Inefficient state firms lose US$4 billion<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
Independent audits on five state companies, including PT
\nTelkomunikasi Indonesia (Telkom) and national airline PT Garuda
\nIndonesia, found inefficiencies, potential losses, and lost
\nsavings amounting to US$4 billion in the five years from 1995 to
\n1999.<\/p>\n
The three other state firms are toll road operator PT Jasa
\nMarga, port operator PT Pelabuhan Indonesia II (Pelindo), and
\npalm oil plantation firm PT Perkebunan Nusantara IV.<\/p>\n
\"These performance audits allow us to measure the gap that
\nseparates the state firms from international best practices, so
\nthat we can aim for higher growth,\" Minister of State Enterprises
\nLaksamana Sukardi said on Thursday in a press briefing to
\nannounce the audit results.
\n The audits form part of an agreement with the International
\nMonetary Fund (IMF), and is the second round since the first was
\ncompleted in 1999.<\/p>\n
Called special audits, their announcement on Thursday is
\nrequired by the current Letter of Intent (LoI) to the IMF.<\/p>\n
Performing the special audits were Pricewaterhouse Coopers
\n(PwC), which audited Jasa Marga and Garuda; Arthur Andersen,
\nwhich audited Pelindo; and RSM International was responsible for
\nPerkebunan and Telkom.<\/p>\n
The audits cover a five-year period, except for Perkebunan
\nNusantara, which underwent only a four-year audit.<\/p>\n
Auditors defined inefficiencies as costs that should not have
\noccurred, could have been avoided or revenues that might have
\nbeen earned, if the firms had operated more efficiently.<\/p>\n
In the five-year audit period, inefficiencies led to losses of
\nRp 8.5 trillion (about $801 million), with Garuda alone incurring
\n$1.62 billion.<\/p>\n
Savings or profit losses were defined as costs that could have
\nbeen avoided or revenues that might have been earned if the firms
\nhad operated more efficiently.<\/p>\n
In total, the five firms lost Rp 7.3 trillion and $698
\nmillion.<\/p>\n
In reference to potential losses, the auditors explained these
\nas future liabilities arising due to inefficient operations or a
\nlack of compliance with international best practices.<\/p>\n
In this category, auditors found potential losses of Rp 776
\nbillion and $147 million, plus Rp 64.6 billion per year in the
\nnear future.<\/p>\n
At Telkom, examples of inefficient operations included high
\nprocurement costs, uncollected account receivables, and
\nunfavorable deals with several joint operation partners.<\/p>\n
Telkom auditor, RSM International recommended among other
\nthings, renegotiating the unfavorable terms in its contracts with
\njoint operation partners.<\/p>\n
National flag carrier Garuda incurred losses partly from
\noperating unprofitable routes, such as to the United States or
\nEurope. These led to losses of $721 million in 1995 to 1999.<\/p>\n
Auditor PwC said after Garuda reduced several routes, that had
\nled to over employment and excess flight capacity.<\/p>\n
On Jasa Marga, PwC found too much government interference.<\/p>\n
The company lacked a clear role that prevents commercial
\ndecision-making, according to the auditor.<\/p>\n
This, PwC said, resulted in Jasa Marga operating several
\nunprofitable toll roads.
\n Other inefficiencies include low productivity due to over
\nemployment, and a lack of initiative to open supporting services
\nsuch as gas stations and rest stop\/service areas to boost
\nrevenue, PwC said.<\/p>\n
Perkebunan Nusantara was marked down due to its low production
\ncapacity, and a joint marketing scheme that kept commodity prices
\ntoo low, according to RSM International.<\/p>\n
Arthur Andersen identified Pelindo's inability to provide
\nloading services as a hindrance to the firm's ability to optimize
\nearnings.<\/p>\n
The auditor suggested the government grant Pelindo the
\nauthority to provide full services at its ports.<\/p>\n
Eyebox:<\/p>\n
State firm losses 1995-1999<\/p>\n
Inefficiency losses : Rp 8.5t and US$1.6b<\/p>\n
Potential losses : Rp 7.3t and US$698m<\/p>\n
Savings, earnings losses : Rp 776b + Rp 64.6b<\/p>\n
yearly and US$147m<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/inefficient-state-firms-lose-us4-billion-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }