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Minister Thohir’s measures for Indonesia’s SOE transformation
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"There is a limit to this ministerial position, hence there will be a 10-year roadmap where we ask the next SOE ministers to complete the program," says Minister of SOEs Erick Thohir.
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Data: BUMN, Photo: ANTARA FOTO, Research: DYAH/YARA, Graphic: Noropuadi, Editor: Rani/Bayu
https://en.antaranews.com/infographics/2724557/minister-thohirs-measures-for-soe-transformation
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Copyright 2022 ACN Newswire. All rights reserved. www.acnnewswire.comA number of strategic measures for the transformation and efficiency of State-owned Enterprises (SOEs) has been taken by Minister of SOEs Erick Thohir, leading to a number of results including increases in revenue.
Enhancing Indonesian state-owned enterprises (SOEs) through clustering
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On October 14, 2021, Jokowi stated that he was pleased to witness the clustering of container terminal operator and port development firm Pelindo into one holding, which was PT Pelabuhan Indonesia, to cuts logistics costs and helps improve connectivity throughout Indonesia.
According to Jokowi, the clustering forms into one great power, as it builds networking with partnerships abroad. "Through partnering with overseas companies who have networks, the (SOEs') link to all countries can become a huge power," the president remarked.
Through clustering, SOE companies have shown above-standard or even excellent work performance that has contributed significantly to the state budget.
According to data from the National Development Planning Board (Bappenas) in 2019, the estimated total budget for infrastructure development in the period of 2020-2024 was US$447 million or Rp6,445 trillion, and 21 percent of them came from or supported by SOEs.
In the third quarter of 2021, the total assets of SOEs reached some US$610.5 million or Rp8,767 trillion, equivalent to some 57 percent of Indonesia's GDP.
Moreover, in January - September 2021, the total consolidated revenues were closed at Rp1,613 trillion, or grew 14% compared to the same period in 2020.
One of the efforts to enhance state firms' performances is through clustering and restructuring.
Clustering efforts have been accomplished by reducing the number of SOEs from 107 to 41, and sector clustering from 27 to 12, where two deputy ministers each oversee six clusters.
Currently, there are 12 sectors that 41 SOEs engage in: energy, oil, and gas; mineral and coal; insurance and pension funds services; plantations and forestry; and telecommunications and media.
Additional industries include the food and fertilizer industry, tourism and supporting services, health industry, manufacturing industry, infrastructure, logistics, and financial services.
On February 18, 2022, SOEs Minister Erick Thohir announced that he would again downsize the number of state-owned enterprises from 41 to 37 in the next two years.
In addition, he expressed his hope that the next SOEs Minister can complete the reducing program to only 30 state-owned enterprises. With a roadmap for a ten-year period, he has targeted to make the scope of state firms more manageable.
So far, the ministry has encouraged and carried out the SOEs transformation through reducing companies that are considered too large in number, and focusing on inefficient business sectors.
Under his leadership, the transformation is focused on human capital through replacing underperforming board of directors with better ones, so many state-owned enterprises can generate profits for the state.
Through restructuring, holdings, mergers, and acquisitions, Thohir has made SOEs' work performances more efficient.
According to Thohir, the SOEs Ministry distinguishes the strategy of the three pharmaceutical SOEs, where Bio Farma focuses on vaccines, Kimia Farma is focused on chemicals, and Indofarma on herbs. Indonesia has extraordinary potential in the herbal sector, but it has not been explored, so the SOEs Ministry had tried to re-map the path in developing it.
"We know that we import 90 percent of the raw material for medicines, and even medical devices. The COVID-19 pandemic has woken us up that we need to create a roadmap for Kimia Farma to focus on chemicals and Indofarma to be positioned on herbs," he explained.
Thohir said that since health and energy are under the same SOEs ecosystem, a connection between sectors needs to be built.
