TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Restructuring plan aims to make SOEs profitable, competitive
State-Owned Enterprises (SOEs) Minister Erick Thohir announced his plan to overhaul the country’s SOEs at a House of Representatives hearing on Monday
Change Size
S
span>State-Owned Enterprises (SOEs) Minister Erick Thohir announced his plan to overhaul the country’s SOEs at a House of Representatives hearing on Monday. It included several new initiatives but excluded his predecessor’s plan to establish a “super" SOEs holding company.
At the hearing with House Commission VI overseeing SOEs, trade, investment, industry, cooperatives and small-and-medium enterprises (SMEs), Erick said that he was dropping former minister Rini Soemarno’s plan to create a super SOEs holding company and would instead establish subholding companies to oversee SOEs in the same business sector.
The minister said that he would also continue debt restructuring as part of his SOEs reform plans, including restructuring the debts of state-owned steelmaker PT Krakatau Steel. He also planned to improve the role of SOEs in contributing to the nation's food, energy and health security through cooperation with global companies.
“This will enable our SOEs to go global, have bigger markets and be more competitive [alongside] foreign companies,” he said.
Among his new SOEs reform initiatives were to issue stricter requirements for setting up subsidiaries.
“I will not prevent SOEs from creating new subsidiaries, but they must present a clear purpose as to why they [want to] create them,” said Erick, underlining that stricter requirements were needed to ensure that SOEs focused on their core businesses and did not venture outside their domain.
He cited PT Pengembangan Armada Niaga Nasional (PANN) as an example, pointing out that the state-owned ship leasing company owned a subsidiary that managed two hotels.
The SOEs Ministry's spokesman, Arya Sinulingga, added that the relevant regulation would also encourage SOEs to manage their existing subsidiaries properly toward improved performance, rather than creating a new one.
Erick also said that the new requirements were intended to prevent “irresponsible parties” from undermining state-owned subsidiaries for personal gain.
One prominent example was Pertamina Energy Trading Limited (Petral), the Singapore-based subsidiary of state-owned energy holding company Pertamina. Petral was dissolved in 2015 by former Pertamina president director Dwi Sutjipto over suspected "mafia" practices, which then prompted the Corruption Eradication Commission (KPK) to investigate the matter.
Erick also plans to revise a government regulation that stipulated the Finance Ministry's role in managing SOEs, which he deemed was an impediment to SOEs restructuring.
Government Regulation No. 41/2003 needed to be revised so the SOEs Ministry would have a broader managerial authority, especially concerning mergers and setting up an SOEs holding company, he said.
The regulation requires the SOEs Ministry to seek permission from the Finance Ministry, in its capacity as a shareholder, on the liquidation, merger and spin-offs of state-owned companies, as well as capital injections.
Erick proposed that the regulation be revised to expedite the liquidation and merger of "problematic SOEs" to turn them into profitable companies. He would discuss the proposal at the next meeting with President Joko "Jokowi" Widodo and Finance Minister Sri Mulyani Indrawati.
In addition, Erick said he would reduce the number of SOEs from 142 at present.
“About 70 percent of the Rp 210 trillion [US$14.88 billion] the government received in profits came only from 15 SOEs, so it is better for us [SOEs] to be fewer, healthier and more agile,” he told the press after the hearing.
University of Indonesia SOEs expert Toto Pranoto told The Jakarta Post that he agreed with Erick, and that the government should liquidate SOEs that no longer generated a profit or contributed to public welfare.
He said that in the past, the government had created SOEs like glass producer PT Industri Gelas (Iglas) to pioneer an industry.
“But since [SOEs] can now be substituted by private businesses, and the fact that [SOEs] are unable to generate profit for the country, I think it is better that Iglas and other SOEs of the kind are liquidated,” said Toto.
However, Toto said that instead of giving the SOEs Ministry broader authority to manage problematic state-owned companies, he suggested the SOEs and finance ministries to establish better coordination to accelerate the decision-making process in matters that concerned problematic SOEs.
