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.