Home > News > Industry News
Business PLN assets’ revaluation to help company expand

The revaluation move by state-owned electricity company PT PLN's fixed assets is necessary to improve the company's balance sheets and expand its businesses, said RSM AAJ tax consultant Sentot Agus Priyanto.

PLN has submitted the documentation for the assets’ revaluation to the directorate general of taxes.

State-owned railway operator PT Kereta Api Indonesia (KAI) is expected to follow suit.

According to Sentot, the purpose of a revaluation is to bring into the books of the fair market value of fixed assets that may be helpful in order to get funds for business expansion.

Such a move is necessary because the company needs funds to carry out ambitious electricity infrastructure projects, such as the 35,000 megawatt power plant program, he added.

"PLN serves the needs of the people. Companies that serve people should be well managed. But as we all know, this time the company was not properly managed," said Sentot in Jakarta on Wednesday.

The increase in the dollar exchange rate has caused the debt denominated in US dollars to increase, while the value of assets in rupiah has remained unchanged. Therefore, the revaluation can be used to increase the state-owned company's capital.

Sentot said that based on its financial reports in 2014, PLN's assets are worth Rp 600 trillion (US$43.63 billion), while its net profit was only Rp 11.7 trillion.

By revaluating its assets, Sentot estimated its assets value will increase 25 percent. "Asset revaluation will impact PLN's capital. The company's profits will be higher and this will add government revenue from dividends," he added.

This year, State-own Enterprises Ministry has lowered its dividend target, from Rp 37 trillion to Rp 34 trillion due to the economic slowdown.

Sentot supported the government’s plan to cut income tax rate (PPh) from 10 percent to 5 percent in excess of the revaluation of assets. "This will lead more and more companies to revalue their assets," said Sentot.

Earlier, Finance Minister Bambang Brodjonegoro said the PPh reduction is granted limited only to taxpayers who proposed revaluation of fixed assets by the end of this year with the hope that the incentive is expected to improve the company's health of the balance.

Because of this policy, there are several state-owned enterprises that are interested in doing the revaluation of the assets that they have.