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)