Legal basis on state firms merger plan questioned<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Following objections from ministers over the Office of State
\nMinister of State Enterprises' plan to merge under-performing
\nstate firms and establish a holding company, the plan has
\nreceived another blow.<\/p>\n
Legislator Dradjat Wibowo of the House of Representatives'
\nCommission XI overseeing banking and financial affairs said
\n\"There is no legal basis for the establishment of a holding
\ncompany\". He was speaking on Thursday in a seminar on \"The
\nprospect of state enterprises after the first 100 days of the
\ncabinet\".<\/p>\n
\"The State Minister of State Enterprises must seriously make a
\nbetter thought out concept,\" said Dradjat, adding that the plan
\nmight only cause inefficiency instead of giving value to state
\nfirms.<\/p>\n
\"Take forestry related state enterprises for example,\" he
\nsaid. \"Each of them has a specific business character that, in
\nthe end, will be difficult to be merged.\"<\/p>\n
\"The plan does not reflect the government's intention to
\ncreate efficiency in state firms. They should focus more on
\nincreasing their return-on-assets as this has been declining.\"<\/p>\n
Minister of Forestry Malam Sambat Kaban as well as Minister of
\nTransportation Hatta Radjasa had earlier objected the plan,
\narguing that the management of state firms must be under their
\nministries in a bid to increase their performance and efficiency.<\/p>\n
Dradjat said state enterprise's return-on-assets in 2003 was
\nonly 1.68 percent, a decline from 2002's 1.72 percent. If in 2003
\nstate firms could increase their return-on-assets to 4 percent,
\nthey would have contributed Rp 13.5 trillion (US$1.48 billion) to
\nstate coffers.<\/p>\n
Banking law expert Sutan Remy Sjahdeini, meanwhile, supported
\nDradjat's statement on the urgency for a sound legal basis for
\nthe plan in order to avoid legal disputes in the future.<\/p>\n
\"The planned holding companies should be fully owned by the
\nstate. If other parties have ownership in the companies, it could
\ncreate legal problems in the future,\" he said.<\/p>\n
Despite the criticism, the plan to merge the state firms was
\nbacked by chairman of the Indonesian Performance Management
\nSociety Irnanda Laksanawan who said that it would help create a
\nmore credible portfolio for state firms to enter into
\ninternational tender processes.<\/p>\n
\"Perhaps it would be better to call the plan a regrouping,\" he
\nsaid. \"It is time that state enterprise's business cycles be
\nevaluated while at the same time rearranging their business plans
\naccording to market opportunities before establishing a holding
\ncompany for them.\"<\/p>\n
Responding to concerns from managers of state enterprises that
\ntheir jobs might be cut, Irnanda said such a possibility was
\nunlikely because the formation of a holding company would only
\nmean a shift in ownership, not in management.<\/p>\n
As of last year, Indonesia had a total of 158 state
\nenterprises with an average return-on-assets of 2.49 percent and
\nan average return-on-investment of 6.10 percent.<\/p>\n
In the same year, there were 31 state firms suffering losses
\ntotaling Rp 4.49 trillion. Six state enterprises had not
\nsubmitted their annual reports.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/legal-basis-on-state-firms-merger-plan-questioned-1447893297",
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"sponsor": "Okusi Associates",
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