-- A shift in the way the Indonesian government supports state-owned enterprises (SOEs) due to the Danantara sovereign wealth fund raises the country's growth prospects, S&P Global Ratings said in a recent release.
Danantara, which is functioning more like an active corporate shareholder, prioritizes profit and efficiencies and has not been burdened by bureaucratic constraints, S&P said.
S&P expects more consolidation and greater and more timely financial support for the SOEs as Danantara pushes for reforms in the sector.
This will lead to larger SOEs in strategic areas while promoting economic growth and freeing up capital, S&P said.
The rating agency also sees the sovereign wealth fund's corporate actions and shifting government support for SOEs realigning credit profiles.
However, challenges persist amid defaults among some SOEs, heightened leverage for certain state-owned construction firms, and generally lower creditworthiness in the sector, S&P said.
Danantara also plays a key role in capital allocation, with limitations in the dividend payouts from SOEs likely prompting more careful investments and priority for those that are more important to the economy.