Govt to decide fate of 150 state companies

Govt to decide fate of 150 state companies

JAKARTA (JP): The government is expected to decide in a
Cabinet meeting on Thursday which ministries should control the
country's more than 150 state enterprises, according to Junior
Minister of National Economic Restructuring Cacuk Sudarijanto.

Cacuk said on Wednesday there were currently three options:
assigning a special body under Coordinating Minister for the
Economy Rizal Ramli, a special body under Minister of Finance
Prijadi Praptosuhardjo or returning the control of the SOEs to
related ministries.

Speaking at a business forum, Cacuk said the Cabinet debate
was expected to focus on the first and second option.

"The options have been discussed within the Cabinet. We hope
we can make a decision at this week's Cabinet meeting (on
Thursday)," he said.

President Abdurrahman Wahid removed the portfolio of the state
minister of investment and state enterprises development during a
major Cabinet reshuffle in August.

Cacuk also said the President had decided that the Investment
Coordinating Board (BKPM) would be under the control of Minister
of Trade and Industry Luhut Pandjaitan.

Both Rizal and Prijadi had earlier insisted that the SOEs
should be under the control of their respective ministries.

Senior executives at SOEs called on the government to quickly
make a decision on which body should take control of the SOEs to
allow the state enterprises to make strategic business decisions.

"For us, it is not important which body is assigned to control
the SOEs. The important thing is for the government to make up
its mind quickly," said a president of an SOE who asked for
anonymity.

SOEs had been a "cash cow" of the country's political elite
and their business cronies during the 32-year rule of
authoritarian president Soeharto. The SOEs were also forced to
finance Soeharto's political game to maintain power.

Many of the SOEs are in a poor financial condition due to past
abuse.

Under pressure from international donors, the government is
trying to introduce good corporate governance in the SOEs.

The government is also mandated to privatize SOEs to raise
cash to help finance the state budget deficit. The previous
Cabinet set a target to privatize some eight SOEs in the April-
December 2000 budget in a bid to raise some Rp 6.5 trillion in
proceeds, but so far none have been privatized.

Prijadi told legislators recently that the Rp 6.5 trillion
target would not be reached.

Rizal has said the new economic team would try its best to
privatize several SOEs in the remaining period of the current
budget.

But he said the plan was to create a "value added
privatization program," pointing out that an SOE would first
undergo a restructuring process to increase its value before
being sold on the market.

He said that the priority was to sell SOEs, including those in
the telecommunications, energy and infrastructure sectors.

He also said the government would not hesitate to sell a
majority stake in the SOEs as long as they were a "second
operator" and not the flagship operator.

As an example, he said the government could release its
majority stake in domestic telecommunications operator PT Telkom,
but should retain a majority in the international
telecommunications firm PT Indosat, which will enter the domestic
market in 2003.

Elsewhere, Cacuk said the Financial Sector Policy Committee
(FSPC) was considering allowing the country's indebted business
conglomerates to buy back the assets they surrendered to the
Indonesian Bank Restructuring Agency (IBRA) to repay obligations
to the government.

Cacuk said a group of retired experts from the U.S. had
conducted a survey here two months ago, and recommended the
government allow the local conglomerates to repurchase their
assets.

The U.S. experts reasoned that the country's economic recovery
would be faster if the conglomerates were allowed to buy back the
assets, Cacuk said.

Some conglomerates have pledged a number of assets, including
ownership in various companies, to IBRA, a unit under the finance
ministry, to repay the debts of their closed down banks.

Some politicians earlier opposed plans by the conglomerates to
buy back the assets.(rei)