Indonesia to Cut Dividend Payout Ratios in 2013, Eyes New Projects

Indonesia’s state-owned enterprises will pay Rp 31 trillion ($3.3 billion) in dividends in 2013, a 0.65 percent increase over this year’s payouts, as the government cuts payout ratios in an effort to spur economic growth, according to official targets.

“We continue to wish for a SOE policy that is not too large, because the profit held back from Rp 2 trillion in
dividends can become projects worth RP 18 trillion,” State-Owned Enterprises Minister Dahlan Iskan said.

The government has set a target of 6.7 percent growth this year and President Susilo Bambang Yudhoyono has urged state-owned enterprises to take an active role in reaching this goal. The president called on state companies to use profits to create more jobs and invest in the nation.

By cutting dividend payouts, state companies can use profits to fund new projects and drive economic growth, Dahlan said.

State-owned companies paid Rp 30.8 trillion in dividends to investors this year, a 9.6 percent increase over 2011s payouts. The ministry originally set a targeted payout of Rp 27.59 trillion, 11.6 percent less than the actual total.

In 2011, investors received Rp 28.1 trillion in dividends, 0.7 percent less than the ministry’s payout target for 2011.

According to ministry numbers, SOEs reported a 21.6 percent increase in net profits in fiscal year 2011, totaling Rp 123.934 trillion.

The largest contributor to 2013s dividends is expected to be the state’s gas and oil company Pertamina, which is expected to pay Rp 7.2 trillion in dividends. The ministry has set dividends from the telecommunications company Telkom to hit Rp Rp 3.64 trillion. The state-owned electric company PLN is expected to book Rp 3.5 trillion in payouts.

Indonesia previously curbed payout rations among the nation’s state-owned banks, down to 20 percent over last year’s ratio of between 20 and 35 percent. Dividends paid out by state-owned banks reached 4.32 trillion this year, a 20.6 percent increase over last years payouts.

Investor Daily/JG