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Pertamina reform requires clarity
The recent appointment of a professional figure to head state-owned oil and gas giant Pertamina may have been a move by the government to shield the company from political intervention.
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The new president director, Elia Massa Manik, stated, as quoted by The Jakarta Post, that he had no affiliation with any political party. His remark was essential on account of the risk of political cronyism despite years of efforts to improve good corporate governance in state-owned enterprises. (JP/Jerry Adiguna)
T
he recent appointment of a professional figure to head state-owned oil and gas giant Pertamina may have been a move by the government to shield the company from political intervention.
However, creating a politicsfree environment for a strategic firm such as Pertamina goes beyond the appointment of a nonpartisan director.
The new president director, Elia Massa Manik, stated, as quoted by The Jakarta Post, that he had no affiliation with any political party. His remark was essential on account of the risk of political cronyism despite years of efforts to improve good corporate governance in state-owned enterprises.
Limiting political interference by appointing professional figures to fill top management positions has long been the key prescription for Pertamina to improve its performance. It started in 1988 when the country no longer picked candidates with military backgrounds to fill the top post at Pertamina and turned to professional figures as a part of an apparent response to alleged corruption in the firm.
However, looking at years of professional leaders taking the helm at Pertamina, concerns about intervention with political motives remain high.
Appointing professional figures is one thing. Yet, it needs to go along with the second prescription — that is creating a framework on the role of the state oil firm.
State oil companies are formed for specific motives of the respective governments, including serving as the arm of the state in challenging the domination of multinational firms or becoming a tool for wealth distribution, such as through fuel subsidies. Pertamina has experienced several changes to this kind of role, which has also drawn its relationship with the state as the shareholder.
