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Jakarta Post

SOEs need more flexibility to compete in ASEAN single market

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Fri, August 22, 2014   /  09:15 am

State-owned enterprises (SOEs) need more flexibility to enable them to benefit from the growing market set to result from the establishment of the ASEAN Economic Community (AEC), which will be fully implemented at the end of 2015, a marketing guru has said.

Hermawan Kartajaya, founder of consulting and marketing research institution Markplus Inc., said the government'€™s regulations relating to the operation of the country'€™s state companies are currently too rigid and often impede the companies'€™ business expansion.

Without a regulatory change, it would be difficult for the state companies to compete with other ASEAN companies when the single market is implemented, Hermawan said in Jakarta on Thursday, during an SOE Marketing Day event.

He hoped that the incoming government would be able to address the regulatory problems that currently impede SOE operations.

Hermawan said senior executives of the state companies grouped under the BUMN Marketeers Club forum met in May this year in Ubud, Bali, to discuss efforts needed to strengthen the operation of the state companies. During the meeting, they signed a declaration entitled the '€œUbud BUMN Initiative'€, which called on the new administration to provide flexibility for SOEs in expanding their businesses.

The BUMN Marketeers Club is an SOE management forum that was established by Hermawan, State-Owned Enterprises Minister Dahlan Iskan and BUMN Track magazine president director SH Sutarto in February 2012.

'€œMinister Dahlan supports us in giving recommendations to the new government regarding our strategies to face the AEC. We hope that the new president and his Cabinet will be marketing-oriented and help our SOEs to improve their markets,'€ he said.

Hermawan said the declaration would appeal to the new administration, as well as to the legislature and the judiciary, to revise various regulations related to SOEs as a form of clear mandate, which would be similar to flexibility shown by the Singaporean government to its investment giant Temasek Holdings.

According to Hermawan, the fact that Temasek managed to expand into one of the largest companies in Asia was partly due to the help of the government. He said the Singaporean government provided full support for Temasek through a flexible regulatory framework.

He also outlined the need for the new administration to start consolidating 141 SOEs that have total assets of about Rp 3,500 trillion (US$299.3 billion) into '€œfewer but bigger'€ companies in order to enable them to be stronger in entering the AEC.

Hermawan cited Semen Indonesia, the largest cement manufacturer in ASEAN, which owns a factory in Vietnam and has plans to expand to Myanmar and other countries, as an example of a successful Indonesian SOE.

During his speech at the event, Dahlan said that as the engines of economic growth in the country, state companies should be able to benefit from the establishment of the ASEAN single market. By doing so, they would be able to make a greater contribution to the economy, he added.

Meanwhile, Firman Taufick, marketing division head for Bank Rakyat Indonesia (BRI), said besides giving more flexibility, state companies operating in certain sectors such as banking should be protected, to ensure that they would not lose out in the free market competition era.

He said state banks should be protected until they have the same levels of operation as banks in other ASEAN countries. (gda)

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