Indonesia to inject funds into infrastructure-related firms

[JAKARTA] Indonesia will inject 7 trillion rupiah (US$555.42 million) into state-controlled miner PT Aneka Tambang Tbk and 956 billion rupiah into steelmaker PT Krakatau Steel Tbk, according to state enterprise ministry documents presented to parliament on Monday.

The government will also pump in 3.5 trillion rupiah into construction firm PT Waskita Karya Tbk and 1.4 trillion rupiah into peer PT Adhi Karya Tbk.

The announcements are part of President Joko Widodo's plan to inject 48 trillion rupiah of capital into 35 of the country's state-owned firms to boost development spending this year.

State Enterprise Minister Rini Soemarno said last week the government would increase the capital of Bank Mandiri, Indonesia's biggest bank by assets, through a capital injection and rights issue.

According to the documents, Waskita Karya, Adhi Karya, and Aneka Tambang will also sell new shares to raise funds to support the government's plans to develop the archipelago's crumbling infrastructure.

The objective is "to increase state firms' role as agents of development in priority sector, like infrastructure and connectivity, maritime, food security, processing industry, tourism, and defense," the ministry said in a statement.

Mr Joko's government wants state firms to make changes and become more efficient. It will allow them to retain more of their profits and then leverage their funding to develop more projects.

The government expects to receive dividends from state firms totalling 34.97 trillion rupiah this year, compared with an earlier projection of 44 trillion rupiah in the original budget proposed by the previous administration in mid-2014.

Dividend payouts for state firms will range from 5 to 40 per cent of profits, depending on each companies' cash and capital conditions.

All of these will be subject to parliament's approval, due in February, along with the overall state budget for 2015.

REUTERS