Ministers in dispute over state firm

Ministers in dispute over state firm

Rendi A. Witular, The Jakarta Post, Jakarta

A recent plan from the Office of State Minister of State
Enterprises to merge several under-performing state enterprises
has received objections from some ministers, arguing that it
might further undermine the performance of these firms.

Minister of Forestry Malam Sambat Kaban, who is among the
ministers opposed to the plan, said the structure of state
enterprises related to forestry-based industry should remain
unchanged since each of them engages in a specific field of
business.

"Merging the firms may not do any good. It is not the solution
(to their poor performance). To restore their operations, we have
to give them more projects, such as restoring damaged forests,"
he said recently.

"I have met with Pak Sugiharto (State Minister of State
Enterprises) over the problem and requested the state enterprises
not be merged and that they be maintained as they are now."

Last week, Sugiharto revealed his plan to merge a number of
state enterprises and set up holding companies to oversee smaller
state firms in an effort to help restructure and revitalize them.

Included in the plan is the merger of forestry based companies
PT Perhutani with PT Inhutani I to IV, which have combined total
assets worth over Rp 5 trillion (US$544 million).

The forestry ministry claims to have the right to manage the
companies since they are closely tied with regulations on
forestry management.

Rejection to the merger plan was also conveyed by Minister of
Transportation Hatta Radjasa, arguing that state firms would not
be able to improve their performance without the assistance of
their technical ministries.

Hatta opposed the plan to merge port operators PT Pelindo I to
IV and airport operators PT Angkasa Pura I to III and a number of
shipyard and sea transportation companies, as they were under his
ministry's authority.

Both Kaban and Hatta want the management of state firms to be
under their ministries in a bid to increase their performance and
efficiency.

However, Sugiharto argued that the transfer of state
enterprises into related ministries would in fact set back
improvement in their performance since there was a lack of
sufficient management skill in the ministries and there was also
the possibility of abuse emerging.

"We plan to discuss the problem with other ministries... I
think they don't fully understand the aim of the mergers," said
Sugiharto.

"If state enterprises are (managed) under their related
ministries, we are going back to the New Order regime. We don't
want to experience more abuse at the firms... We have to let them
be subject to market regulation."

Previously, state enterprises were controlled by related
ministries. However, most of them were very poorly managed and
suffered from very low rates of return due to the intervention of
vested interests, which often used the companies as cash cows for
political parties and for the personal benefit of officials in
the ministries.