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.