T

he good days appear to have passed for Indonesia’s once-powerful private-sector lobby group the Indonesian Chamber of Commerce and Industry (Kadin).

The growing domination of state-owned enterprises (SOEs) has become a recurrent issue that it has raised over and over again during the tenure of President Joko “Jokowi” Widodo, who came to power in late 2014.

The administration has set an ambitious target of connecting the nation’s sprawling archipelago of more than 17,000 islands by building hundreds of kilometers of new roads and dozens of seaports and airports.

At the close of its annual national coordinating meeting on Tuesday, Kadin chairman Roslan Roeslani complained to Jokowi, who was in attendance, about the omnipresence of state firms. While there are only 118 SOEs their “children and grandchildren” — the term Roslan used to describe subsidiaries — amounted to nearly 800 and they were grabbing market share from private firms, including small and medium enterprises (SMEs).

“SOEs have gone too far and have eaten up much of the private sector’s proportion. Some SOEs even have subsidiaries in catering and textiles,” Roslan said in his closing speech.

In one of its recommendations, Kadin, which comprises business associations across all sectors nationwide, also suggested that state firms sell finished projects to private enterprises to allow the former to earn profits to be used to speed up other infrastructure projects. It also proposed that SOE subsidiaries merge or be sold to private business entities.

In its heyday under the leadership of business tycoon-cum-politician Aburizal Bakrie from 1994 to 2004, Kadin overcame several crucial problems, such as illegal sugar imports and timber exports, which were rampant at that time.

Under his successor, Suryo Bambang Sulisto, who was the main commissioner of Bakrie-controlled miner PT Bumi Resources, the group also forced the government to postpone the electricity price hike by state-owned power firm PLN in 2010.

In response, Jokowi said he would call a half-day meeting with Kadin and relevant ministries within two weeks to discuss its complaint in detail.

While acknowledging the excessive number of SOE subsidiaries and their domination of the business realm, the President considered it a natural phenomenon in a transition era in which the government was geared up to spur infrastructure development.

“I agree about the concerns regarding the SOEs, and I have already instructed the last plenary meeting [to resolve them]. It’s true that there are too many SOE subsidiaries, but I didn’t create them. They’ve been around for a long time, so why are they being talked about now?” Jokowi said. “I’ve ordered the merging of these 800 firms.”

The massive presence of SOEs is particularly evident in the infrastructure sector, which will require Rp 4.7 quadrillion (US$347.04 billion) by 2019, the end of Jokowi’s term.

State-owned construction firms like PT Wijaya Karya and PT Waskita Karya and PLN are building roads and toll roads and power plants, respectively.

University of Indonesia economist Fithra Faisal echoed Kadin’s concern, saying that if left uncontrolled, SOE domination could lead to a “crowding-out effect,” in which they pushed private firms out amid unfair competition.

To stop this, the government needed to give a balanced proportion to both SOEs and private firms, with the former focusing on priority projects, he added.