Govt to merge state firms
Rendi A. Witular, The Jakarta Post, Jakarta
The government will merge a number of state enterprises and set up several holding companies to oversee smaller state firms in an effort to help restructure and revitalize state enterprises, the majority of which are in bad shape.
State Minister of State Enterprises Sugiharto said the policy was taken to help improve efficiency and help each of the firms be a leader in its respective industry by controlling both upstream and downstream businesses.
"The policy is to be implemented this year, but some of the processes will need an initial study from independent institutions and coordination with other ministries," he told a press conference after the opening ceremony of the State Enterprises Summit at the State Palace on Tuesday.
Sugiharto said that from a total of 158 state firms as of last year, 54 of them would be merged into 21 while 38 would be included in 10 holding companies and 66 would remain the same.
According to the minister, companies to be merged include port operators PT Pelindo I to IV, airport operators PT Angkasa Pura I to III, timber firms PT Perhutani and PT Inhutani I to IV, surveyor firms PT Sucofindo and PT Surveyor Indonesia, and pension fund firms PT Jamsostek, PT Taspen and PT Jiwasraya.
The mergers also cover companies engaged in shipyard, pharmaceutical, publishing, fisheries, construction, pulp and paper and civil engineering businesses.
State enterprises to be converted into holding companies include oil and gas firm PT Pertamina, power firm PT PLN, gas distributor PT Perusahaan Gas Negara (PGN) and cement producer PT Semen Gresik.
The government will also form holding companies to oversee mining companies such as PT Antam, PT Timah, PT Bukit Asam Batubara and PT Sarana Karya, and for supervising plantation and fertilizer companies.
The holding companies will be tasked with forming new subsidiaries to support their core businesses upstream and downstream.
In a bid to improve transparency and governance, the government will eventually sell shares of the holding companies to the public via initial public offerings.
"The holding companies will provide a growth engine for the country's economy by functioning as the government's investment arm and by integrating and complementing the businesses of each state enterprise," said Sugiharto.
However, he added, the most daunting aspect of the plan was that most of the companies had been poorly managed for a long time and suffered from very low rates of return on investments and equity due to the intervention of vested political interests, which often use the companies as cash cows for political parties.
President Susilo Bambang Yudhoyono underscored the need for state enterprises to be sold to the public or merged with other state firms in a bid to increase their value and lessen the burden on the government in managing them.
"I have ordered Pak Sugiharto to select state firms that are not strategic or profitable to be privatized in order to reduce the government's risk and burden," he said in front of state enterprise executives.