'Bill on SOEs needs revision'

'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.