T

he heads of several prominent state-owned enterprises called on Tuesday for a curtailment of existing laws and regulations that prevent their companies from unleashing their full potential.

Gatot Mudiarto Suwandono, the president director of publicly-listed PT Bank Negara Indonesia (BNI), said that state-owned companies and the private sector did not operate on a level playing field as the former were bound by many more regulations.

At the same time, state enterprises are also under political pressures that blunt their competitive edge.

“State-owned enterprises could actually play a much bigger role if we had access to a level playing field with private companies,” he said during the Forbes Indonesia Leadership Forum on State-Owned Enterprises held on Tuesday.

At present, nine laws govern state enterprises, including the 2002 Law on State Finances, the 2003 Law on State-Owned Enterprises and the 2002 Law on the Synergy Between State-Owned Enterprises.

Gatot said the bureaucracy thrown up by this web of laws bred inefficiency within state-owned enterprises.

Arief Yahya, the president director of PT Telekomunikasi Indonesia (Telkom), said that the plethora of laws “made state-owned enterprises slower than private enterprises” in carrying out their business activities.

He said that to make state-owned enterprises more competitive, the conditions surrounding these enterprises had to be transformed to become more business-like rather than bureaucratic.

“The state-owned businesses have to be conducted in a business-like way,” he noted.

Dwi Soetjipto, the president director of cement producer PT Semen Gresik, also alluded to the existence of laws that hindered companies trying to operate more efficiently.

“We have a lot of non-productive assets but it is difficult for us to sell them so that we can be more productive,” he said.

He further added that reforming regulations, in addition to resizing enterprises, was part of the transformation that state-owned enterprises had to undergo to become stronger business entities.

Semen Gresik is one of only a handful of some 141 state-owned enterprises that are currently performing extremely well.

The cement manufacturer, along with PT Bank Rakyat Indonesia, PT Bank Mandiri, PT Telkom Indonesia, PT Bank Negara Indonesia and PT Perusahaan Gas Negara, are listed on the Forbes Global 2000 list which ranks the largest public companies in the world.

Sahala Lumban Gaol, an expert on public policy with the State-Owned Enterprises Ministry, pointed out, however, that although state-owned enterprises faced more regulation than those in the private sector, the state-owned enterprise sector still managed to grow.

The sector booked combined net profits of at least Rp 123 trillion (US$13.2 billion) last year. Although 118 companies saw profits, 23 others suffered losses of Rp 3.24 trillion, including PT. Merpati Nusantara Airlines which has been plagued by internal rifts within its management.

This year, the sector is expected to increase its net profits by 17.45 percent to Rp 145.6 trillion as well as raise capital expenditure by 52 percent to Rp 217.3 trillion.

Sofjan Wanandi, the chairman of Gemala Santini Group and Indonesian Employers Association (Apindo) chairman, said that state-owned enterprises played an important role in the economy.

“State-owned enterprises will always be important because they balance their counterparts in the private business community,” he said.

He added that ameliorating state-owned enterprises also entailed driving out political interference in the management of the enterprises.

“That is what the new minister is doing,” he said, referring to State-Owned Enterprises Minister Dahlan Iskan.