Sorting Out Chaos

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  • TEMPO.CO, JakartaMany hope that the new state-owned enterprises minister will sort out the chaos in the management of state-owned companies. This could start by appointing new directors who are free of political interests.

    As a businessman who has no links to political parties, the choice of Erick Thohir as minister for state-owned enterprises (SOEs) gave people hope. He should use his authority in the best possible way to reform SOEs in the wider interest, not simply use them as a political tool of the government or a way of repaying favors.

    The first test for the founder of the Mahaka Group is choosing professional and competent people for directors and managing directors of a number of SOEs. The most urgent appointments are the chief executive officer (CEO) of Bank Mandiri and Indonesia Asahan Aluminium. The CEOs of these two companies, Kartika Wirjoatmodjo and Budi Gunadi Sadikin, were appointed by President Joko Widodo to assist Erick as deputy ministers.

    The position of CEO of Bank Tabungan Negara has also been vacant since Suprajarto, former chief executive officer of Bank Rakyat Indonesia refused the appointment. Other positions are CEOs of PLN and Perkebunan Nusantara III, which had been vacant since the people at the top of these two companies were named as suspects by the Corruption Eradication Commission (KPK).

    These important positions must be filled by people who are credible and who are able to improve the performance of the companies. A total of 118 state-owned enterprises with total assets of Rp8,092 trillion should become a means for the state to manage the economy to bring about the best possible benefits for the people.

    The most important principle that Erick must adhere to is a meritocracy. As well as ability in a professional sense, the leaders of SOEs must have good track records. There must be no hasty appointments of directors based only on their closeness to and the interests of certain groups, as was the case with the previous SOEs minster, Rini Sumarno, because this damages the companies.

    At least seven officials of SOEs were detained and named suspects by the KPK during Rini’s leadership. The most recent is CEO of Industri Telekomunikasi Indonesia Darman Mappangara, who was named a suspect at the end of October. Darman is alleged to have paid a bribe of approximately Rp1 billion to Angkasa Pura II Finance Director Andra Y. Agussalam – who had also been named a KPK suspect – in order to obtain a number of projects from Angkasa Pura II.

    Without a serious endeavor to comply with the principles of good governance, senior officials of SOEs could once again be detained and then jailed. According to the KPK, from 2004 to 2018 alone, 56 directors of state or regional government-owned enterprises were involved in corruption cases. Erick must not repeat Rini’s mistakes. SOEs must be managed in a way that is transparent and accountable, and that adheres to the rules of good governance of state-owned companies.

    Erick also needs to keep a watch on the vision of SOEs so that they are not trapped in state capitalism. Of course, state-owned companies must be well managed so that they grow and generate profits. But when pursuing profits, these SOEs must not turn into monsters that throttle the private sector.

    If we refer to the Constitution, state-owned companies should focus more on sectors that are important to the people and that affect people’s livelihoods, such as energy, transportation and water. Other sectors should be left to the private sector. Our economy will always need the support of the private sector so that it can stay strong and flourish.

    Read the Complete Story in this Week's Edition of Tempo English Magazine