Deputy Minister: SOEs Must Urge Freeport to Pay out Dividend  

TEMPO.CO, Jakarta - Deputy Finance Minister Bambang Brodjonegoro asks the Ministry of State-Owned Enterprises to urge mining company Freeport Indonesia to pay its dividend to the government. As holder of 9.36 percent stake in Freeport, the government should receive a dividend of Rp1.5 billion.

In the last two years, Freeport has been postponing its dividend payment. As a result, this year the government must cut the payment from other SOEs to the state treasury. "We are not forcing [Freeport], but [the paymet] is stipulated in the contract agreement so it could be negotiated," Bambang said yesterday.

The actual dividend that will be paid in the 2014 State Budget is only around Rp37.5 trillion, below the target set at Rp40 trillion. "It is based on the 2013 fiscal year that will be paid in the 2014 state budget," SOE Deputy Minister Mahmuddin Yasin said yesterday.

In addition to Freeport, dividend payments from a number of SOEs are also declining. SOE Minister Dahlan Iskan said PLN is also unable to split its profits because it is still losing money. "Freeport and PLN are unable to pay because they made no profits. We must turn our brains around," he said in Jakarta some time ago.

In its 2013 fiscal year, PLN posted a net loss of Rp29.6 trillion, a major setback compared to 2012's Rp3.2 trillion profit. PLN's loss last year was the largest in the company's history.

Other large SOEs that are still losing money in 2013 include Krakatau Steel (Persero) with US$13.9 million. Meanwhile, Garuda Indonesia suffered a 90-percent annual net profit decline to US$11.2 million.

The SOE Ministry, said Yasin, will coordinate with the Fiscal Policy Office regarding the plummeting amount of government dividends. "We will also report to the House of Representatives that this year's dividend target is not achieved," he said.

In 2013, SOE profits reached Rp150.7 trillion, edging up from the previous year's achievement of Rp150 trillion.

Zamkhani, the SOE Ministry's deputy of primary industries, said it is difficult to collect dividend payments from Freeport because the decision has been approved in the general meeting of shareholders held some time ago. "We want the dividends distributed. However we are only a minority shareholder, so there isn’t much we can do."

The unmet target of dividends from SOEs, according to Said Didu, former secretary to the SOE Minister, is because the government's target is too high. The government also did not take into account the fact that the economy had worsened over the past year.

The amount of state expenditure that increases every year, he said, forces the government to keep increasing dividend targets. This is not the correct step considering there are SOEs—particularly from the farming and mining sectors—that heavily depend on external factors. According to Said, the ideal dividend target should be set between Rp30 trillion to Rp35 trillion.

Until yesterday, Freeport was unable to provide any statement regarding the matter. At the end of last month, Freeport's vice president of corporate communications Daisy Primayanti said the dividend could not be distributed because of several reasons including the exports decline of copper, halted gold mining operations as well as the declining global commodity prices. Despite having not paid its dividends, Freeport has paid the government US$500 million in taxes and royalties.

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