Management of state firms to get more authority
JAKARTA (JP): Minister of Finance Mar'ie Muhammad pledged yesterday to delegate more power to the managements of state- owned companies to make them more responsive to rapid changes in the business environment.
"A ruling on the authorization of more administrative power to directors and commissioners of state-owned companies is being prepared," he told a hearing of House Commission VII on finance, trade and logistics.
The minister said that the extra power for members of the companies' executive and supervisory boards was an essential step toward improving the efficiency and competitiveness of state- owned firms.
He acknowledged that the government's control of the operations of state-owned companies was often counter-productive.
"It is, therefore, unfair for us to ask state-owned companies to make large profits, while interfering with their activities and decision making processes," he told the hearing.
The minister said the extra power for the executives of state- owned companies would make them as quick as those in private companies at reacting to changes in the business climate because they would no longer have to consult government officials when adjusting their companies to market demands.
He said the government's control over state-owned companies would no longer come directly from the related ministries but from commissioners, so that the boards of management no longer had to consult with the related ministers whenever they needed to make big decisions.
"The government's control will occur through commissioners, mostly comprising of senior government officials," he said.
At present, decision making processes in state-owned companies are very slow because their executive boards must first consult the related ministers before making decisions.
Performance
Mar'ie said the performance of state-owned companies has continued to improve in the last five years because of restructuring.
He said the number of state-owned companies fell to 178 last year from 183 in 1993 because of the liquidation of some manufacturing firms.
The number of the state-owned firms considered to be healthy increased to 92 last year from 81 in 1993, while the number of unsound firms fell to 86 from 102," he said.
He said the profitability of state-owned companies was promising in the last five years. Their pre-tax profits increased steadily to Rp 10.5 trillion (US$4.4 billion) last year from Rp 9.32 trillion in 1994, Rp 7.7 trillion in 1993 and Rp 7.2 trillion in 1992.
Mar'ie said the total profit of the firms in the first semester of this year was Rp 5.54 trillion.
The minister said that listing state-owned companies' shares on domestic and overseas stock exchanges was another way to improve their performance. (hen)