State company management<\/p>\n
We hope the government's pronouncement on the planned measures
\nto strengthen the management of state companies will become
\nreality this time. It is eight years since the issuance of
\nPresidential Instruction No.5\/1988, but not much has been done
\nwith regard to the reform of state enterprises. The latest
\nfigures show that almost 50 percent of the 178 state firms are
\nstill classified as less sound or unsound according to the
\nparameters set by the finance ministry.<\/p>\n
Last Wednesday Minister of Finance Mar'ie Muhammad talked
\nagain about the reform of state companies at a hearing of House
\nCommission VII for finance and trade. He said that a regulation
\nwas being prepared to vest greater authority and autonomy in the
\nmanagers and supervisors (commissioners) of state enterprises.
\nVarious studies have cited a lack of managerial autonomy and
\ncumbersome decision-making processes as two of the main obstacles
\nto improving the management of state firms.<\/p>\n
Mar'ie's statement would be music to the ears of state company
\nmanagers were it not for the fact that such a pronouncement has
\noften been made in the past without any significant result.
\nIn June the director general for state companies made similar
\nremarks, namely that the government was preparing a regulation
\nwhich would give more authority to the boards of directors and
\ncommissioners.<\/p>\n
But the managers of most companies still complain about being
\nshackled by bureaucratic red tape. The directors of several state
\ncompanies based in the provinces still have to spend many working
\ndays each month in Jakarta answering to ministers or directors
\ngeneral. This hurdle was admitted by Mar'ie himself when he said
\nat the hearing that high officials should refrain from calling
\nstate company directors to so many unnecessary meetings and
\nconsultations.<\/p>\n
State company managers are required by the finance minister
\nto work according to the corporate plans already approved by the
\nannual shareholders meeting. But in reality they are often
\nhijacked by requests or directives from ministers or other
\npowerful political lobbyists to do things which are in no way
\nrelated to the corporate plans.<\/p>\n
Mar'ie said at the hearing that if state companies are asked
\nto compete on a par with private enterprises their managers
\nshould be given as much autonomy as their counterparts in the
\nprivate sector.<\/p>\n
All the ideals stated by the finance minister are precisely
\nwhat are needed by state company managements to be able to
\nperform effectively and efficiently. The problem though is that
\neven though the finance minister acts as the government
\nshareholder in all state companies, he is not the sole authority
\nwho deals with state enterprises. They also have to answer to the
\ntechnical ministries which supervise their fields of operation.
\nIn many instances the directors general feel entitled to meddle
\nwith the state enterprises supervised by their minister.<\/p>\n
The finance minister therefore should push harder to have the
\nregulation on the granting of greater authority and autonomy to
\nstate company managements issued and enforced within the near
\nfuture. As more and more sectors previously monopolized by state
\ncompanies are opened up to private sector investors, state
\nenterprises will simply not be able to compete with the private
\nplayers if their hands remain tied by excessive bureaucratic
\ninterference. This would not only cause the government huge
\nlosses but would also have a detrimental effect on many other
\nindustries because many state enterprises operate in the upstream
\nand mid-stream sectors, manufacturing basic and intermediate
\nmaterials used by other companies.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/state-company-management-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}