Government to issue regulation on management of SOEs<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government will soon issue a regulation on the formation
\nof a holding company that will oversee poorly managed state-owned
\nenterprises (SOEs), as part of efforts to help restructure and
\nrevitalize them, a minister said.<\/p>\n
State Minister of Administrative Reform Taufik Effendi said
\nthe plan to form the holding company was confirmed and that
\nPresident Susilo Bambang Yudhoyono was expected to sign the
\nnecessary regulation.<\/p>\n
\"We have finished preparing the necessary legal framework for
\nsetting up the holding company. We expect the president to sign
\nit soon,\" said Taufik after a meeting with State Minister of
\nState Enterprises Sugiharto on Monday.<\/p>\n
Taufik explained that after the President signed the
\nregulation, his office, along with officials from the state
\nenterprises office would start forming the structure and
\nselecting people to run it.<\/p>\n
The holding company will likely be called the SOE Managing
\nAgency, functioning more or less similar to the Singapore
\ngovernment's investment arm, Temasek Holdings.<\/p>\n
The agency will act on behalf of the government in managing
\nSOEs, with authority to select top executives and commissioners
\nof SOEs, prepare business guidelines for the SOEs and approve
\ncorporate action plans.<\/p>\n
If the plan goes forward as expected, executives of the
\nholding company will be in charge of managing some 157 companies,
\nwith combined assets of more than Rp 1.2 quadrillion (about
\nUS$133 billion).<\/p>\n
The most daunting aspect of the plan is that most of the
\ncompanies have been poorly managed for such a long time and now
\nsuffer from very low rates of return on investment and equity due
\nto the intervention of vested political interests, which often
\nuse the SOEs as cash cows for political parties.<\/p>\n
Taufik said in order to function effectively and help generate
\nmore profit from the SOEs, the agency was expected to have a very
\nlarge structure with numerous executives overseeing each business
\nsector.<\/p>\n
\"A 'fat' organization will not matter as long as it brings
\nmore profit for the state,\" said Taufik, adding that the
\ngovernment had not yet decided whether the agency would be
\ndirectly responsible to the State Minister of State Enterprises
\nor the President.<\/p>\n
This statement was seemingly in contradiction to a previous
\nmove by Taufik's office which rejected a proposal from State
\nMinister of State Enterprises Sugiharto on the structure of the
\nagency because it included too many executive posts, a condition
\nthat may make the agency itself overly inefficient.<\/p>\n
The idea of forming such an agency was first laid out by
\nformer state minister for state enterprises Tanri Abeng, who was
\nthe first minister to be specifically charged with reforming
\nstate companies during the twilight of the Soeharto regime in
\n1998.<\/p>\n
Tanri at that time proposed the establishment of a state
\nholding company to manage all SOEs, however, before he was able
\nto realize his plan, Soeharto decided to resign after widespread
\ndisturbances and student protests.<\/p>\n
Sources at the Office of the State Minister of State
\nEnterprises said that Tanri, who is a close aide to Vice
\nPresident Jusuf Kalla and is currently the president commissioner
\nof state-owned telecommunications company PT Telkom, had been
\nordered by Kalla to advise Sugiharto about the formation of the
\nholding company.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-to-issue-regulation-on-management-of-soes-1447893297",
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"sponsor": "Okusi Associates",
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