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.