BUMN's must be strengthened

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