Revolt at state companies

State company employees seemed to have tasted blood when the government succumbed last year to the demand of Semen Gresik workers and some vested-interest groups to cancel the sale of the cement company to Mexico's Cemex, the world's third-largest cement group, which is listed on the New York Stock Exchange.

Trade unions at several other state companies moved to reject new boards of directors, alleging that their integrity was questionable.

For a few days during the third week of last month, the employees of the Central Java unit of Telekom went on strike and demonstrated in Yogyakarta and Jakarta in an attempt to block its asset swap with another state telecommunications concern, Indosat.

Union leaders at Bank Central Asia, which is now at the final stage of its tendering process, are organizing a mass strike to force the government to stop the bank's strategic sale to foreign investors, demanding that the country's third-largest bank remain majority-owned by the state.

Why, at a time when more than 40 million people are either under-employed or entirely jobless, are state company employees so radical and easily provoked to rebel against sensible corporate policies that have legally and properly been decided by the majority shareholders?

Almost all analysts agree that the deals, undertaken as part of the reform of state companies, are economically quite sensible and greatly conducive to restoring sorely-needed investor confidence in the economy.

The transactions would bring in additional revenue to the cash-starved government to plug its huge budget hole. But most importantly, the deals would unshackle the state companies from the grip of corruption and would make them less vulnerable to the demands from politically well-connected vested interests.

The Semen Gresik deal, for example, would have injected at least US$530 million into the state's coffers and put the cement company under better management. This, in turn, would have made the company more competitive on both the domestic and international markets and consequently would have enabled it to raise capacity utilization, thereby increasing sales, generating more employment and tax revenues for the government.

The asset swap between state Telekom and Indosat has been designed to gear them up for keener competition as a result of the termination of Telkom's monopoly in fixed-line services and Indosat's duopoly in international call services.

Telkom will be able to provide international call services and get a much larger share of the cellular phone market while Indosat will, in turn, enter fixed-line operations by acquiring Telkom's facilities in Central Java. So, by and large, both state telecommunications companies would be in a better position to face stiffer competition after the liberalization of telecommunications.

Likewise, BCA's strategic sale has been designed to put the country's largest retail bank in the hands of more credible owners and bring its operations up to international standards, to bolster confidence in the fragile banking industry.

It may be OK in principle for the employees, as one of the stakeholders of the companies, to freely express their views and assert their arguments. But acting in such a violent manner to oppose policies that are so clearly for the future good of the companies and their employees is totally antidemocratic and utterly intolerable.

Because most of the demands are not directly related to worker welfare and future career development one cannot help but get the impression that the employee revolts were partly instigated by vested-interest groups, which have thus far used state companies as their cash cows.

However, such near-anarchy and worker radicalism could not have occurred had President Megawati Soekarnoputri demonstrated a modicum of leadership and credibility. Her government, instead, seems incapable of knowing when to act firmly and appears politically incompetent in preventing Cabinet members from becoming engaged in highly public squabbles over policy decisions.

The government also seems ignorant of the blunt reality, in the current learning phase of the democratization process, that nothing is simple and easy any more when it comes to policy- making. The government can no longer simply mandate policies, however rational and sensible they may be, as did the past authoritarian government under president Soeharto.

It is most imperative for Megawati to work harder to earn public confidence in her leadership and her government and for her Cabinet ministers to "go the extra mile" in selling policies through effective communication with the House of Representatives, all affected stakeholders and the general public.