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Indonesia showcases state-owned enterprises success in G20 forum
Speaking during an international conference organized in the lead-up to the Group of 20 leaders summit in Bali, State-Owned Enterprises (SOE) Minister Erick Thohir said that since he enacted reform at the ministry to start consolidating state-owned companies, there has been a steady improvement in the firms' performance.
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State-Owned Enterprises (SOE) Minister Erick Thohir visited state-owned sugar company Industri Gula Glenmore (IGG), owned by state-owned plantation company XII in Banyuwangi, East Java, on Sept. 18, 2021. (State-owned enterprises (SOEs) Ministry/Public relation teams)
Two senior ministers in the administration of President Joko "Jokowi" Widodo touted the success of the state-owned enterprises in an international conference on Monday, showcasing some of key contributions from the firms in propelling the country's economy.
Speaking during an international conference organized in the lead-up to the Group of 20 leaders summit in Bali, State-Owned Enterprises (SOE) Minister Erick Thohir said that since he enacted reform at the ministry to start consolidating state-owned companies there had been a steady improvement in the firms' performance.
Erick, who was tapped by President Jokowi to serve as State-Owned Enterprises minister in 2019 said in his speech to inaugurate the conference that state firms performed exceptionally well especially during the pandemic.
He said that in 2021, at the peak of the pandemic, revenue of SOEs increased 18.8 percent to Rp 2,3 trillion (US$160 billion) from the previous years.
"Overall, the consolidated profit increased by 838 percent from Rp 13 trillion in 2020 to Rp 124.7 trillion in 2021," Erick said.
By the end of 2021, figures from the ministry said that assets controlled by SOEs are worth Rp 9 trillion, or equal to 53 percent of Indonesia's GDP.
With the success, Erick pledged that he would continue working to reform business practices at SOEs, especially the work in consolidating these companies.
Erick targets that by the end of his term in 2024, he expects there will only be 43 state-owned companies with total assets of Rp 9,1 trillion, down from 92 firms in December 2021, with assets worth Rp 9 trillion.
Coordinating Maritime Affairs and Investment Minister Luhut Panjaitan meanwhile praised the role of SOEs for playing a crucial role in the government's handling of the COVID-19 pandemic.
Luhut said that while the world was under lockdown from the pandemic – especially during the first wave of the Delta variants faced with shortages in vaccine, personal protection equipment and therapeutics – state-owned companies, especially those working in the medical and pharmaceutical business, carried most of the heavy lifting.
Luhut said that state-run hospitals and state-owned pharmaceutical firms were at the forefront of the government's campaign to mitigate the coronavirus pandemic.
"The role was vital especially in providing the country with vaccines. Also, I remember when India started imposing a lockdown [from COVID], we couldn't even import paracetamol and state-owned enterprises picked up the slack," Luhut said.
Luhut also expressed his confidence that state-owned companies would continue to be the country's safety net especially now the world has become more volatile from the Ukraine war and its economic fallout.
"Now, we're facing a perfect storm and we are preparing a strategy to deal with that [...] we're confident we can manage it well [...] with the participation from SOEs," Luhut said.
Since Erick began his term as minister, the government has taken initiatives to boost efficiency at companies.
In June, this year, President Jokowi signed a new government regulation that expands previous rules barring executives and commissioners of SOEs from taking on positions of political leadership, whether in political parties, as lawmakers or as top regional administrators.
In December 2021, Erick proposed that the government should privatize SOEs with revenue below Rp 50 billion as part of its reform efforts.
Currently, Erick and the House of Representatives Commission VI overseeing trade and industry are discussing an amendment to the 2009 law on SOEs that would allow the ministry, among others, to liquidate non-performing companies in an expedited process.
Meanwhile, former British prime minister Tony Blair, who spoke in a panel with Erick, said that the Indonesian government should allow for a greater participation from private sectors in contributing to the economy.
"The challenge is how to get the public and private sector working together to be in a dialogue and that the government should not see the private sector as an adversary but actually as a partner," Blair said.
The former Labour prime minister also said the private sector should recognize that they will take into account public interests. "They should not only take care of their private interests," he added.