On the other hand, oil and gas firm Pertamina has begun to build petrochemicals, and one of the derivatives of petrochemicals is to create paracetamol. If Pertamina is merged with a health state firm into one ecosystem, Indonesia would no longer need to import paracetamol.
The ministry also consolidated and launched the tourism holdings and its sub holdings into one cluster, consisting of airport operator Angkasa Pura I and Angkasa Pura II, as well as some aviation and hotel companies.
Thohir put together the infrastructure construction SOE and cement SOE into one cluster, as he viewed that the two need each other and are expected to synergize.
Meanwhile, the tourism, logistics, and support cluster consists of Hotel Indonesia, temple tourism managing firm PT TWC, which manages the temples of Prambanan and Borobudur and Ratu Boko, and Indonesia Tourism Development Corporation (ITDC).
State-owned Bank Negara Indonesia (BNI) also announced that it relied on clustering to strengthen the distribution of smallholder business credits (KUR), as well as to help boost the productivity of Micro, Small, and Medium Enterprises (MSMEs) during the COVID-19 pandemic.
Moreover, on February 23, three state-owned companies have agreed to collaborate on building green industry clusters in Indonesia that will prioritize the efficient and effective use of sustainable resources. The three state firms are electricity company PT Perusahaan Listrik Negara (PLN), oil and gas company PT Pertamina, and fertilizer company PT Pupuk Indonesia.
The clustering efforts began in 2020, as many state firms decided to be merged. Thohir also significantly increased the performance target of SOEs to double their outputs in 2024, especially on profits, which are projected to reach some US$20.8 billion or Rp300 trillion.
To be successful
Performance of banks incorporated in the Association of State-Owned Banks (Himbara) throughout 2021 showed satisfactory results through well-implemented credit restructuring, economist and capital market practitioner Lucky Bayu Purnomo said.
According to Purnomo, credit restructuring has resulted in more efficient and effective management of operational expenditures. In December 2021, the total profit of Himbara banks shot up to US$5 billion or Rp72.05 trillion, significantly increasing by 78.06 percent, compared to 2020 at US$2.8 billion or Rp40.34 trillion.
Thohir said each Himbara bank has a specific business focus, such as BRI prioritizes the MSME and ultra micro-segments, Mandiri is dedicated to enhancing the national corporates and entrepreneurs, BNI on international business, and BTN focuses to reduce backlog numbers and help people, including millennials, to make it easier to purchase a home.
"We hope that Himbara's role can be more prominent and become the main national economic driver through enrichment in various segments that provides positive impacts for stakeholders and Indonesian society," he said.
Previously, SOE holdings that had been formed were plantation holdings under PT Perkebunan Nusantara III, forestry holding under Perum Perhutani, fertilizer holding under PT Pupuk Indonesia, and cement holding under PT Semen Indonesia.
Under Thohir's leadership, the holdings of SOEs that have been completed are the mining holdings under Mining Industry Indonesia (MIND ID), oil and gas holdings under PT Pertamina, pharmaceutical holdings under PT Biofarma, state-owned hospital holdings under Pertamedika IHC, insurance and underwriting holdings Indonesia Financial Group (IFG), and tourism and aviation holdings under Aviasi Pariwisata Indonesia or InJourney.
Fixing SOEs through the establishment of holdings is a task that must be carried out sustainably to yield powerful government-owned corporations that can compete on the international stage.
Photo: ANTARA / HO-Kementerian BUMN / pri
Reporter: Kenzu Tandiah; Editor: Rahmad Nasution (c) ANTARA
Copyright 2022 ACN Newswire. All rights reserved. www.acnnewswire.comPresident Joko Widodo (Jokowi) has given a period of one to two years for state-owned enterprises (SOEs) to make fundamental changes to increase their competitiveness.
Eradicating corruption within SOEs
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Gontha urged the State-Owned Enterprises (SOEs) Ministry to dismantle past cases of alleged corruption in the company related to aircraft leasing.
