Tjager named director general of state firms

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)