New govt aims to resolve problems in SOEs

New govt aims to resolve problems in SOEs

Rendi A. Witular, The Jakarta Post, Jakarta

The new government under President Susilo Bambang Yudhoyono
will push efforts to resolve protracted problems in state-owned
enterprises (SOEs) in its first 100 days, in a bid to help the
companies run their businesses more efficiently.

"The ministry's short-term programs will be mostly focused on
settling problems in the SOEs, so that they can operate safely
without any disturbance," said State Minister of State
Enterprises Sugiharto after attending a coordination meeting of
economic ministers on Tuesday.

"Aside from that, we will also review the master plan for
developing the SOEs for the next five years," said Sugiharto, who
is a former chief financial officer at publicly listed energy
firm PT Medco Energi Internasional.

According to Sugiharto, his office had identified several
problems, which must be immediately settled, such as the lengthy
dispute between state oil and gas company PT Pertamina with the
U.S.-based power firm Karaha Bodas Company (KBC).

The International Arbitration Court in Geneva ruled nearly two
years ago that Pertamina must pay damages of US$299 million,
including accrued interest, to KBC after the government suspended
the company's power project in the wake of the late 1990s
financial crisis. Pertamina was KBC's partner in the project.

The government has ordered Pertamina not to pay the claim,
pending investigation from the police over a corruption
allegation in the KBC's power project.

Other problems that will be settled within this year are the
dispute between the government and Mexico-based cement giant
Cemex SA over the latter's investment in cement producer PT Semen
Gresik, and a decision by the previous government to close down
fertilizer manufacturer PT Asean Aceh Fertilizers (AAF).

Sugiharto, however, said the government had not yet decided
how to solve the problems, and would discuss them further with
the president in the next Cabinet meeting scheduled on Thursday.

"We are still in the process of seeking ways to settle the
problems. We hope to come up with concrete solutions in the next
Cabinet meeting," said Sugiharto.

Sugiharto also said that the government would appoint, as soon
as possible, a new board of directors for national flag carrier
Garuda Indonesia.

The current Garuda management has been in limbo for more than
a year after their tenure expired, following the failure of the
previous government in appointing replacements due to alleged
collusion in the selection process.

Elsewhere, regarding the planned privatization of several SOEs
this year, Sugiharto said the ministry would consult further with
the Ministry of Finance.

"We will see the outlook, whether it is urgent or not. The
2004 state budget is almost at its end anyway. So I guess it is
not necessary for us to (further) carry out the privatization
programs this year," he said.

Meanwhile, Coordinating Minister for the Economy Aburizal
Bakrie said the new government would continue the privatization
programs of SOEs set out by the previous government, but with a
new method.

Aburizal refused to disclose the programs or the new scheme,
but he hinted that privatization programs should support the
government's efforts to lower the deficit in the state budget and
help increase state income from SOEs.

"Basically we will continue with the privatization programs
designed by the previous government, but with new ideas and a new
style," said Aburizal.