Erick Thohir Talks about IDR 106 Trillion PMN Up to BUMN IPO Plan

Jakarta, CNBC Indonesia The Covid-19 pandemic has no doubt had an impact on State-Owned Enterprises (BUMN). This is reflected in various aspects, one of which is the company’s financial performance.

Nevertheless, SOEs also have a big role in handling the Covid-19 pandemic. Millions of vaccines made by PT Bio Farma (Persero) is only one of many concrete evidences of the role of state-owned companies.

In the CNBC Indonesia Power Lunch program on Friday (30/7/2021), SOE Minister Erick Thohir explained the impact of the Covid-19 pandemic on SOEs. Not only that, Erick also talked about state equity participation (PMN), the transformation of SOEs to future IPO plans.

Check out Erick’s full interview excerpt:

Can you tell us about the performance of SOEs this year and PMN’s plans for SOEs this year and next year?
So if we look at the data, the perception is that sometimes PMN is not good. But if we look at the data for the last 10 years, SOEs contributed to the country Rp. 3,295 trillion. Where more than Rp 1,800 trillion is in the form of taxes, Rp 1,000 trillion in non-tax revenues, plus dividends of Rp 388 trillion. So if we look at the cake compared to PMN it is very small, only 4% compared to its contribution.

We are currently with the Covid-19 condition, just like private companies, 90% are affected. If we look at my data, only four state-owned companies are stable than before, stable and even going well, namely telecommunications, healthcare, plantation, food and agriculture. The majority are definitely affected too.

But of course with the efficiency that we are doing if we look at the current financial statements of PT PLN (Persero), PT Pertamina (Persero), Himbara, Telkom, the results are very good. Just imagine like PLN whose name is capex-nya [capital expenditure/belanja modal] That’s why we will reach 24%, that is, there is a savings of Rp. 24 trillion, yes, PLN’s book is better now. Pertamina with efficiency subholding what we are doing, now Pertamina’s refinery has also started profit also that one before cost center.

Efficiency at this time of Covid-19 is key, that’s why we transform, merge, restructure. It’s a good time but of course with what, hold still development will occur, job openings will still occur.

What are the contributions of SOEs in handling Covid-19?
We have to see that yesterday, PLN distributed what support to free electricity, there are also now repairs to electricity discounts. Not to mention that at PT Telkom Indonesia Tbk (TLKM) we provide what was called free credit and support the program from the Minister of Education, Culture, Research, and Higher Education.

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And it is equally important how yesterday we restructured on a large scale the names of corporations and MSMEs whose value was almost Rp 470 trillion. Because we know that apart from the government, apart from SOEs, remember that there are two most important wheels of our economy, apart from the MSMEs, which are the backbone and the base is large but also private. Well, we do that.

Not to mention the assignment at KUR [Kredit Usaha Rakyat]. This year’s KUR is now IDR 253 trillion, if I’m not mistaken the figure is 92%, yes, it’s from Himbara banks.

Now, these are the things that we saw, why did we make sure that the business world as an ecosystem can still be well supported and we tried to suppress the reduction of employees. Well, it’s not easy, but yeah, we’re back as the backbone, the locomotive of the economy, and that’s what happened before public service obligation we support this.

What are the challenges in encouraging the role of SOEs in facing the pandemic?
It’s always associated with CSR [Corporate Social Responsibility]. Now, our CSR which used to be of various kinds, now focuses on three things, namely health, education, and greenery. So helping the environment, because this is the most important point, we also have to refocus here.

Well, the programs that we have done yesterday, at the beginning, helped the construction of the Wisma Atlet together with the Minister of PUPR. Yesterday when the amount [permintaan] bed also increased very high yes we try to build a modular hospital. And yesterday the Hajj hostel in Jakarta, later also in Lampung and several other places that we will try support.

Apart from that, what is equally important is how we also support the government’s program to distribute free medicines through the TNI and also the Puskesmas.

Well, indeed we continue to try also to ensure that the presence of the drug remains in the pharmacies. So that’s why we increase our production capacity. But for the record, we also have a very important role for the private sector to support this, because it’s not just us who make drugs like oseltamivir and favipiravir, the private sector also does it.

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And of course, it’s also important to note, not at this time of trouble for the people, these drug hoarders who have no morals. I also hope that they will become part of the unity, because this is really a difficult time for the people, we must too support them so that our economy can move again, of course we take care of our health.

How to increase the role of SOEs in handling Covid-19?
Of course we can’t do it alone, we have to work together too. Private support, from the community, from the Indonesian people, work together in situations like this. And we have good power. Indonesia has market, has strong natural resources, this is fundamental for future recovery.

Of course from us now what we are trying to prioritize according to the directions from BPOM [Badan Pengawas Obat dan Makanan], Ministry of Health [Kementerian Kesehatan], BRIN [Badan Riset dan Inovasi Nasional] Also, how do we try to open up opportunities to make the Red and White vaccine, which so far we hope to have imported our own vaccine next year.

Incidentally, PT Bio Farma (Persero) is indeed a company from the Dutch era that is hundreds of years old, one of which is expertthe production of vaccines throughout the world, not only in Indonesia. Such as polio vaccine, meningitis, and others. Indeed, for vaccines rather than Covid-19, we have to go back to study and improve. Now, this is what we are focusing on for the Red and White Vaccine, which is indeed a collaboration between SOEs with domestic universities and also research institutions.

But it’s not just there, we’re also trying to open partnerships with other parties, one of which is Baylor University. Yes, let’s try to see yesterday that it has been registered with the WHO, which we call the BUMN vaccine. Bio Farma collaboration with Baylor University.

Our Red and White Vaccine is collaborating with UI [Universitas Indonesia], Unpad [Universitas Padjadjaran] and others. But with Baylor University, we will also synergize with existing universities in Indonesia for clinical trials. So this is both we are upgrading from our knowledge here R&D [research and development] and future vaccine production.

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When will these two vaccines be launched?
We will try, hopefully in the middle of next year, in May-June, hopefully we can start. Because Bio Farma itself already has line of production the new one, which was only one billion, now we have an additional 500 million new production, 250 million has been produced now. One of them weconvert which used to be Sinovac’s raw materials into vaccines, of which 250 million are still in the process of licensing from BPOM. Well, this is the facility that we can get for the future Red and White Vaccines.

What is the purpose of the SOE transformation that has been carried out so far?
If we look at what our names are supply chain which is one of our weaknesses. How was it conveyed earlier that our drug production has started, but the ingredients are still imported.

This is a raw material for medicine, which we are currently studying whether or not, which was 90%, at least 50% made in Indonesia. We are trying to do that, of course, Pertamina builds petrochemicals whose derivatives will later become raw materials for Paracetamol. Well this is one of us. The paracetamol has been produced by itself but the raw material is not yet. Here we try link and match we do.

Then also how did we make a breakthrough in accordance with the program from the President at that time, downstreaming the industry. Well, that’s one of them how nickel was sent abroad in raw material yesterday, now we are state-owned enterprises forming IBC [Indonesia Battery Corporation], consortium namely PLN, Pertamina, MIND ID [Mining Industry Indonesia] yes together with LG and CATL for the production of batteries rather than electricity alone here.

Not only there recycleThe problem is that this is important because it should not only be produced but not recycled. Why is it important for us to take care of it? ecolife In the future, yes, it is important that our young generation or our next generation can also live better or there is a very good improvement in life in Indonesia with the name green energy, green electricity, and others.