Jakarta, Indonesia--(Newsfile Corp. - July 25, 2024) - Indonesia's state-owned enterprises (SOEs) reported a dramatic increase in dividend payments to the government in 2023, reflecting the success of recent reforms aimed at improving efficiency and profitability in the public sector.

Dividends from state-owned companies more than doubled to 81 trillion rupiah (about US$5.2 billion) in the 2023 fiscal year, a 102.1% increase from the previous year, according to Erick Thohir, Indonesia's Minister of State-Owned Enterprises. Speaking at a parliamentary hearing on 10 July, Mr Thohir said that when combined with taxes and other non-tax payments, state-owned enterprises contributed 21.9% of Indonesia's total fiscal receipts for the year, up from 15% in 2022.

The improved financial performance comes after several years of organisational and governance reforms introduced by the ministry. These changes included establishing sector-focused holding companies, implementing stronger oversight mechanisms and concentrating resources on activities with the greatest economic impact.

"Creating more competitive SOEs with stronger financial performances required the consolidation and rationalisation of existing SOEs so we could streamline operations and reduce redundancies," said Minister Erick Thohir. "At the same time, we implemented a wider restructuring of the ministry to improve governance structures."

Indonesia's largest state-owned enterprises, including the national oil company Pertamina, state-owned mining company MIND ID, and two major banks, Bank Rakyat Indonesia and Bank Mandiri, reported combined profits of 215 trillion rupiah (US$13.2 billion) in 2023.

The reforms have also enabled global partnerships in various sectors. Pertamina NRE, a renewables subsidiary of Pertamina, has partnered with UAE-based Masdar to develop solar and wind power plants. The ministry also recently secured an investment commitment of up to US$3 billion from Eagle Hills, a subsidiary of UAE's Emaar Properties, to enhance Indonesia's tourism destinations and airport logistics.

Despite the improved performance, the government continues to provide budget support for selected state-owned enterprises. At the 10 July hearing, parliament approved 44.2 trillion rupiah (US$2.7 billion) in capital injections for fiscal year 2025, primarily to fund strategic projects with significant economic and social impact.

Over the past five years, Indonesia's state-owned enterprises have paid a total of 280 trillion rupiah (US$17.2 billion) in dividends to the government. During the same period, the government has injected 218 trillion rupiah (US$13.4 billion) into selected companies to fund priority national projects, including village electrification programmes, and infrastructure development, including the trans Sumatra toll road and the light rail transit (LRT).

"The Ministry of SOEs and all state-owned enterprises are committed to continuing this transformation process while ensuring that capital provided by the Indonesian government will be invested optimally to advance prosperity for Indonesia and its people," added Minister Erick Thohir.

######

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/217611