T

he new State-Owned Enterprises (SOE) Minister, Dahlan Iskan, may be popular for such idiosyncrasies as wearing running shoes to work and sitting cross-legged on a tabletop during his own press conferences, but those familiar with his work know that the man means business. Many say his integrity and unique style of leadership may be good for a ministry marred by political back-dealings and extortion in the past. To get greater insight on his leadership style and what is in store for state-owned enterprises, The Jakarta Post’s Nurfika Osman and Andi Haswidi spoke to the man himself:

Question: What is the major problem, or the weakest point, in the management of SOEs right now?

Answer: The thing that needs to be fixed is how we can create a corporate management, instead of a bureaucratic management, because SOEs consist of enterprises, not institutions. In addition, because we are corporations we have to allow room for creativity. Another important thing is that we need to have efficient management. I think we have ignored the element of speed in developing SOEs for years, thus we have lost out on many good opportunities.

One example of this is when I found a SOE that did not have a finance director for a year. This is very unhealthy because a finance director plays a very vital role in any company. They are like the heart of human body. Every SOE company must have a finance director. A person having dual positions is no longer allowed.

Another thing to fix management is to make the process of changing a director of a SOE take no longer than one month. The President (Susilo Bambang Yudhoyono) has agreed on this.

What will you do to avoid state-owned enterprises becoming cash cows for government officials?

I think the phrase “cash cow” is too much because, in reality, the conditions are not that bad. They are just part of an image we have had since the Dutch colonization era. Integrity is the key to solve this. The people with integrity — those who are able to ignore and refuse interventions from any political party, think logically, and have passion to boost companies — are the people that we need to develop SOEs.

Now, the track record of someone’s career is much more important than the two-hour fit- and-proper test. The test remains important, but it is not the main factor anymore. I give 10 percent for the test and 90 percent for track record. I do not care if people do not like that, because a two-hour test will never defeat a long track record.

We will have a clandestine operation to monitor the track records of company executives and will appoint a president director through such a system.

Then we will let the newly installed president director pick directors to work with, because we believe that the key to having a good company is a solid and harmonious management. Pak Mustafa (Mustafa Abubakar, the previous SOE minister) started to apply this method when he picked me as state electricity company PT PLN president director couple of years ago and it really worked. I am applying the same method now.

How can you be so sure that your officials are free from political interventions?

There will be a lot of monitoring systems and I have my deputies to do this. We are SOEs. We are companies, not political parties. And I personally have a great network to monitor them.

Many SOEs, especially those listed on the stock market, propose lower dividends in order to boost investment. What do you say to that?

A dividend is not the main factor, even though reducing it will make more money for investment to expand their business. But if they want to grow, they should increase the profits, not reduce the dividends.

If the company was able to book a great amount of profit, a 50 percent dividend cut would still benefit the company.

However, in order to grow, that is strongly related to the company’s programs and goals they would like to achieve in the end. So, there’s no ideal figure on how much dividends should be paid to shareholders.

If the company did not have any important programs within a year and just continued finishing old programs, they could pay 100 percent of the dividends. In contrast, a company can hold the dividends for years to expand their business in the future. In short, the dividend depends on the condition in the company.

Is there still room for a strategic sale of SOE?

There is no room for strategic sales anymore because they have a lot of weaknesses. However, that does not mean that the strategic sales we had in the past were wrong. We did it because the country did not have enough money. The economic conditions and the stock market were not as good as they are now.

The conditions are different today and strategic sales are not the answer. We can restructure the SOEs, via acquisitions and mergers, and we have to make use of the stock market. I encourage SOE firms not to do what we call “wait and see” to expand their business. The wait-and-see behavior will make our economy stagnant. SOEs have to move and make progress, and this will encourage the private sector to do the same.

In addition, when there is a problem at a SOE company, we will summon the president director — the one who leads the company — not directors. Whether it is a director who meets us because the president director is too busy, that is going to be another issue. We will never again summon directors because we are afraid of adu domba (setting the president director against directors).

If we found out that the president director’s work was not good, we would lay him off without issuing a warning letter because that is the attitude of a professional. I have even told the president, before he installed me in the cabinet, that if my work as a SOE minister was bad, I would be ready to be laid off at anytime because I am a
professional.