Mon, 31 Oct 1994

More autonomy urged for state companies

JAKARTA (JP): State-owned companies need more freedom in management and more qualified managers to make themselves competitive and efficient, experts said here over the weekend.

Frans Seda, chairman of the PPM Foundation, told journalists after attending the graduation ceremony of the PPM Graduate School of Management on Saturday that many state companies are inefficient because they are burdened with missions set out for them by the government.

"The most effective way to remedy inefficiency in state companies is reducing the governmental missions and giving them more freedom, as well as more autonomy, to do business," Seda, a former minister of finance, said.

He suggested that the government recruit qualified managers to manage state companies, especially those which need "helping hands".

"If necessary, the government can hire private managers to mend the problems," Seda said.

He added that the current recruitment of managers at state companies, which takes only civil servants, is not proper.

Meanwhile Julius Tahija, chief commissioner of Bank Niaga, noted that the leadership capability of managers still plays an important role in making state firms efficient.

"The performance of state companies still depends largely on the quality, integrity and perseverance of their managers. And unfortunately, the crisis of leadership occurs everywhere," Tahija said.

He said that integrity is the most important side of the managers because lack of integrity can lead to practices, such as collusion, manipulation and corruption.

Supporting Tahija's argument, Anugerah Pekerti, director of the PPM Institute, said the inadequate legal framework allowed such practices to happen.

"We should strengthen our legal framework so that it can limit bad practices and facilitate fair competition," Pekerti said.

Commenting on the government's current privatization of state companies, Pekerti said the policy is leading in the right direction.

"Privatization will make them more efficient. Thus, the government should privatize all non-strategic state companies," he suggested.(rid)