SOEs revenues growth set at 13%

The Jakarta Post, Jakarta

The government expects average revenue growth of 13 percent for its 145 state-owned enterprises (SOEs) under a program which will set the course over the next four years for Rp 772.5 trillion (about US$82 billion) worth of state assets.

Called the SOEs masterplan, the program outlines government policies in reforming the SOE sector up until the year 2006.

This includes the government's privatization program, which has seen the stiffest opposition come from SOE stakeholders, such as employees and local politicians.

The masterplan begins with a vision of turning SOEs into "business entities which can compete globally and are capable of meeting stakeholders' expectations."

Indonesia owns 161 SOEs, but only 145 are in the plan because the 2001 financial statements of the others are still unavailable.

The 145 SOEs are involved in 37 industries and possess total assets worth Rp 772.5 trillion.

Five SOEs are in the banking sector, including Bank Mandiri, which is the country's largest bank in terms of assets.

Combined with the 9 state-owned insurance companies, and six financing institutions, the biggest chunk of the SOEs are involved in the financial sector.

This is followed by 15 in the plantation sector, 13 in the hospital sector and nine in the construction sector.

The masterplan said revenue in the banking and financial services sectors was among the slowest to grow, reasoning they had yet to recover from the late '90s financial crisis.

By 2006, the masterplan projects SOEs' total revenue will have hit Rp 378.66 trillion, up from Rp 237.56 trillion in 2001. This, it said, is achievable based on average revenue growth of 13 percent.

Profit before tax is expected to grow by 12 percent per year, and total assets by eight percent.

The issuance of the masterplan comes amid persistent calls for the government to reduce its role in the SOEs and focus instead on its regulatory function.

Trade experts argue the government's often heavy and slow handed approach will make it hard for the SOEs to compete in an increasingly integrated global economy where quick changes demand quick responses.

Indonesia's joining of the World Trade Organization and its agreeing to free trade mean greater exposure to competition from outside.

But while most private sector companies swiftly adapt to such changes and their widening impacts, the SOEs have been slow to do so.

Efforts to restructure the SOEs have met resistance when it comes to laying off workers or selling the state's share to foreigners.

The government argues that the question of ownership does not matter, emphasizing that privatization could provide greater benefits to the state in terms of higher tax revenues.

The Rp 6.5 trillion in proceeds that are targeted from the privatization program this year are also aimed at financing a state budget deficit estimated to hit Rp 42 trillion.

But, anti-privatization protests have been growing stronger since earlier this year, partly inspired by the stiff resistance put up by workers of cementmaker PT Semen Gresik, which managed to worm its way out of last year's privatization plan.

The protests have also spread to include workers in telecommunications firms PT Telkom and PT Indosat, with the latter slated for sale this year.

So far, the government has proved unable to sell off a state company in the face of labor protests.