State-Owned Enterprises

This problem is like an endless story — and complicated. Not only is it increasingly widespread and profound, it is also about roles and management.

KOMPAS/LUCKY PRANSISKA

Bambang Kesowo

At present, after a lot of discussion about their dominance in government projects, there are concerns over Garuda\'s leaders, Jiwasraya\'s business strategy mistakes, the growth of subsidiaries and sub-subsidiaries of state-owned enterprises (SOEs) — which are considered increasingly out of control — and finally, the SOE minister’s decisions to liquidate underperforming SOEs.

In the past, even though it was still the same era, SOEs were often admonished for not doing more for the country; it’s not clear whether the SOEs or the SOE minister really wanted to be seen or give the impression of being present. To show their concern, the management of SOEs were almost always on the news and providing assistance to traders in the market, household handicraft businesses, among other things to exercise the SOE’s creed of helping small and medium enterprises as if they were the responsibility of the SOE management.

Maybe there were almost no exhibitions and commemorative events, or those formatted as events — even in moments like car-free days in the capital city. It was not uncommon to see the presence of groups with SOE uniforms or ID cards. Perhaps wanting to give a real impression of their existence and presence, the SOE jargon was being promoted as an agent of development. Therefore, it is not too surprising when people are later shocked to see that in a lot of economic behavior, the presence of SOEs actually seems to have covered everything.

The problem of coverage is actually representing the disappointment that is highly felt and thought about.

Is the concept of the role and function of SOEs in developing the country\'s economy and the goal of prospering the people true? When and how should the state act or properly take part to act as a player or economic agent, which is deemed necessary to realize goals of the economy and prosperity in accordance with the mandate of the Constitution? If it is truly intended, the determination and at the same time the economic restructuring program launched by the current President can be an opportunity to reform the matter.

The policies and measures regarding this seemed to be going back and forth.

In the context of developing the SOEs, of which there are a lot and seem increasingly reproductive, the idea of simplification as well as restructuring has long been going on through the wrap-up of the restructuring concept. Both the business or also its management. The problem is that for a long time, the policies and measures regarding this seemed to be going back and forth. Later, there was also a grouping effort through the policy of holding formation even though it also raised widespread new doubts whether it was the real medicine. If all the steps being taken are actually only a technical matter in management, the question of roles and functions actually reveals the justification for the existence of SOEs: why and when they needed to be present.

KOMPAS/ALIF ICHWAN

Finance Minister Sri Mulyani (left) talks with State-Owned Enterprises (SOE) Minister Erick Thohir (right) during a press conference at the Finance Ministry office in Jakarta on Thursday (5/12/2019). The press conference was used to explain the chronology of the smuggling of Harley Davidson motorcycles and Brompton bicycles using Garuda Indonesia\'s new aircraft.

Fundamental question

The commotion in handling SOEs, whose numbers are reported to be more than 140, including those considered unhealthy, and at the same time concern about the issue of dominance in the implementation of government projects, are perhaps only outward appearances. Perhaps the drug called restructuring or formation of holdings does not touch the basic problems and question: Does the country need so many SOEs?

With the presence and behavior of the many SOEs we have now, isn\'t it like running a trading business, struggling to live and compete with the people themselves, whose prosperity in fact must be improved? With the strength of the law and the authority it has, shouldn’t the state be able to realize the entire mandate of the Constitution with policies and programs?

The momentum of restructuring

If so, on what should the handling of the problem be based? It seems we must dare to return to the starting point. If we have the determination to simplify institutions and procedures in order to create employment opportunities, we should also dare to remind the state to be fair in its own attitudes and behavior, including in carrying out its activities and forms of business. Even if we want to base them on the ideals of Article 33 of the Constitution and make them as a legitimate for the presence of the state in business activities, have we ever tried to define what the "important production branches for the state" are?

Similarly, we also need to redefine how to "control the wish of the lives of many people".

So far, we have been trained in the translation of the phrase "controlled by the state", although we are still always doubtful when we have to elaborate to what extent and what is meant by "natural resources contained therein", which exists after the words Earth and water in Article 33 of the Constitution. Equally important is our training in developing definitions, even though they just provide justification for the desire to control and strengthen authority for the management of certain sectors, which are then asserted as part of the functions in the governmental administration.

Even if formation of SOEs also need to be justified as an effort of pioneering, because of one or more reasons the people have not been able to start, is there a strategic policy that outlines which fields or branches are needed such pioneering business? Are there policies that have been outlined, when and how state mechanisms must divest pioneering efforts after they run well and the people are able to manage them?

Along with the example of the benchmarks, the idea of forming and presenting SOEs should be addressed carefully. In conditions when the ability of the people are able realize and run various businesses, the presence of the state through SOEs should indeed be reduced or even eliminated. There is no need to worry about the employment field and job opportunities when considering the liquidation of SOEs because all aspects are attached as a package in related businesses — let alone if liquidation is realized in the form of sales of business entities. No unemployment will be created in the liquidation or reduction in the number of SOEs.

Now or later, it seems that the starting point deserves consideration. What is called rearrangement, improvement, structuring will definitely be available throughout the course of business management. No matter how many. However, stopping only by flipping through so many SOEs as well as their diverse business, financial and governance conditions, will also not resolve the central issue of the role of the state, the presence of SOEs and their relation to the role of the people in the national economy. Liquidation will probably be one of many interesting ideas, as well as challenges.

Bambang Kesowo, Chairman of the board of supervisors of the National Resilience Institute Alumni Association (IKAL).