T

he government is finalizing the establishment process of a “super holding” enterprise that will control all Indonesian state firms with US$320.4 billion in assets, resembling the Malaysian sovereign wealth fund Khazanah Nasional.

It is looking to revise Government Regulation (PP) No. 44 to include new articles on state asset management in favor of the establishment of the super holding. All the assessments and legal documents are scheduled to be presented to President Joko “Jokowi” Widodo on Friday.

“We are discussing the regulations needed over the whole process to ensure that the state will remain the manager of the future state-owned enterprise [holding company],” State-Owned Enterprises (SOEs) Minister Rini Soemarno said after a meeting held at the Office of the Coordinating Economic Minister about the establishment of the super-holding on Thursday.

The giant holding firm will act as a parent company for 199 large SOEs and replace the SOEs Ministry, which is a government institution employing civil servants. Its main task is to manage state firms like corporations without relying on the state budget to support their business growth and at the same time play a bigger role in the country’s economic development.

For the first phase, there will be five holding companies supervising SOEs in energy, mining, toll-road infrastructure, housing and financial services sectors, which will be followed by a whole transformation program expected to reach completion by 2019.

The SOEs Ministry, with the help of the Finance Ministry, discussed its proposed new articles in the revised government regulation that would enable the government to hold A-series shares in all state-run firms.

Under the A-series shares, popularly known as “Saham Merah Putih”, the government will have exclusive rights in all state firms, just like a major shareholder, despite owning only a minority of shares. For instance, it will be able to appoint and replace members of boards of commissioners and directors in state-run firms.

With such a mechanism, the establishment of an energy holding company, which is expected to be realized this month, can be carried out faster, so that the establishment process for four other holdings can be expedited before the end of this year.

In the energy sector, state-owned oil and gas giant Pertamina will be the holding company, but it is likely to acquire state-run gas firm PGN as its subsidiary. PGN will later be expected to acquire Pertamina’s subsidiary Pertamina Gas (Pertagas) in order to prevent any possible overlaps in work areas.

Edwin Hidayat Abdullah, the SOEs Ministry deputy for energy, logistics, regional and tourism development, said recently that the future energy holding company was expected to increase efficiency and eliminate duplications of investment between state-run energy firms.

“The holding can also have synergy with PLN [state-electricity company] as it is related with the role of gas supply in fulfilling the government’s 35,000 megawatts electricity target,” he said.

After the forming of the energy holding company, Pertamina’s total investment until 2021 is expected to reach US$1.5 billion, so that infrastructure for gas supply can be developed faster and “we can optimize the usage of floating storage and regasification unit [FSRU]”, finance director Arief Budiman said.