One night, the chief executive of a state-owned enterprise sat alone\nin his office. The office lights had dimmed. The city outside the window\nsank into silence.<\/p>\n
Before him lay an investment proposal. Its value was hundreds of\nmillions of dollars. If successful, the project could create thousands\nof jobs and strengthen Indonesia\u2019s position in the global market. But\nhis hand paused before signing. Not because the project was bad. Not\nbecause the risk was too great. It paused because of one sentence that\nkept looping in his head: \u201cWhat if this is considered a loss to the\nstate?\u201d<\/p>\n
He knew, in business, not every decision ends in success. Even in the\nenergy industry, global statistics show about 35 percent exploration\nsuccess and 65 percent failure to discover commercial reserves. That is\nnot a crime. It is the natural law of business. But in Indonesia,\nfailure can become a criminal case.<\/p>\n
In many countries, a newly appointed director would be prosecuted for\nfraud, kickbacks, or conflict of interest. If decisions are made\nprofessionally and rationally, failure is not corruption. Yet in this\ncountry, the spectre of \u201closs to the state\u201d often halts innovation\nbefore it begins.<\/p>\n
The director finally closed the proposal. An opportunity was lost.\nAnd that night, what was lost was not only a project; what was lost was\nthe courage and economic innovation within Indonesia\u2019s state-owned\nenterprises.<\/p>\n
Elsewhere, a global investor is considering an energy project in\nIndonesia. The investor sees a large market potential. He sees promising\nresource reserves. But before investing, he must navigate a labyrinth of\nbureaucracy. He must deal with:<\/p>\n
Ministry of Energy and Mineral Resources<\/p><\/li>\n
Special Task Force for Upstream Oil and Gas Activities (SKK\nMigas)<\/p><\/li>\n
Ministry of Environment and Forestry<\/p><\/li>\n
Ministry of Agrarian Affairs and Spatial Planning and the\nNational Land Agency<\/p><\/li>\n
Ministry of Agriculture<\/p><\/li>\n
Ministry of Transport<\/p><\/li>\n
Ministry of Manpower<\/p><\/li>\n
Ministry of Investment<\/p><\/li>\n
Provincial Government<\/p><\/li>\n
Regency or City Government<\/p><\/li>\n<\/ol>\n
Each door has its own forms. Each desk its own signature. The\ninvestor then asks one simple question: \u201cWhy should I be the\nintermediary between ministries?\u201d In many advanced countries, a company\ninteracts with only a single regulator. Inter\u2011agency coordination is\nhandled within the government, not placed on the investor\u2019s shoulders.\nWhen licensing becomes too long, it is not only investment that is\ndelayed; the future is delayed.<\/p>\n
Today Indonesia is taking a major step in managing BUMN. The\necosystem of BUMN is being consolidated into a single holding company\nknown as Danantara Indonesia. The goal is clear: to strengthen\nsynergies, increase efficiency, and create a national company capable of\ncompeting on the global stage. The scale is enormous.<\/p>\n
The total BUMN ecosystem includes more than 1,000 corporate entities.\nIn one group alone, Pertamina has around 257 subsidiaries, nearly a\nquarter of the entire national BUMN portfolio.<\/p>\n
But size does not always equate to strength. In a healthy ecosystem,\nlarge size must be matched by lean governance\u2014swift decision\u2011making and\na drive to innovate. Look at Norway. The country also has a large\nnational oil company, Equinor. Yet its ecosystem is simple. Investors\ndeal with only two main bodies: the Norwegian Petroleum Directorate and\nthe Ministry of Petroleum and Energy. The process is clear, fast, and\ntransparent. That is the difference. Not the size of the company, but\nthe quality of its institutions.<\/p>\n
Two books help us understand these issues. Why Nations Fail, by Daron\nAcemoglu and James A. Robinson (Crown Business, 2012). In this book,\nAcemoglu and Robinson put forward a thesis that challenges development\neconomics. Why are some countries prosperous and others still poor?\nTheir answer is simple but profound. Not culture. Not religion. Not\nnatural resources. What determines outcomes are institutions.\nInstitutions that foster innovation, provide legal certainty, and create\nopportunities for economic actors are the inclusive institutions.\nCountries with such institutions tend to prosper. Conversely, countries\nwhose institutions are obstructive by bureaucracy, legal uncertainty,\nand fear of taking decisions will stagnate.<\/p>\n
This idea does not only apply to countries. It also applies to\ncorporations. If we borrow the framework of the book, we can ask another\nquestion: Why Corporations Fail. Companies fail not because of a lack of\ncapital or technology. They fail when their institutions make\ndecision\u2011making slow and innovation risky. When directors fear taking\ndecisions because of unclear legal risk, the organisation loses its\ncreative energy. And when decision\u2011making processes must pass through\ntoo many layers of bureaucracy, companies lose the agility to\ncompete.<\/p>\n
A great company<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/when-business-risk-is-criminalised-1772997331", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }