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Indonesia's State-Owned Enterprises Ministry on Tuesday revealed it would increase capital spending by state companies this year by 72 percent over last year in a bid to stimulate economic growth.

The ministry said it would allocate Rp 184 trillion ($20.05 billion) of capital expenditure to its 138 companies, compared with Rp 107 trillion in 2009. That amount would represent 3.3 percent of gross domestic product, up from 2.8 percent last year.

“We expect this year will be better than last year as the economy will be growing. Therefore, SOEs should keep investing to help the government stimulate the economy,” State Enterprises Minister Mustafa Abubakar said on Tuesday. “The spending will help the government create a multiplier effect in the economy and will provide new jobs and opportunities for many Indonesians.”

The government has set a target of 5.5 percent economic growth for 2010, compared with last year’s estimated growth rate of 4.3 percent.

The government also expects net profit from the SOEs to rise by as much as Rp 90 trillion this year, an increase of about 21 percent from Rp 74.2 trillion in 2009.

Much of this improvement is expected to come on the back of higher earnings from energy company PT Pertamina and state electricity company PT Perusahaan Listrik Negara.

Last year’s figures included a rare unaudited net profit of about Rp 6 trillion for PLN, a big turnaround from a record Rp 12.3 trillion loss in 2008.

Profits for Pertamina and PLN are also expected this year, although no target has been announced for PLN.

Audited earnings from state companies for 2009 are expected to be announced by the State Enterprises Ministry in February or March.

State companies that specialize in energy, telecommunications, transportation, mining and plantations will spend the largest amount on capital expenditure this year — a combined Rp 166 trillion. The energy sector represents the biggest contributor to capital expenditure. Pertamina, PLN, and PT Perusahaan Gas Negara are expected to spend at least Rp 115 trillion this year.

Sahala Lumban Gaol, a deputy for strategic sectors at the State Enterprises Ministry, said most of the spending by the three companies would be used for PLN’s “fast-track” power generating program, Pertamina’s acquisitions of new oil fields and the construction of two floating gas terminals off North Sumatra and West Java.

Meanwhile, the ministry has set an ambitious target for ailing SOEs, asking them to trim total losses this year to Rp 143.8 billion, a decrease of 87 percent from Rp 1.17 trillion in 2009.

The number of SOEs expected to post losses is tipped to be cut in half, from 20 companies last year to 10 this year.

State firms such as regional airline PT Merpati Nusantara Indonesia, glass manufacturer PT Industri Gelas Indonesia and shipbuilder PT PAL Indonesia are among those struggling to turn a profit.

Muhammad Said Didu, secretary to the ministry, said many small and underperforming companies may be liquidated or sold this year.

Mustafa said the ministry had set a target of Rp 28.6 trillion in dividends for 2010, a decrease from the 29.1 trillion realized in 2009.

Dividends from state firms are calculated using figures from previous financial years, meaning this year’s figure will be affected by the global financial crisis.