SOE restructuring ooposed
SOE restructuring ooposed
Rendi A. Witular, The Jakarta Post, Hong Kong
The government faces a daunting task in its efforts to
restructure a number of underperforming state enterprises as a
result of widespread opposition from executives desperate to
preserve their power and opportunities for personal enrichment.
"There is widespread opposition to restructuring in various
state enterprises. This is because their managers are trying to
maintain their interests and positions," said State Minister of
State Enterprises Sugiharto on Tuesday while accompanying Vice
President Jusuf Kalla on a business trip to China.
He said the efforts to thwart reform could be seen from
attempts by executives to prevent the merger of underperforming
firms so as to create more efficient enterprises.
He added that the government would allow these executives some
more time to carry out the ministry's merger instructions and to
expand their businesses through what he termed "non-organic"
means, such as through acquisitions.
However, the government's patience was not unlimited. Should
the executives persist in their efforts to thwart reform or fail
to carry out the minister's instructions, they would be fired.
The instructions in question were issued following the
adoption of a blueprint for the development of state enterprises
in February. Under the blueprint, the number of state enterprises
will be reduced from 158 to between 100 and 120.
Among the enterprises that are required to merge are fourteen
plantation companies (PT Perkebunan Nusantara (PTPN) numbers I to
XIV), four port operators (PT Pelindo numbers I to IV), four
airport operators (PT Angkasa Pura numbers I to IV) and four
forestry firms (PT Inhutani numbers I to IV).
"We understand that the reform of state enterprises cannot be
completed in one year. Due to the scale of the damage, we will
give them enough time to carry out restructuring, including
effecting mergers. But they must do as they have been instructed
or they were definitely loose their jobs," said Sugiharto.
He pointed to the recent debacle involving a plan by Bank
Negara Indonesia (BNI) to merge with a smaller rival, Bank
Tabungan Negara (BTN), which was opposed by BTN management based
on short-term considerations.
"How can BTN hope to finance increasing housing loans if its
capital is inadequate? A merger would definitely entail long-term
benefits for the bank. This is what the management doesn't want
to understand," he said.
BTN is a state bank focusing on providing housing loans to
those in the low- and medium-income brackets, while BNI is a
retail bank and is currently the nation's third largest lender by
assets.
Another merger that was opposed by executives was that of the
14 PTPN companies, as the boards of a number of the companies
were attempting to maintain their positions and the sort of
corrupt practices they had grown used to, added Sugiharto.
"I can easily replace the managements for opposing the
mergers. But I have to ensure smooth transitions in order to
prevent other conflicts in the companies. So, we will give the
managements some time to see if they are committed or not," he said.
At present, the management of PTPN numbers I to XIV are in the
process of conducting due diligence prior to merging their
operations. They are scheduled to appoint advisors for the merger
process later next month.