BUMN's must be strengthened

Despite several analysts's skepticism that the government will be able to reach the target of Rp 6.5 trillion in privatization proceeds this year, the Minister of Investment and State Enterprises Development expressed his optimism that the target is achievable.

To make good on his optimism, the state minister and his assistants have endeavored to attract domestic and foreign investors to participate in the privatization. Since the government needs an economic breakthrough to achieve its target, it is important to increase the existing capability, productivity and efficiency of the state enterprises (BUMN) to be privatized.

PT Pupuk Kaltim, for instance, is one of the eight state enterprises to be privatized this year; it will be one of the first. This company has never sustained a loss and it has been making great profits from exports of its products even though Indonesia is still experiencing economic disorder. It is not difficult to predict that foreign investors will have an interest in PT Pupuk Kaltim for its excellent performance.

Still, the strong appeal of this company in principle can be enhanced provided that prior to the privatization the government makes a strategic action to restore the status of PT Pupuk Kaltim by ensuring that all shares are directly and solely owned by the state.

In addition to the restoration, the government should authorize the company to wholly and independently determine its own marketing policies for its products, empowering PT Pupuk Kaltim to freely compete with other fertilizer companies, both domestic and international.

The government should not sell state enterprises in their existing structure and capacity but delay until it has increased existing capability, productivity, efficiency and capacity. This will ensure that all state enterprises to be privatized provide the greatest benefit to the government by increasing share value above par, or a market price higher than par value.

Last but not least, the government has to empower the human resources of BUMN because the main objective of the establishment and development of state enterprises is in the public interest especially for a mutual welfare of the people.

One effective way to reach the goal is by enabling employees of the state enterprises to be privatized to have a chance to own shares of the companies. This would provide the employees with a sense of belonging because they are also the owners of the companies and such condition would stimulate them to work hard and make an all out effort to develop the companies.

HASAN BASRI MUCHTAR

Jakarta