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Jakarta Post
The Jakarta Post
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SOEs holding regulation not in line with laws, says economist

  • News Desk
    News Desk

    The Jakarta Post

Jakarta | Wed, February 1, 2017 | 04:15 pm
SOEs holding regulation not in line with laws, says economist State-Owned Enterprises Minister Rini Soemarno (right) talks to a staff member before a press conference following a Cabinet meeting at the Presidential Office. (Antara/Widodo S. Jusuf)

A new regulation that has become a legal basis for the establishment of state-owned enterprise (SOE) holdings has faced criticism as it is not believed to be in line with existing laws, an analyst has said.

Government Regulation (PP) No. 72/2016 on procedures for state capital injections into SOEs states that the inbreng rule, in which the assets of one company are transferred to another and treated as a capital injection, is not regulated by the SOEs Law as a source of capital injection for SOEs, said Indef economist Mohammad Reza H. Akbar, as reported by kontan.com.

According to Article 2A, paragraph 1 of PP No. 72/2016, capital injections for state assets in the form of shares owned by a certain SOE being moved to another SOE was carried out without passing through state budget mechanisms, Reza said.

(Read also: Energy, mining, financial services holdings to be formed first: SOE minister)

Such a mechanism ignored the supervisory function of the Supreme Audit Agency (BPK) over SOEs, he added. “The article cannot become a legal basis for the capital injection because it is against the SOEs Law and State Finance Law,” he said.

In addition, the SOEs Law and PP No. 44/2005 did not regulate SOEs’ subsidiaries and their business derivations, he said, adding that “therefore, it needs a new law to regulate the matter”, not Article 2A, paragraphs 2, 6 and 7 of PP No. 72/2016.

However, SOEs Minister Rini Soemarno insisted that the rulings on PP No. 72/2016 were in line with laws on state finance, SOEs and the state treasury. (bbn)

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