The State-owned Enterprises Ministry is drafting regulation that may tighten procedures for state firms to own shares in secondary subsidiaries, in a bid to improve the overall performance of state firms.
Minister Mustafa Abubakar said Thursday the ministry was trying to streamline the number of firms held by subsidiaries of state firms to make it easier for the ministry to supervise.
The planned regulation, he went on, might force secondary subsidiaries to be divested if their financial performance was poor or the business they were engaged in was not directly linked to the parent
company.
“State firms can maintain sub-sidiaries that are still productive and profitable,” he said.
Mustafa added the regulation would include all necessary technical definitions on the criteria for firms eligible to be divested.
“Establishing a subsidiary under a state firm is important, but to be more accountable we have to be more selective in establishing subsidiaries of these subsidiaries,” he said.
The government currently controls 139 state enterprises, which has a combined 600 primary and secondary subsidiaries.
The government also plans to group state firms with similar businesses under holding companies, and to revitalize those currently underperforming.
The government is also in the process of establishing a financing company that will dedicate itself to supporting ailing state firms.
The company, to be named PT PPA Finance, will have a starting capital of Rp 100 billion (US$10.8 million) from its sole parent, PT Perusahaan Pengelola Aset, a state firm specializing in restructuring state assets since 2004.
The ministry is predicting net profit of Rp 90 trillion from state firms this year, up from the
Rp 74 trillion registered in 2009 on expected increased exports and
investment.
State enterprises are also expected to contribute a lesser amount of revenue to the government, targeted at Rp 24 trillion of dividend this year, down from last year’s Rp 28.6 trillion.
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