Holding firm planned for state companies

Holding firm planned for state companies

JAKARTA (JP): President Soeharto has approved plans to set up
a holding company to manage and restructure the country's
sprawling state-owned companies, a minister said yesterday.

State Minister of the Empowerment of State Enterprises Tanri
Abeng said after meeting Soeharto that the holding company would
help strengthen state firms and then privatize them.

"The target is to accelerate the privatization."

Tanri said he would join the coordinating minister for
economy and finance and the finance minister to prepare the
structure of the holding company.

Indonesia has 164 state companies but 70 percent of them were
classified as financially unhealthy and not-so-healthy as of last
year, he said.

The minister acknowledged that the government had been slow in
restructuring state firms due to a lack of coordination and
dualism in overseeing them.

Most state firms had two bosses, the finance minister and the
minister overseeing them directly. State-owned electricity firm
PT PLN, for instance, would have to heed all orders from the
finance minister and the minister of mines and energy.

Under the current cabinet, Tanri said there should be no more
dualism in supervising state firms.

Tanri, former president of PT Bakrie & Brothers, is heading a
newly created ministry. In previous cabinets, the supervision of
the state firms was undertaken by the finance ministry's
Directorate General of State-Owned Enterprises.

In a 50-point memorandum with the International Monetary Fund
(IMF), Soeharto has agreed to establish a special framework to
accelerate the privatization of state firms through share
flotation, negotiated enterprise sales or closures by April.

Soeharto also agreed that 12 enterprises would be prepared for
public listing during the first year of the program.

Director General of State-Owned Companies Bacelius Ruru has
said that only two firms were ready to float their shares to the
public this year.

Tanri, however, declined to make any projections for how many
state firms would be privatized this year.

He only said that before floating state firms on a stock
market, he would make them healthy and profitable so that they
would sell at much higher prices.

Tanri said Soeharto had also agreed to possible foreign
participation in state firms.

"If necessary, strategic partners should be sought to utilize
these state firms and it is very likely to involve foreign
sides," he quoted the President as saying.

"The President also said that those state companies which
could not be retained should be sold or just closed down in order
not to burden the healthy ones."

Soeharto also asserted that state firms should be managed by
professionals, Tanri said, adding that the companies would retain
their workers except those who could no longer be developed and
trained further.

"The President talked about the culture of professional,
modern management, and he wants state firms to be managed by
professionals." (prb)