State to Appoint Non-public SOEs as Holding, Minister Rini Says

TEMPO.CO, Jakarta - The government will turn companies whose shares are fully owned by the state as holding for state-owned enterprises, SOE Minister Rini Soemarno said. Rini made the statement after a closed cabinet meeting on the formation of SOE holding at the president's office Friday last week, August 12, 2016.

Rini said there will be six holding companies each for the mining, oil and gas, housing, infrastructure, financial services, and food sectors.

As the holding company of mining SOEs, the government will appoint PT Indonesia Asahan Aluminium (Inalum). Pertamina will lead oil and gas SOEs, and Perum Perumnas will be the holding for state housing companies.

For infrastructure SOEs, the holding is PT Hutama Karya. PT Danareksa will be the holding for state-owned financial services firms while Perum Bulog will lead state companies engaged in the food sector.

President Joko Widodo said that merging SOEs is aimed at allowing government-owned firms to compete on the global scale. Widodo ensured that the establishment of SOE holdings is not privatization as being named a holding will not erase the company's SOE status.

Minister Rini also suggested the establishment of a super-holding company that owns SOE shares, similar to Singapore's Temasek and Malaysia's Khasanah Nasional Berhad.

Indef economist Enny Sri Hartati said these plans are only a shortcut to solve SOE's mismanagement by the government. She said that SOEs should start upholding good governance principles. "Who is actually responsible for SOEs' performances?" Sri said on Sunday, August 14, 2016.

Enny urges SOEs to start doing businesses adhering to the development roadmap. "The amount of subsidies to SOEs today is far greater compared to the dividends received by the state. This is unhealthy," she said.

ADITYA BUDIMAN