Tanri urges next government to continue privatization
Tanri urges next government to continue privatization
JAKARTA (JP): State Minister of the Empowerment of State
Enterprises Tanri Abeng has urged the country's next government
to continue his state enterprise reforms to help drive the
recovery of the crisis-hit economy.
Tanri said on Wednesday the reform programs were designed to
introduce corporate governance in order to boost the
competitiveness of the country's state enterprises.
He said the most urgent task was to restructure the board of
directors and board of commissioners of state firms in a bid to
make them more professional.
"There must be a political commitment to isolate the
management from the intervention of the bureaucracy and
politics," he told a seminar on the economy.
Tanri also called on the next government to continue the
privatization program, saying it was a key criteria for
introducing corporate governance.
Indonesia is scheduled to select its next president on Oct.
20. The most popular presidential candidate is Indonesian
Democratic Party of Struggle (PDI Perjuangan) leader Megawati
Soekarnoputri. Her top economic advisers have often criticized
Tanri's programs, particularly the privatization program.
Tanri's first privatization deal turned sour after analysts
and politicians lambasted his move to sell between 49 and 51
percent of state steelmaker PT Krakatau Steel to a relatively
small Dutch firm, Ispat International, which is based on Cayman
Island.
Strong political intervention in the privatization program
enabled Tanri to only be able to raise US$380 million in
privatization proceeds, which fell far short of the $1 billion
target set in the 1998/1999 fiscal year.
Tanri has set a target of raising $1.5 billion in
privatization proceeds in the current fiscal year ending in March
2000.
To date, the government has raised $1.04 billion.
Analysts have said the country's political unrest has
discouraged investors from buying into state firms.
Tanri has been under fire for his alleged role in the Bank
Bali scandal, which revolves around the "illegal" transfer of
some $80 million from the bank to a well-connected private firm
for alleged political purposes of the inner circle of President
B.J. Habibie.
Tanri explained that efforts to introduce corporate governance
in state firms started with the issuance of a special
presidential decree in 1998. The decree paved the way for the
establishment of the State Ministry of the Empowerment of State
Enterprises, and the handing over of the management of some 159
state firms to the ministry from 17 related technical ministries.
Former president Soeharto's last Cabinet team formulated the
ruling before the authoritarian leader stepped down in May 1998
amid mass student protests and the deepening economic crisis.
"With the ruling, there's a formal separation between the
regulatory function of the technical ministries and the
operational function (of my office)," Tanri said.
"The referee no longer has to act as a player."
State companies have long been a cash-cow for politicians and
well-connected businessmen.
Tanri said introducing corporate governance in the first phase
of state enterprise reforms would occur through restructuring,
profit orientation and privatization.
He said the second phase would involve issuing a blueprint of
policies to consolidate 144 state enterprises fully owned by the
government into 10 strategic industries.
But Tanri said 30 of the 144 firms must be able to "stand
alone".
"Merging or consolidating them would not create more added
value," he said.
He declined to name the 30 firms.
"The final decision will be in the hands of the upcoming new
government."
Tanri said a complete study on the 144 firms was expected to
be completed on Thursday.
He said that based on the study's results, a group of state
firms would be enabled to continue to exist, but other companies
would be merged or consolidated into holding companies. (rei)