State firms to be revamped
State firms to be revamped
JAKARTA (JP): The government will take a number of steps to
improve the efficiency and competitiveness of state-owned firms
under a program to prepare some of them to go public, Minister of
Finance Mar'ie Muhammad said here Thursday.
The planned measures, Mar'ie said, will include the
streamlining of state firms to reach their ideal economic scales.
"I am determined to further streamline state-owned firms so
that they will no longer be a burden on the government," Mar'ie
told a seminar, organized by the Management Institute of the
University of Indonesia.
He said that this streamlining will be achieved by merging
state-owned companies in the same sector or keeping them in one
holding company.
To boost the efficiency of state firms, the government last
month restructured 26 state plantation companies, known as PT
Perkebunan (PTP), by merging them into 14 entities.
"As the consequence of such structural adjustment, a number of
executives will have to lose their positions as presidents of
state firms. They have to accept this reality," Mar'ie said.
He noted that the government is currently also restructuring
state firms under the Ministry of Industry and Trade.
The government said last month that it was considering the
possibility of merging state-owned trading companies, including
PT Pantja Niaga, PT Kerta Niaga, PT Aduma Niaga, PT Dharma Niaga,
PT Mega Eltra, PT Sucofindo and PT Sarinah Department Store.
"Currently our state firms are in transition between the old
era and a new era, an era of globalization," Mar'ie said.
He said that such restructuring of state firms is a first step
towards loosening governmental control over state-owned firms.
"Global trends demand less intervention from the government in
state firms," Mar'ie told the seminar.
The minister suggested that ideally the government should
avoid running businesses itself. Instead, it should act as a
regulator only.
"Can the government really run a business? From experience we
know it throws up more failures than successes," Mar'ie said.
The minister noted that the new reality of economic
globalization has forced the government to rethink its roles
related to businesses.
He acknowledged that many bureaucrats are still reluctant to
loosen their grip on state firms. "So it seems that the
government will face big difficulties abandoning businesses."
When one or two of the restructured firms perform well, the
government will sell parts or all of its shares in the companies
to the public, Mar'ie said.
The government is currently preparing a number of state-owned
companies for privatization, including toll road operator PT Jasa
Marga, PT Krakatau Steel, electricity firm PT Perusahaan Listrik
Negara, general mining firm PT Aneka Tambang and Bank Negara
Indonesia 1946.
It has so far privatized four state firms, PT Semen Gresik,
telecommunication firms PT Indosat and PT Telkom as well as tin-
mining firm PT Tambang Timah. The last three listed their shares
on foreign stock exchanges as well as local ones.
"Offering state firms to the public is part of our
privatization drive," Mar'ie said.
He added that such privatization can also be pursued by
inviting active participation from the private sector in
economic development and by giving state firms more freedom to
act like private firms do.
Mar'ie explained that the government's privatization drive
also aims to improve the performance and competitiveness of state
firms on the global market.
In an increasingly borderless world, Mar'ie said, the focus of
competition is shifting from competition among countries to
competition among corporations or alliances of corporations.
"The key to survival and development in this era of
globalization is improving our competitiveness," Mar'ie said.
"Therefore, we have to develop our competitive advantages as, in
the future, we won't be able to rely on our current comparative
advantages." (rid)