SOEs Told to Sell Bonds and Become ‘More Accountable’
State Enterprises Minister Dahlan Iskan urged state companies on Monday to sell bonds if they needed to raise funds, saying it would help make them more accountable and less prone to political intervention.
“Having SOEs sell bonds is aimed at improving corporate governance,” he said. “Selling bonds means that SOEs will have to go through several steps, including being rated by ratings agencies, complying with capital market regulations and having to be responsible to the public.”
Selling bonds would also require the companies to be financially sound, he said.
Indonesia’s state enterprises, now numbering 142, have long been associated with poor service and a lack of good governance and honest management. They are also often seen as cash cows for corrupt politicians.
“Selling bonds is also aimed at telling the public that state enterprises are transparent and run in a professional manner,” Dahlan said.
The minister, who was president of state utility PLN until October, said intervention by politicians usually led to graft.
Several state companies, including Bank Mandiri, the country’s largest lender by assets, toll-road operator Jasa Marga and gold miner Aneka Tambang welcomed the minister’s call.
Antam’s president director, Alwinsyah Loebis, said the company was now forgoing bank loans to finance projects.
“We had sought $450 million in bank loans to finance some of our projects,” he said. “But the process was long and would have needed six approvals. We forgot about that and decided instead to have a bond sale.”
Antam doubled the size of its bond sale to Rp 3 trillion ($333 million) after demand from investors soared beyond Rp 10 trillion.
The offering period of Antam’s seven-year and 10-year notes ran from Dec. 6-9, and the notes will be listed on the Indonesia Stock Exchange on Thursday.
Bank Mandiri’s president director, Zulkifli Zaini, said selling bonds would allow state companies to tap low-cost funds from the market and also improve corporate governance.
“Question number one from investors now is whether good corporate governance has been put in place,” Zulkifli said. “And whether state companies are prone to political intervention.”
Jasa Marga president Frans Sunito said that most potential investors were more concerned about whether state companies were resistant to political intervention than whether they had sound financial fundamentals.
The yield of government five-year bonds fell to 5.479 percent on Monday from 5.490 percent on Friday, while the yield of the 10-year notes was 6.2053 percent on Monday compared with 6.2008 percent on Friday.
The yield of five-year bonds has fallen 1.23 percentage points so far this year while that of the 10-year bonds has declined by 1.37 percentage points, according to data from Indonesian bond pricing agency.
This is more like a trust-gain mission to me. But if it works and it pushes up the economy, I don’t see why not. Will you participate in the bonds issued by SOEs?