President urges state enterprises to fight corruption

Rendi A. Witular, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono has urged executives at state enterprises not to provide facilities for people claiming to be members of his family or other key state officials, to be in line with his government's pledge to avoid making state firms cash cows.

"Such a practice is the root of corruption and must be stopped," he said when officially opening the State Enterprises Summit on Tuesday at the State Palace.

The President said he was annoyed by reports claiming that a number of people had used his name to obtain money from state enterprises.

"The reports said certain people had used my name or the Vice President's or ministers' to get loans and projects from state firms. That is not true! We never asked anything from them," he said.

His call was similar to that made by president Megawati Soekarnoputri in her first days in power. In 2003, news broke that her son Mohammad Rizki Pratama was involved in PT Theda Persada Nusantara, a private firm appointed to develop a Chinese Center in the Jakarta Fairground in Kemayoran, Central Jakarta. He eventually withdrew from the project after an inquiry was opened by the House of Representatives.

Many state firms have been poorly managed and deliver low rates of return on investment and equity due to interference by people with connections.

"State enterprises' managements must contemplate whether corruption is spiraling at their companies or if they have political links with particular parties. I will not tolerate such practices," said Susilo.

The President also ordered State Minister of State Enterprises Sugiharto to focus on making state firms the drivers of developing the country's agriculture and fishery sector as well as a catalyst for small-and-medium enterprises.

Most of the country's state enterprises are reluctant to engage in the three sectors due to lack of government support and limited access to both local and international markets.

I-box SOEs with largest losses in 2003

No. SOEs Losses

1. PLN 3.5 trillion 2. Perusahaan Perdagangan Indonesia 418.2 billion 3. Pelni 382.4 billion 4. PANN Multi Finance 152.2 billion 5. Indofarma 129.5 billion 6. Industri Sandang Nusantara 114.7 billion 7. Kertas Kraft Aceh 108.4 billion 8. PTPN II 96.1 billion 9. Inhutani I 90.9 billion 10. Cipto Mangunkusumo General Hospital 81.221 billion

Source: Office of State Minister of State Enterprises