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)