He cited issues related to powerful groups in the company and the price difference between Boeing 777-300ER aircraft rental and CRJ1000 aircraft purchase.
Ghonta spoke of having reported the problems to several institutions ranging from the director-general of the Ministry of Law and Human Rights to the chairman of the Corruption Eradication Commission (KPK).
State-Owned Enterprises (SOEs) Minister Erick Thohir then filed a report on an alleged graft case in the financially beleaguered state-owned airline PT Garuda Indonesia (Persero) to the Attorney General's Office.
The report outlines the government's plan to restructure Garuda Indonesia as well as provides evidence regarding the procurement of ATR 72-600 aircraft.
We provide evidence from the investigative audit, so it is not an accusation, he asserted.
For the past two years, Garuda Indonesia had faced a financial storm due to past mismanagement that caused the company's debt to swell to more than Rp140 trillion, Thohir remarked.
Meanwhile, Thohir noted that the Garuda Indonesia case was not just about an aircraft but pertaining to an ecosystem.
He encouraged the Garuda Indonesia case to be resolved, as it was impossible to buy or rent an aircraft without a business plan and without calculating flight routes.
In the absence of such a calculation, Garuda ultimately paid the aircraft rental fee of up to 28 percent to the lessor as compared to only eight percent to other airlines' aircraft lessors.
"Hence, there is a system and there is a solution, so that in the future, Garuda will not repeat similar cases again since due to no management, the loss will also affect the people, in the form of expensive tickets," he pointed out.
In addition, the SOEs Ministry has taken steps to restructure and salvage the state-owned airline.
The ministry will focus on transforming the airline to make it more accountable, professional, and transparent.
More than 470 creditors have submitted claims of up to US$13.8 billion, or equivalent to Rp198 trillion, to Garuda Indonesia as of January 5, 2022, as part of a debt recast.
The figure has been cited by Garuda Indonesia's Suspension Debt Payment Obligation (PKPU) team, Thohir remarked.
After the verification is completed, the PKPU team will take a decision on January 19, 2022, regarding the amount considered to be valid and can be included in the restructuring process, he remarked.
The Garuda management had earlier submitted a proposal to reduce its liabilities by more than 60 percent, from US$9.8 billion to US$3.7 billion through restructuring.
The proposal aimed to help the company survive amid the COVID-19 pandemic that has protracted for two years.
Save Garuda
Commission VI of the Indonesian House of Representatives formed a working committee to rescue national carrier Garuda Indonesia.
"In principle, the Committee for Rescuing Garuda is a follow-up to the three work meetings undertaken by Commission VI with the SOEs minister, deputy ministers, and the Garuda Indonesia Board of Directors," Head of the Committee for Rescuing Garuda Martin Manurung stated.
Manurung explained that the working committee will work not only to look for management issues within the state-owned airline but also to explore options offered by the government.
The deputy chairman of Commission VI stated that the formation of the working committee was also a form of political support for Commission VI of the Indonesian House of Representatives for Garuda Indonesia to stay afloat.
"We want Garuda Indonesia, as a national flag carrier, to be able to stay in the air, to be able to fly, as an airline of national pride," Manurung noted.
Meanwhile, State-Owned Enterprises Minister Erick Thohir expressed support for the establishment of a working committee by Commission VI of the House of Representatives (DPR RI) to rescue and reform national carrier Garuda Indonesia.
Establishment of the working committee is proof of DPR RI's concrete support and commitment to monitoring the state-owned airline's rejuvenation process, the minister noted.
The political support that the legislature has exhibited would be key to rescuing the flag carrier, the minister noted while adding that his ministry is committed to cooperating with the parliament's working committee for seeking solutions to remedy issues that have plagued the national airline.
The ministry will also inform the working committee, which will monitor the airline's restructuring and reform progress, about Garuda Indonesia's future business and reform plan, he added.
