OPTIMIZATION OF STATE ASSETS IN JAKARTA TO SUPPORT THE NEW CAPITAL
Jose Arif Lukito
Senior Advisor to DGSAM on State Asset Optimization (Tenaga Pengkaji Optimalisasi Kekayaan Negara)
Directorate General of State Assets, Ministry of Finance of the Republic of Indonesia
The government is doing great work in 2 (two) locations due to the relocation of the National Capital, namely public asset management in East Kalimantan and DKI Jakarta. People pay a lot of attention to the new capital (IKN Nusantara), but for Jakarta, which will become the old IKN, the same attention also needs to be given. This is because public/state assets, especially those belonging to the Central Government in Jakarta, which are known as Barang Milik Negara (BMN) amount significantly, IDR 1,464.2 trillion or US$99 billion (DJKN, 2022).
Because of the transfer of the line Ministries/Institutions (K/L) along with their work unit (Satker) to IKN Nusantara, there was a vacancy in part of the land and buildings previously occupied in Jakarta. The Ministry of Finance as the 'ultimate property manager' or “BMN Manager” realize around 25 percent of state assets in Jakarta have the potential to be optimized. As an ultimate property manager mandated to accept the transfer of state assets in accordance with Article 27 of Law No.3/2022 on the National Capital, including the mandate to prepare a master plan for asset management as ordered in Article 34, the Government has a lot of homework amid limited fiscal capacity, in addition to how to realize IKN Nusantara, the management of state assets in Jakarta is also a challenge.
There are at least 3 (three) public demands on state assets, namely: (1) Increasing in Non-Tax State Revenue (PNBP) from the results of asset optimization; (2) Efficiency of asset operating costs associated with Government property use; and (3) Creative financing based on Government property as the underlying assets. These three demands in different narrative in the “Pocket Book for the Transfer of the National Capital" (Bappenas, 2021) are directed to support IKN Nusantara financing. This had become a discourse some time ago in the mass media when the Government assets are associated with the issue of "firesale of state assets". In fact, support for IKN Nusantara financing sources can be carried out through at least three optimization strategies, namely: (1) Changes in asset repurposing and consolidation; (2) Optimization of Building Floor Coefficient (KLB); and (3) Utilization of assets in Jakarta by other parties. To ensure that state assets are optimized to support new IKN without selling the government assets then these strategies should be undertaken as follows.
First strategy, the repurposing and consolidation of asset use and optimization of KLB. In accordance with the IKN Master Plan in Law No.3/2022, the Ministry of State Apparatus Empowerment and Bureaucratic Reform (KemenPANRB) must compile a list of K/L that will move gradually to East Kalimantan. Accordingly, the first steps taken by the Government through its specialized agency known as the Directorate General of State Assets (DGSAM) are to implement (a) the highest and best use/HBU analysis of state assets that will be vacant (idle); (b) measuring the level of conformity of the use of state assets with the Standards of Asset Needs and Use (Standar Barang dan Standar Kebutuhan/SBSK) which is able to provide certainty of the level of effectiveness and efficiency of the KLB; (c) evaluation of Government asset performance so that the strategic measures can be put in place in the context of efficiency, effectiveness and optimization of state asset management through scoring on indicators of public interest; social benefits; user satisfaction; potential future use; financial viability; and technical conditions; and finally (d) cost benefit analysis (CBA analysis) from the existence of existing state assets over the relevant region.
These in-depth studies become a reference for the integrated use of state assets, so that government-owned buildings and areas will be consolidated and joint use by several K/Ls. Surplus assets will be utilized for other, more optimal interests. There will be significant cost-savings that arise if the transfer in the context of asset repurposing/consolidation is carried out in a planned and timely manner, because it will minimize the opportunity loss when there are assets that should be available and absorbed by the market for utilization that generates state revenue. The government should not lose momentum when they can be absorbed by the market and other parties, otherwise it will result in exposure to the state budget due to significant costs of maintaining/repairing.
Second strategy, deregulation of existing government regulation on the utilization scheme of assets in Jakarta is required. In various reports, there are expectations from investors that the government should be willing to give incentives for investors if state assets in Jakarta are commercialized. In this case, the existing utilization of state asset schemes are in the form of leases, Utilization Cooperation (Kerja Sama Pemanfaatan), Bangun Guna Serah (Build Operate Transfer)/ Bangun Serah Guna (Build Transfer Operate), Utilization Cooperation in Infrastructure (Kerja Sama Pembangunan Infrastruktur) and Limited Cooperation in Infrastructure Financing (Kerja Sama Terbatas Infrastruktur). This is necessary to deregulate the existing schemes in order to attract domestic and international markets that require for example longer period of joint cooperation in utilizing the assets, ease in approval to change the structure and function of state buildings, acceleration of permits for changes in land functions, and tax incentives. The deregulation can be given not only responsive to market aspirations but also maintain good governance from the Government side.
Third strategy, optimization of state assets in Jakarta through an innovative scheme, namely the securitization of state assets as a form of financial engineering which makes future cash flow from the results of the management of state assets as underlying-assets for the issuance of Asset-Backed Securities (ABS/EBA). In general, the trend of proceeds generated from state asset is currently increasing so that the average in the last 5 years has reached Rp2,341.55 billion (DJKN, 2022). The EBA investors will earn returns derived from state assets that generate revenue (income-generating assets). If this figure is capitalized for EBA with a tenor of 5 (five) years, then at least an upfront payment can be instantly obtained by Government amounting to Rp.10 trillion now. If the current state assets are made breakthroughs and the deregulation for asset optimization are put in place the future proceeds from the assets will be increasing.
The securitization will increase the variety of asset and infrastructure financing schemes, contribute to market deepening programs in the country, and of course can be used to support the financing of IKN Nusantara. Considering that some state assets are underlying assets of SBSN (State Sharia Securities), the securitization is distinguished from the assets that are the basis for issuing SBSN.
It is now clear through three above-mentioned strategies that "firesale of state assets" would not be necessarily happened, because the potential utilization of the government assets that generate revenues is still growing to support IKN financing in East Kalimantan.
Jakarta, September 2022
Jose A. Lukito
The opinion expressed in this article is the authors. It does not purport to reflect the opinion or view of DGSA/DJKN and Indonesian Ministry of Finance.