'Bill on SOEs needs revision'

A'an Suryana, The Jakarta Post, Jakarta

The draft law on state-owned enterprises (SOEs) will not provide certainty for the government's crucial privatization program because some of the articles lack clarity, analysts say.

Institute for Development Economic and Finance (Indef) economist Dradjat Wibowo singled out articles 73 to 78 of the draft law.

"Several articles must be refined because it renders decision- making regarding privatization unclear," he said during a discussion on the bill on Monday.

Articles 73 to 78 stipulate that the privatization program must be approved by a special privatization committee and the House of Representatives.

But Dradjat said it was not clear who would chair the committee. "Would it be the state minister of state enterprises or the coordinating minister for the economy? This is not clear."

He added that although the draft law requires the government to first obtain a green light from the House before carrying out its privatization program, it was also not exactly clear whether the House would have the final say.

He said that in the past the government had also consulted with the House before launching a privatization program, but it did not mean that legislators had the final say.

"What if the lawmakers object to the privatization program. Could the government still proceed with it?"

The draft law on SOEs is now in the hands of the House for deliberation. The legislators are expected to complete deliberation in May.

Some lawmakers had demanded that the government postpone the 2003 privatization program pending approval of the bill.

But others said that the government could proceed with the plan, arguing that the House had previously been consulted about the program.

The government is planning to raise some Rp 8 trillion in privatization proceeds this year to help finance the state budget deficit.

But due to various reasons, including protests from some quarters and the new uncertainty triggered by the war in Iraq, the government might not meet its privatization target.

Dradjat also said that the draft law did not clearly state which SOEs could be privatized. The bill only says that companies operating in a competitive market can be sold to private investors.

"But this is not a solid definition. What does a competitive market mean?"

He feared that vague articles could be manipulated by certain government officials for their own interests to privatize any SOE despite public concerns.

Meanwhile, economist Sunarsip shared Dradjat's view, saying the legislators must revise the bill.

Sunarsip also said that the bill failed to divide SOEs into strategic ones and nonstrategic SOEs.

He said that only nonstrategic SOEs should be included on the privatization list.