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No More Changes, Please
Minister of State-Owned Enterprises (BUMN) Rini Soemarno in Jakarta, July 25, 2016. Tempo/Tony Hartawan
Friday, 21 September, 2018 | 07:18 WIB
No More Changes, Please

TEMPO.CO, Jakarta - State-Owned Enterprises (SOE) Minister Rini Soemarno is certainly quick on the draw. Within the past four years, Rini has reassigned Pertamina and Garuda Indonesia`s executive director positions as many as three times.

Changes in the leadership of a company are nothing out of the ordinary. Based on Law No. 19/2003 on SOEs, chapter 16, article 4, an executive director’s tenure lasts five years and may be extended once. But for Elia Massa Manik (Pertamina) and Pahala Mansury (Garuda Indonesia), this law did not apply. They only occupied their seat for 17 months.

Pertamina is indeed a state company that has seen the most frequent changes in leadership, particularly since the 1998 reform. In the span of 20 years, Pertamina has had nine executive directors and three acting executive directors. Meanwhile, Garuda Indonesia has had its executive director position reassigned eight times within the same period.

Pertamina and Garuda’s track records cannot be used to justify Minister Rini’s move to rearrange SOE leadership at will. Rini, as the representative of the government, which owns Garuda as well as Pertamina shares, should measure the success of company leaders through their performance. But there’s suspicion that there were ulterior motives in the frequent reshuffle of Pertamina and Garuda leaderships.

First of all, it would be difficult to use "performance" as an argument to justify these reshuffles. In Elia Massa Manik’s very short tenure, Pertamina’s profit did see a decrease from US$3.16 billion (2016) to US$2.55 billion (2017). But the slump was caused by the government’s reluctance to raise the price of Premium. As a result, Pertamina suffered losses because of the rise in oil prices and the dollar’s value. Likewise, although Pahala Mansury could not yet lead Garuda to profit, he was able to cut the company’s losses down to 58.6 percent, from US$284 million in the first semester of 2017 to US$114 million in the first half of 2018.

Last year, Rini also made a controversial decision when she dismissed Dwi Soetjipto (Pertamina) and Arif Wibowo (Garuda) although they had successfully multiplied the companies’ profits. Dwi Soetjipto, a hard worker and lobbying master who managed to improve Semen Indonesia, was instead dismissed by Rini when he was able to double Pertamina’s profit from US$1.57 billion in 2014 to US$3.16 billion in 2016.

Arif had a similar fate. He was able to lead Garuda from a loss of US$367 million in 2014 to a profit of US$78 million in the following year. Still, both were replaced before their time.

So what’s up with Minister Rini? Why is she so fond of replacing SOE directors? Officials who perform are instead dismissed. These reshuffles tend to strengthen the signal that the motive simply had to do with power-sharing and giving away seats to those who are loyal.

It is not only the motive behind these reshuffles that is questioned by the public but also Rini’s competence in selecting executive directors. Their "failures" at Garuda and Pertamina-if seen as such-are also Rini’s failure. It shows that Minister Rini does not have the ability to choose good SOE leaders. Consequently, she has had to replace executive directors multiple times.

It is time for the President to put an end to Rini’s current method of reshuffling. This method does not improve Garuda and Pertamina. The continuity of strategies and company plans are inevitably disrupted, especially at a time when Pertamina and Garuda are facing great turbulence caused by rising oil prices in the international market.



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