The State-Owned Enterprises Ministry cannot rescue the airline alone, and we need to collaborate with relevant stakeholders, including DPR RI's Commission VI, in mending Garuda Indonesia, Thohir remarked.
Transforming Garuda Indonesia is a must to ensure the flag carrier survives amid the economic uncertainty posed by the COVID-19 pandemic and to ascertain that it records positive performance after the pandemic, he noted.
The ministry has also collaborated with the Attorney General's Office to investigate allegations of corruption by the airline management in the past, the state firm minister remarked.
Thorough reforms in the law enforcement and business aspects are expected to bolster Garuda Indonesia's performance to become more accountable, professional, and transparent in the future, Thohir affirmed.
Jiwasraya, Pension Fund
Efforts to eradicate corruption by the minister are also being made in the insurance business sector.
Thohir revealed that the completion of Jiwasraya's mega scandal case provided a solution for the aggrieved parties.
"However, what distinguishes us from other corruption cases is that the Jiwasraya case has a solution for those who were harmed. It is not a pending case for which there is no explanation. Those who were harmed will be recompensated for their losses," Thohir stated.
The minister drew attention to no solution being found to this day in several cases of corruption in pension funds and insurance. No refund was offered to the cheated parties.
For instance, the case of illegal online loans where no perpetrators or masterminds had yet been revealed and no refund was provided to the victims and deceived parties.
Thohir affirmed that the collaboration was necessary to solve the Jiwasraya case.
President Joko Widodo gave directions that the Jiwasraya case should be solved immediately.
After looking at the facts and evidence, an audit investigation from the Development Finance Comptroller (BPKP) and a report from the Supreme Audit Agency (BPK), the Ministry of SOEs officially reported the Jiwasraya case to the Attorney General's Office.
"The Ministry of SOEs does not want to become trapped in legal problems, and it focuses on corporate issues," the minister stated.
In addition, Thohir will fix pension funds in state-owned enterprises comprehensively this year.
The pension fund has become a breeding ground for corruption, with the pensioners' bills not being paid in the end, he pointed out.
To this end, the minister of SOEs urged Commission VI of the Indonesian House of Representatives to jointly conduct a focus group discussion on exposure regarding pension funds.
"We are ready, but we cannot clean it up right away, as there is a binding law. Hence, the Ministry of SOEs cannot intervene," Thohir noted.
Meanwhile, he remarked that comprehensive improvement in pension funds in the state firm became one of the SOE Ministry's programs in 2022.
The existence of state-owned companies aims to provide the greatest profits to the state.
Thereafter, the profits will be channeled back through various programs for the people, starting from infrastructure development to welfare improvement, and others.
There is no place for corruption within SOEs.
The accountability, transparency, and anti-graft approaches must continue to be implemented to build prosperous SOEs.
(c) ANTARA 2022. Reporter: Azis Kurmala; Editor: Sri Haryati
ANTARA/HO-Ministry of Energy and Mineral Resources/pri
Copyright 2022 ACN Newswire. All rights reserved. www.acnnewswire.comIn October 2021, former Garuda Indonesia commissioner Peter Ghonta took the lid off various problems brewing in the company.
SOEs Ministry presses for more involvement of younger staff, women
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SOEs Minister Erick Thohir will target the promotion of 10 percent of young leaders in the SOEs by 2023, or double from five percent of young leaders promoted this year.
Young leadership and women's leadership is viewed as a driving force to help expedite the realization of the SOEs programs, as well as to transform the human capital.
"I am fully concerned about the human capital transformation, since it is the start to push the transformation in the ministry. We are changing the structures, leaderships, mindsets, and core values we own," he said.
In addition, young people are blessed with outstanding intelligence and mindsets that, in nature, may function differently when they are older, according to Thohir.
"In terms of leadership, we know that God blesses extraordinary intelligence and mindsets to humans, but in the limited ages," he said.
