JAKARTA: The government is preparing State-owned Enterprise (SOE) Funds financing scheme in a form of private equity mutual fund to meet a funding shortage of IDR49 trillion for SOEs.
Ekoputro Adijayanto, an advisory staff to the State Minister for State-owned Enterprises (SOEs), explained SOEs this year needed IDR190 trillion in capital expenditure, with only IDR141 trillion of which could be provided by conventional funding sources, such as banks and the capital market, leading to a shortage of IDR49 trillion.
"To meet the financing gap, we are seeking another source, namely SOE Funds. The instrument to be used is private equity mutual fund, with underlying assets being SOE projects, especially in the infrastructure sector," he told Bisnis last week.
The government launches the idea of creating SOE Funds as one of sources of funding for various SOE projects. Another target is to support the investment plan in the infrastructure sector, which reaches IDR1,500 trillion per annum.
SOE Funds is a fund management program run by state-owned securities firms to accommodate fund surplus from SOEs.
"The fund managers overseeing the funds are PT Danareksa Investment Management, PT Bahana Securities, and PT Mandiri Manajemen Investasi. However, it is possible ahead we will raise funds from outside SOEs, either from foreign funds or local private ones."
Unfortunately, SOE Funds, scheduled previously to be launched on June 30, probably could not yet be realized since the Vice President had not approved it.
One Bisnis source confided Vice President Boediono had not given his approval due to the absence of legal umbrella for SOE Funds. "The minimum legal umbrella is Government Regulation [PP]."
Another source mentioned corporate placement fund in one investment portfolio was the authority of the respective company.
When asked for confirmation, Ekoputro explained SOE Funds were being finalized and there were several things that had to be coordinated. Deliberation on internal coordination level at the State Ministry for SOEs covered the mechanism of fund allocation from SOEs under the program.
"The external coordination more involves reporting the existence of SOE Funds to the Vice President and the Coordinating Minister for Economic Affairs. In addition, guidance from the Vice President and the Coordinating Minister for Economic Affairs is also needed."
Ekoputro explained there would be no majority ownership by one investor. The process to create the fund would refer to the Bapepam-LK regulation and would put into account the return rate, which would be commercially formulated.
Separately, President Director of Danareksa Investment Management John D. Item disclosed the company and two other state-owned fund managers had prepared projects to be sold to the investors in this case SOEs through equities.
For a start, the projects would be small-scale ones. "For a start, we will only oversee IDR100 billion-IDR200 billion funds. We hope later to oversee trillions of rupiah."
John added the investment selection would be determined by the investment committee established by the State Ministry for SOEs. The investments could be invested in the new projects or the existing ones.
Regulatory barriers
In response to the plan of issuing private equity mutual fund to meet the IDR49 trillion fund need, the government is appealed to pay attention to regulatory barriers that limit insurance and pension fund investments.
Head of Insurance Bureau at the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) Isa Rachmatarwata explained the agency positively welcomed the creation of SOE Funds. However, insurance companies investing in SOE Funds still needed to pay attention to a regulation limiting insurers' investment in short-term instruments.
Chairperson of the Indonesia Pension Funds Association (ADPI) Djoni Rolindrawan said the association viewed the investment ceiling limit for investments in mutual funds should be relaxed if pension funds were involved in SOE Funds.
Based on Minister of Finance Regulation 199/2008 on Pension Fund Investment, there are 16 types of investments permitted for pension funds set at maximum 10% of total investment.
"If the investment regulation is relaxed, SOE Funds can be absorbed by pension funds more," said Djoni.
Based on the existing regulation, since employer pension funds as of June 30 are estimated to book a total net asset value of IDR110 trillion, it will mean they can only spend IDR11 trillion maximum on mutual fund products.
President Director of State-owned Insurance Company (Askes) I Gede Subawa disclosed SOE Funds, which would be led by state-owned insurers and state lenders, were expected to create better return since the funds would be safer and more focused. (Bisnis/gps/06/mts/bpj/pul/spr/wiw)
http://www.bisnis.com/pls/bisnis/bisnis.cetak?inw_id=740524
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