Over diversification makes RI firms 'less competitive'<\/p>\n
JAKARTA (JP): Indonesian and other Asian business
\nconglomerates are mostly over diversified and this makes them
\nless competitive, says a financial analyst.<\/p>\n
Booz-Allen and Hamilton's president, Zafer G Achi, said here
\nyesterday that Asian business groups generally had difficulties
\nchoosing their core businesses.<\/p>\n
He said that in Indonesia's case, many companies tended to
\ngrab any available business opportunity without making a long
\nterm plan.<\/p>\n
Companies that did this would not last long because most of
\ntheir activities were based on short-term programs, he said at a
\nseminar called creating value in the multi-business company.<\/p>\n
He said the business environment has changed along with global
\nbusiness demand, and major diversification was no longer a trend.<\/p>\n
He said that companies used to believe diversification was a
\ngood way to make big profits.<\/p>\n
Now a small but healthy company was more profitable, he said.<\/p>\n
\"Being diversified and bigger does not necessarily make a good
\nand profitable company in the future,\" he said.<\/p>\n
In order to compete globally, Indonesian companies should
\navoid opening new businesses unless they were sure to make a
\nsignificant profit contribution, he said.<\/p>\n
Jakarta Consulting Group's managing director, AB Susanto, did
\nnot entirely agree because there is some evidence that some
\nIndonesian companies have played an important economic role both
\nat domestic and international level because of their widely
\ndiversified operations.<\/p>\n
\"People forget that managing a business in Indonesia should
\ntake cultural values into account,\" he said.<\/p>\n
State firms<\/p>\n
He said that Achi's analysis was based on Western business
\nphilosophy and way of thinking.<\/p>\n
\"Business diversification has made Indonesian conglomerates
\ngrow strong,\" he said.<\/p>\n
The finance ministry's director general for supervision of
\nstate-owned companies, Bacelius Ruru, said state-run companies
\nwere less efficient than private corporations.<\/p>\n
He said that inefficiency was caused by improper management
\nand because executives of state-run companies were poorly paid.<\/p>\n
\"If these companies are not efficient, the country's economy
\nis not efficient,\" he said on the sidelines of the seminar.<\/p>\n
He said that while state companies had a social mission to be
\nthe agent of development, this should not stop them from being
\nefficient.<\/p>\n
\"The social mission of state-run companies should not be an
\nexcuse for being inefficient,\" he said.<\/p>\n
As agents of development, state-run companies, which have
\ntotal assets of Rp 350 trillion (US$145.83 million), should help
\nsmall companies and the poor.<\/p>\n
To aid them in this, the government should create sound macro
\neconomic conditions for investment, form a transparent framework
\nand promote long term capital business plans, he suggested.<\/p>\n
He said state companies should also be privatized through a
\nnumber of strategies including going public, the joint operation
\nscheme (KSO), build-operate and transfer (BOT) or build-operate-
\nand own (BOO) strategies.<\/p>\n
\"By floating shares to the public on the capital market, state
\ncompanies come under public scrutiny,\" he said.<\/p>\n
With a public float the state companies should improve their
\nmanagement and efficiency.<\/p>\n
He said that state-own telecommunication firm PT Telkom had
\nnot performed well before going public.<\/p>\n
\"Look at the performance of PT Telkom five years ago and now,\"
\nhe said. (09)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/over-diversification-makes-ri-firms-less-competitive-1447893297",
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