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)