities worth IDR 6.81 trillion, then bank and other financial institutions were recorded at IDR 4.92 trillion.

5. PT Adhi Karya (ADHI)

Total liabilities: IDR 30.42 trillion. Down 2.36 percent compared to the first semester of 2022 worth IDR 31.16 trillion. How come it consists of long-term liabilities worth IDR 7.26 trillion and short-term worth IDR 23.16 trillion. Business debt related parties contributed Adhi Karya's largest liabilities of IDR 6.81 trillion, followed by bank and other financial institutions worth IDR 4.79 trillion.

According to BUMN observer Herry Gunawan, this debt issue is a serious problem for the company. If the BUMN is unable to fulfill its obligations to banks, it will have an impact on the company's cash. The funds will also be restrained and difficult to disburse. Under these conditions, the company will also find it difficult to issue debt securities. BUMN Karya needs to restructure and improve governance for business transformation. In my opinion, there is a maximum restructuring in BUMN Karya," said Herry.

Institute for Development of Economics and Finance (Indef) economic observer Nailul Huda assessed that the root of the problem was the debt of BUMN Karya due to an assignment from the government. Some of President Joko Widodo's ambition projects had to run with limited funds.

Red plate banks such as Bank Mandiri, BNI, and BRI, which are the largest distribution banks in BUMN Karya, are also considered under conditions of being forced to provide infrastructure financing to BUMN Karya.

"The problem with this infrastructure is short-term development, but sometimes payments from medium-long-term governments. That's why many are in arrears and BUMN Karya still has to pay to the bank," said Huda.

He stated that many SOEs Karya carry out their duties not according to their duties. For example, the Sumatra Toll Road built by PT Hutama Karya which is supposed to carry out construction, development and providers of toll road services. This assignment is considered to disrupt the company's cash flow.

PT PP Corporate Secretary, Bakhtiyar Efendi did not deny the swelling of debt due to construction projects based on assignments from the government. Even so, he did not specify the amount of the project rather than the use of the company's debt. However, the debt at PT PP is to carry out business processes both in the construction and investment sectors.

Bakhtiyar explained, despite registering jumbo debts, PT PP is still trusted to work on strategic government projects. Based on company data, PT PP managed to obtain a new contract until the end of June 2023 of IDR 11.62 trillion, or grew 6.31 percent compared to the same period the previous year of IDR 10.93 trillion.

PT Waskita Karya's SVP Corporate Secretary, Ermy Puspa Yunita, revealed that despite being hit by jumbo debt, his party focused on working on seven new State Capital (IKN) project packages, with a portion of Rp4.33 trillion. In addition, in June 2023, Waskita also managed to book a contract worth Rp7.82 trillion, and the majority 66.24 percent came from government projects. The value of the new contract also comes from 18.85 percent subsidiary projects, 13.62 percent BUMN/BUMD projects, and 1.29 percent private projects.

Meanwhile, after the Working Meeting with Commission VI of the DPR, Thursday (31/8) the Minister of SOEs Erick emphasized that his party was still trying to overcome the issue of jumbo debt at BUMN Karya. However, this problem cannot only be resolved by the Ministry of SOEs.

He admitted that he would not run away from the problem of jumbo debt in BUMN Karya. However, the process of overcoming the problem takes two to three years. Because, in overcoming this problem, not only punishing the guilty party, but also improving the system.

Deputy Minister of SOEs, Kartika Wirjoatmodjo revealed that one of the solutions to overcome the problem in BUMN Karya was to merge. Tiko, his nickname, gave an example, the merger or merger of two BUMN Karya, namely between PT Hutama Karya (Persero) and PT Waskita Karya Tbk (HK) is targeted to be realized in early 2024, where later the issuer codenamed WSKT shares will become a subsidiary of Hutama Karya.

According to him, the merger of the two state-owned entities in the infrastructure sector was carried out through the WSKT shares to Hutama Karya which was targeted at the beginning of next year. Therefore, bond holders and WSKT vendors are expected to support the corporate action plan.

"We want bond holders and vendors to find the best solution so that Waskita can join the venture, then it will be used as a subsidiary of Hutama Karya to be banned there," he said, Monday (14/8).

Tiko ensured that the merger of two BUMN works would be carried out immediately after Waskita Karya passed all stages of its financial restructuring, including the Postponement of Debt Payment Obligations (PKPU) at the Central Jakarta District Court (PN). After efforts to restore the WSKT financial structure, shareholders will attract the issuer to join Hutama Karya.

Tiko also said that the debt restructuring of PT Waskita Karya will be completed in August or September 2023. This is because 80 to 90 percent of creditors from banks have approved the restructuring scheme offered by the Ministry of SOEs. One of the proposals in the restructuring is the extension of the tenor or the period of returning bank debt. Where, the issuer's debt tenor codenamed WSKT shares can be extended for up to eight years.

Although the majority of banks agree with the WSKT restructuring scheme, a number of bond holders and vendors are said to have not agreed on the rescue. The Ministry of SOEs, continued Tiko, will take the negotiation route with bond holders and WSKT vendors. The goal is that the restructuring scheme can be approved without having to go through the PKPU process at the District Court.