Sat, 02 Dec 2000

Tjager named director general of state firms

JAKARTA (JP): Finance Minister Prijadi Praptosuhardjo officially installed I Nyoman Tjager as the director general of state-owned enterprises (SOEs) on Friday.

"The duty of the director general of SOEs will be very tough," Prijadi said at the inauguration ceremony.

Tjager was previously the deputy of the now dissolved ministry for the development of SOEs and investments.

Prijadi said that the country's 158 SOEs had combined total assets of Rp 560 trillion (US$60 billion), but had a low level of return on assets and return on equity.

Prijadi said that the new director general must boost the performance of the SOEs to be able to contribute to the state budget, which is heavily burdened by the huge cost of the country's bank restructuring and recapitalization program.

The government proposed in the 2001 draft state budget that SOEs should contribute around Rp 8 trillion to the budget, but legislators currently entering the final stage of the budget debate demanded the SOEs contribute up to Rp 10 trillion.

The government has said that out of the 158 SOEs, 132 were expected to make profit in 2001 while the remaining would still be operating at a loss.

Prijadi said that Tjager, who was a senior official at the Capital Market Supervisory Agency from 1997 to 1999, must immediately make preparations to privatize several SOEs next year to help finance the state budget deficit estimated at 3.7 percent of gross domestic product.

The government expects to be able to raise around Rp 5 trillion in privatization proceeds in 2001.

Prijadi has said recently that four SOEs including PT Sucofindo, airport operator PT Angkasa Pura II, and pharmaceutical firms PT Kimia Farma and PT Indofarma were ready to be privatized next year.

The government is supposed to privatize several firms this year including the above companies in a bid to raise around Rp 6.5 trillion but none have been realized.

The weak market sentiment due to domestic political and economic instability has been seen as the main factor causing the delay in the privatization program.

But some say that the cabinet reshuffle in April and August has affected the privatization program.

President Abdurrahman Wahid dismissed Laksamana Sukardi from the ministry for the development of SOEs and investments in April. He then appointed Rozy Munir, seen by analysts as a less capable person but personally close to the President.

The President launched another cabinet reshuffle in August and this time he also dissolved the ministry for the development of SOEs and investments, returning the SOEs under the authority of the ministry of finance.

The former president Soeharto transferred in 1998 the authority for the SOEs from the ministry of finance to the newly formed ministry for the development of SOEs and investments.

Rozy and Tjager had been tipped to be the director general of the SOEs.

Elsewhere, Prijadi instructed Tjager to implement good corporate governance in SOEs, which had been the cash cow of politicians and the military during the 32-year authoritarian rule of Soeharto.

He also said that the new director general must design a "hire and fire" system for the directors and commissioners of the SOEs as well as a "fit and proper" test system.

The fit and proper test system was first implemented by Bank Indonesia as a mechanism to select top officials for domestic banks to ensure that the people running the banks have not violated banking regulations in the past in a bid to prevent the banking crisis from reoccurring.

But ironically, Prijadi failed to past the central bank test when he was nominated to become president of the state-owned Bank Rakyat Indonesia by Abdurrahman. (rei)