TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati said at least 68 percent of State-Owned Enterprises or SOEs that received state capital injections (PMN) in 2020 were facing financial distress or on the brink of bankruptcy.

The analysis was carried out using the Altman Z-score. “68 percent of our SOEs, based on the Altman Z-score, is in a distress position, while 32 percent are safe,” said Sri in a meeting with the House of Representatives (DPR) Finance Commission, Wednesday, December 15.

Sri said the government also looked at other parameters, such as profit and loss. According to her, 60 percent of SOEs receiving PMN in 2020 could generate profits, while 40 percent were still at a loss.

Additionally, the debt-to-equity ratio (DER) of 55 percent of the SOEs was above the industry average, 34 percent of them was below the industry average, nine percent negative or eroded equity, and two percent was comparable to the industry average.

“This is our concern. That's why we asked some of them to scale down and to be given PMN to make them healthy so as not to overleverage,” Sri explained.

Sri Mulyani said the debt-to-equity ratio had a maximum provision of three times. It was noted that 25 percent of SOEs receiving PMN are overleveraged or their DER at more than 3, 33 percent were relatively green or safe, 1 percent were underleveraged, and 9 percent were at negative equity. Meanwhile, the early warning system score showed that 41 percent of SOEs were not good, 23 percent were sound, and 36 percent were quite good.

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