House passes bill on SOEs into law
House passes bill on SOEs into law
Dadan Wijaksana, The Jakarta Post, Jakarta
The House of Representatives endorsed on Tuesday a bill on state-
owned enterprises (SOEs) at a plenary session, which stipulates
tighter supervision as part of efforts to improve efficiency, as
well as to avoid misuse of state assets.
The bill requires that each SOE must have at least three
different internal agencies in charge of supervising how the
enterprise is run.
The three are: a supervisory board (equivalent of the board of
commissioners in private companies), an internal supervisory task
force and an audit committee.
Legislators hailed the bill as one step forward in an attempt
to make state firms more efficient and productive so they can
compete better amid tough global competition.
Lawmaker Afni Achmad, when presenting the Reform faction's
final say on the bill, said that with a tight control mechanism,
the bill would not only create better-managed firms, but would
also prevent unnecessary intervention from government officials
with vested interests, as had often been the case in the past.
"Experience shows us that a hidden agenda often lies behind
intervention, which negatively affects performance, as principles
of professionalism become neglected," Afni said.
A lack of control mechanisms has often turned state companies
into cash cows for many parties, including government officials,
to be used either for personal or political gain.
In some cases, the abuse has occurred in the form of
irregularities, in which trillions of rupiah in losses have been
reported each year by the Supreme Audit Agency (BPK) and the
State Development Finance Comptroller (BPKP).
All this serves to show that the country's attempts to stamp
out graft and corruption in state institutions -- including state
enterprises -- have so far proved somewhat ineffective.
It is these kinds of irregularity that the bill is trying to
reduce.
State Minister for State Enterprises Laksamana Sukardi also
said the bill not only encouraged better business practices for
state firms but also provided the basis for fundamental change in
how state firms should be run.
"Based on this bill, state firms will fall into only two
types: limited companies (PT) and semiprofit-oriented companies
(perum). It means there would no longer be perusahaan jawatan
(perjan) any longer," said Laksamana, referring to the latter as
state entities that are not profit-oriented.
He added that from now on, PT and perum companies would take
over the daily operations of perjan-type of companies, although
the details would be determined later on.
In another part of the bill, the government has also to set up
a committee tasked to design and enforce the privatization
program, to ensure the process runs smoothly, for the benefit of
the public.
Antiprivatization campaigners have long questioned the legal
basis of the program, using it as ammunition to oppose the
crucial program.
Highlights of bill on SOEs
* SOEs will only be in the form of limited companies (PTs) and
semiprofit-oriented companies (perum)
* SOEs must have an internal supervisory board, audit committee
and supervisory board
* The board of directors must follow up on what the supervisory
agencies recommend
* Privatization can only be applied to SOEs that are in the form
of PTs, with certain requirements
* SOEs to be privatized must be in competitive sectors or
industries
* The privatization committee will comprise the coordinating
minister for the economy, finance minister and the minister
responsible for the sector or industry concerned.