Sunday, 10 August 2014


The Ministry of State Owned Enterprises [BUMN] planned to reduce the number of BUMN from 141 to around 80 by several ways, among others by forming holding companies or marger of companies, all to step up efficiency.

Trimming of BUMN which was rated as successful was Indonesia Fertilizer Industry and Cement Industry. Pupuk Indonesia commanded over some fertilizer companies among others Pupuk Sriwijaya in South Sumatra, Pupuk Kalimantan Timur. Petro Kimia Gresik and Pupuk Kujang Jabar, and non fertilizer products.

Semen Indonesia was another example of a formation of a successful holding company. Under Semen Gresik, this mother company had some subsidiary companies, i.e. Semen Padang and Semen Tonasa, and a company factory in Vietnam.

The formation of a holding company would be the underlying concept in trimming BUMN. The concept would predictably have positive impact on performance, and such was evidently true. Today they were proposing a holding company for plantation. The scheme would blend a number of BUMN into one single company which was strong by capital.

The Ministry of BUMN admitted the mother companies of plantation and forestry was still facing problems, and the case was being evaluated. Trimming of BUMN was on account of the fact that nearly half of the Government-owned companies were always losing and burdening the Government, because they had had to be injected in order to keep running.

On the other hand, some BUMN with high potential to make high profit, had always been the prey of parasites who were high ranking officials, the ruling elite or businesspeople having connections with high officials.

The question was how these BUMN could bring benefit to the nation, contribute to state’s income, and finally improve people’s welfare. So trimming was necessary so the companies would not burden APBN state budget but strengthen it instead. BUMN must not be bread and butter for retired officials but be the propelling force of development.

One of the restructurization programs was by doing rightsizing, i.e. to make the number of BUMN right. To refer to BUMN Masterplan, the basic rightsizing strategy consisted of 5 points, i.e. formation of holding, acquisition, consolidation, privatization and liquidation.

By scale, the performance of 141 BUMN were not proportional. Date of infobank Bureau of Statistics had it that 20 biggest BUMN alone had contributed 97.62%  of total net profit in 3011 or equal to Rp112.89 of total BUMN profit of 2011 amounting to Rp115.64 trillion.

The 20 BUMN already encompassed nearly all economical sector which was the Government’s focus of attention like energy, telecommunication, agriculture, transportation, infra structure and banking. The condition did not change much since 2012. It means that if 141 BUMN was shrunk to 30 – 25 BUMN, it would not affect the composition of BUMN significantly.

Even if the Government focused attention on 25 BUMN alone, it already represented the entire 100% BUMN. So there was 116 BUMN which could be the leading group in this restructuriation program. Although right sizing had been exercised since 2005 the result had not been to the maximum.

It was still a long way before arriving at 25 BUMN. In 2014 alone the Ministry of BUMN had set target to restructure at least 50 BUMN till end of year. the target : BUMN became 114 companies in 2012, 104 BUMN by end 2013 and BUMN and 91 BUMN by end of 2014.

In 2013 last, in accordance with the Masterplan of the Ministry of BUMN, only 4 BUMN were to be liquidate, i.e. Perum PFN, Balai Pustaka, Perum Pengangkutan Penumpang Djakarta [PPD] and PT Djarta Lloyd.

Perum PFN was liquated because this company had stopped operating, Perum PPD was liquidate considering that business was no longer worthwhile, while PT Djakarta Lloyd was no longer
prospective and the company had no change the Management with more competent leaders.

It was identified that one of the hindrances to rightsizing of BUMN was lack of leadership coordination to synchronize corporate structurization plan run by the Ministry of BUMN and technical ministries of sectors related to BUMN. Less synergy means less profit.

It must be understood that BUMN were orientated to technical Ministry and Counseling Ministry. For example, Pertamina and the State Electricity Company [PLN] were energy producers so technically they were under the Ministry of Energy and Mineral Resources [ESDM]; as both BUMN were under the guidance of the Ministry of BUMN.

Very frequently there was disharmony between the two ministers in managing BUMN due to difference in vision, mission strategy and experience of the two ministries. The result was that BUMN were “kept hostage” by the dilemma.

One more obstacle in BUMN management was regulation, sectoral or regulation in state financing. Such indicated reformation in the Government was not widely spread, especially in terms of BUMN. A condition as such made restructurization process to run draggingly slow.

In fact the Ministry of BUMN had already set up a formula making consisting of [1] Internal Policy for the Ministry of BUMN and [2] Policy for BUMN development.

Firstly, policy for the Ministry of BUMN. The policy was Reformation of the bureaucracy. The Ministry of BUMN as executor of Government policy did the controlling and developing of BUMN had the mission to implement Law no. 19/2013.

Therefore, the Ministry of BUMN must be supported by adequate resources and instruments, among them Human Resources which was competent, of high integrity in realizing a workplan and capable of executing the mission written in the Law.

Preparation for reformation of the bureaucracy at the Ministry of BUMN in the process of finalization as applicable at the ministries/institutions which had implemented reformation of the bureaucracy. The measures to be taken in finalizing reformation of the bureaucracy was among others to speed up all the paperwork producers for reformation. To communicate and coordinate intensively with the Ministry of State Apparatus Empowerment and Reformation of the Burreaucracy and the Ministry of Finance to accelerate the reformation process; to prepare a recruitment mechanism system of the Ministry of BUMN to cover up shortage of personnel of certain skills speed up the process of stipulation of personnel status as permanent employee of the Ministry because at the moment their status was still free lance workers; and to prepare the system of Performance Indicators [KPI] of employees.

The strategy to be adopted was to step up competence and performance of personnel of the Ministry of BUMN. To step up capacity and capability of the Ministry of BUMN and to enhance implementation of Good Corporate Governance of the Ministry of BUMN.

Secondly, the strategy for developing BUMN companies was rightsizing, restructurization. revitalization and profit making of BUMN gradually and sustainably. The rightsizing was exercised in 5 actions, i.e. stand alone, merger, consolidation, holding, divestation and liquidation.

The sectors prioritized for rightsizing of BUMN in 2012 – 2014 were the paper industry, Printing and Publication, plantation, Forestry, Mining, Pharmacy, Excavation, Mix Industry, so the number of BUMN by end of 2015 became around 116 BUMN.

In 2013 last, rightsizing was exercised on the sectors of Airport Management, Land transportation and Railway, Agriculture, Trading, Energy, Construction, and Construction Consultant, Logistics, and Appraisal Services so the number of BUMN would come to 105.

Furthermore in 2014 there would be rightsizing on the sectors of Defense, Technology-based Industry, Docs and Shipping, Steel and Steel Construction, Insurance, and Construction so the number of BUMN by 2014 would predictably be around 95 BUMN.

The policy of rightsizing was completely and overally written in Masterplan 2010-2014 which was inseparable part of the Strategic Master Plan of the Ministry of BUMN. All were aimed at posting an ideal number of BUMN for stronger competitiveness, Maximize BUMN value and bring utmost benefit for the nation. (SS) 

Business News - July 4, 2014

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