Indef: SOE Mergers Eliminate Duplication of Functions
Jakarta (ANTARA) - Esther Sri Astuti, Executive Director of the Institute for Development of Economics and Finance (Indef), has assessed that mergers or the formation of SOE holding companies eliminate duplicated corporate functions, making operations leaner and more agile.
“Through mergers or the formation of holding companies, duplicated functions are removed, making companies leaner, more agile, and more competitive in the global market,” said Esther when contacted by ANTARA in Jakarta on Wednesday.
Esther believes that, in addition to grouping SOEs according to their classification, the government also needs to reduce the number of SOE types so that it becomes easier to control and monitor these state-owned companies.
She felt SOE restructuring indeed had to be carried out, because there are enterprises in sound financial condition while others are ailing, in this case loss-making.
“Financial restructuring saves SOEs from debt and repairs their balance sheets,” said Esther.
Consequently, she said, healthy SOEs are able to pay more optimal dividends and support the funding of national strategic projects (PSN).
Head of the SOE Regulatory Agency (BP BUMN) Dony Oskaria affirmed the government’s commitment to carrying out comprehensive transformation and restructuring by cutting 1,077 companies down to around 200-300 companies.
This step is being taken alongside the formation of the Danantara Sovereign Wealth Fund, which will consolidate state assets to make them more focused and globally competitive.
Dony explained that there are currently 1,077 companies in the SOE ecosystem undergoing a fundamental review to be streamlined down to around 200-300 companies this year.
From the results of that assessment, BP BUMN has divided the companies into four main quadrants.
The first is liquidation for companies whose debt burdens far exceed their assets and which have no market competitiveness.
Then, divestment for small-scale companies outside the core business, for example a travel agency owned by an energy SOE.
Another crucial step is the merger or consolidation of companies based on industrial sector, such as logistics, hospitals, and hotels, so that they can achieve large economies of scale.
Furthermore, development for strategic SOEs that form the backbone of the economy and defence.
Beyond streamlining, Dony also affirmed a fundamental paradigm shift in interactions between SOEs. The term “SOE Synergy” has now been firmly replaced with obligation.