Govt told not to shift monopoly to private sector
Govt told not to shift monopoly to private sector
JAKARTA (JP): The currently pursued privatization of state-
owned enterprises should not lead to the shifting of the
government's monopoly over public utilities to the private
sector, a lawyer suggested yesterday.
A. Zen Umar Purba, a lawyer at the Ali Budiardjo Nugroho
Reksodiputro law firm, told a regional seminar here yesterday
that one of the attractions for private sector companies to get
involved in the privatization of state firms is the possibility
of securing the state firms' facilities to conduct business.
"A state-owned enterprise that enjoys a monopoly is an extreme
example of this," Zen told the seminar on privatization and
access to capital markets, organized jointly by his law firm and
the Pacific Rim Advisory Council.
"The privatization (of such companies) should not become a
means to shift the monopoly power from the government sector to
the private sector," he continued.
He suggested that the government, through state firms,
maintain its monopoly of public utilities, including oil and gas,
water, electricity and, to some extent, telecommunications.
To avoid a shift of the monopoly to the private sector, the
government should maintain its controlling power in any company
which holds a monopoly over public utilities, Zen said.
In the case that such a state firm is privatized, either by
direct placement or a public offering of shares, the government
should maintain at least 51 percent of the company's total
shares.
The government has so far privatized four state firms through
public share offerings. They are cement producer PT Semen Gresik,
telecommunications firms PT Indosat, PT Telkom and tin-mining
firm PT Tambang Timah. The last three listed their shares on both
foreign and local stock exchanges.
The government plans to float shares of three more state firms
on both local and overseas stock exchanges this or next year.
They are steel manufacturer PT Krakatau Steel, toll road operator
PT Jasa Marga and PT Bank Negara Indonesia 1946. The first two
will list their shares on both foreign and local markets, while
the last will float shares on the local market only.
"The government can offer more of its shares in Krakatau Steel
to the public as I believe this sector (steel industry) does not
need to be monopolized," Zen said.
In the event that the government decides a particular business
sector no longer requires its facilities or protection, it should
grant equal opportunity to other private parties to be involved
in the same business.
Zen noted that the government should pursue a very transparent
privatization process, especially when the privatization is
executed through private placement and when the privatized state
firm will still enjoy favorable facilities from the state.
Following privatization, a state firm is expected to operate
like a private entity, with its main task being to generate and
accumulate profit, Zen said.
"Therefore, I'm happy Minister of Finance Mar'ie Muhammad
stated recently that state-owned companies, like private
undertakings, are obliged to abide by the company law," Zen said.
Supporting Mar'ie's argument, Zen said the recognized bodies
in a limited liability company, under Company Law No. 1/1995, are
the shareholders, the board of commissioners and the board of
directors.
"The finance minister's statement was a positive, congenial
explanation, in consideration of the prevailing misperception
among government officials that state firms are extensions of
certain government agencies," Zen said.
He also supported the government's plan to deregulate state
firms to make them immune from the intervention of bureaucrats.
The government currently has 178 state firms, of which 160 are
limited liability companies -- which are automatically subject to
the 1995 company law. (rid)