Revamp city-owned firms: Councilor

Revamp city-owned firms: Councilor

JAKARTA (JP): The United Development Party (PPP) faction of
the City Council is demanding that city-owned companies be
restructured to improve their efficiency.

Muhammad Rodja, a representative of the faction, reiterated in
the plenary session of the council over the weekend that it is
time for the restructuring of the poorly performing firms.

The low level of the firms' contributions to the municipal
administration's coffers shows that their performance is
deteriorating, Rodja said.

He also pointed out that the companies are playing a lesser
role than expected in facilitating the city's economic growth.

The contribution of the companies' profits to the city budget
in the period between 1991/1992 and 1994/1995 fell by 24.4
percent, or about 6.4 percent per annum, he said.

"How can they compete on the global market, if their
performance is poor?" Rodja asked.

As one of the agents of development, the city-owned companies
should play a bigger role in helping improve the nation's
competitive edge on the world market, he added.

Rodja suggested a number of ways to restructure the firms,
including changing their status to that of limited liability
companies.

Their current status as municipal administration owned
enterprises weakened their ability to function as competitive
business entities because of the companies' obligation to act as
social welfare oriented agents of development, he said.

"As limited liability firms, the companies would be free to
set profit targets, without neglecting their role as agents of
development," he said.

The restructuring could also be done through operational
cooperation or management contracts with other parties. The
bottom line is that the city-owned companies must be managed
professionally, he said.

Estimates put the profits of city-owned companies in the
1994/1995 fiscal year at Rp 12.02 billion (US$5.46 million), far
below the target of Rp 16.96 billion.

However, Rodja said, these estimates would remain inconclusive
pending the final audit reports on the incomes of a number of the
companies, such as Bank DKI, PD Dharma Jaya, PD Pembangunan
Sarana Jaya and PD Wisata Niaga Jaya. They are currently being
audited by the State Audit Agency.

The city administration has promised to present the results of
the audited incomes to the city councilors in next year's plenary
session.

During it's Friday session, the City Council gave its support
to the city administration's decision to involve the private
sector in the installation of water pipes in the capital.

Tb. M. Rais, the deputy governor in charge of city
development, said that the management of the water distribution
system is divided into several districts, where the private
sector can take part.

The involvement of the private sector is designed to help
improve the city-owned water company's water distribution
services, Rais said. (32)