Hence, the Indonesian younger generation should be offered the opportunities to become leaders and take positions in SOEs that align with their competence.
By 2021-end, the minister installed some young leaders under 42 years in several strategic positions, such as Soleh Ayubi, 38, who currently serves as Chief Digital Health Officer at PT Bio Farma. He formerly worked and built a career in the United States.
Muhammad Fajrin Rasyid is also among the young leaders who was promoted to become a director at PT Telekomunikasi Indonesia. He formerly served as Bukalapak co-Founder and President.
Productive Generation
The ministry is pressing for young leadership, since Indonesia will reach a critical momentum from 2024-2034 when young people under 40 years will become the majority in the country.
Young people will dominate and become the trendsetters in the market during the upcoming years. Currently, however, most of the Indonesian younger generation tend to be consumptive, not productive.
"We must change the mindsets, and how they can be productive and create the markets for Indonesian markets," Thohir noted.
To this end, they need to be assisted with a supporting ecosystem that helps them to develop their ideas and create breakthroughs.
Thohir spoke of his intent to build such an ecosystem, that could be very competitive among other countries.
He mentioned South Korea as a country that has successfully built its pop-culture ecosystem in the past ten years, compared to the US and Japan that had led the industry.
He is optimistic that Indonesia can also be the country that can build its own supporting ecosystem, as it has large infrastructures and SOEs in many areas, such as telecommunication, banking and tourism.
Indonesia is also projected to become the fourth largest economy in the world. Such a prediction will not remain a dream if the young generation prepares themselves well, Thohir noted.
"The opportunities will not come twice. We have built toll roads, airports, seaports, and other infrastructures. In the near future, we will build digital infrastructures, such as data centers, wifi, optic fiber, 5G tower," he said.
Women Empowerment
The role of women is inseparable in SOEs, since their ideas, thoughts, initiatives, and actions contribute to the companies' advancement.
Women leaders in SOEs mirror the ministry's efforts in enhancing equal leadership. They hold some strategic positions akin to president director, for instance, with President Director of PT Pertamina Nicke Widyawati, President Director of PT ASDP Indonesia Ferry Ira Puspadewi, and President Director of Airnav Indonesia Polana B Pramesti.
To involve more women in SOEs, the ministry incorporated with Indonesian Human Capital Forum (FHCI) and Indonesia's Plan Foundation also ran an empowerment program for young and talented women, namely the 2021 Girls Takeover.
The program offers opportunities for six young women aged 20-24 years who were selected from some 7,000 candidates, to play a role as an SOE ministers or director for one day to coincide with International Daughters' Day on October 11.
One of the finalists, Sharon Florencia, 24, shared her experience in taking over as SOE Minister. She acknowledged the valuable lessons she gained from Minister Thohir, especially from his leadership.
"During taking over as the SOE Minister, I observed the need to boost women's leadership through mentorship programs for women, as well as scholarship programs for those in eastern Indonesia who do not have equal access to education," she said.
Another finalist, Adinda Zenniar, 20, who took over for Bank Mandiri President Director Darmawan Junaidi, is keen on enhancing women's capabilities in digitalization.
"I see that the company plays an important role in enhancing women's leadership in information and communication technology by providing training and job opportunities for young women to work in this area," she said.
Young Papuans in SOEs
BUMN Muda (Young SOEs), a community under FHCI, plays an active role in developing SOEs' human capital, including young talents from Papua and West Papua, to become future leaders.
"We focus on human capital development of the young generation nationwide, including young talents from Papua and West Papua," BUMN Muda Chairman Soleh Ayubi said.
FHCI recruited 776 young Papuans by 2021-end. They were installed in 55 SOEs, reaching 77 percent of the realization from 1,000 talents targeted.
The forum strives to uphold the commitment to recruiting the best Papuan talents by improving the process and the SOEs involvement to offer them more opportunities, FHCI Chairwoman Alexandra Askandar remarked.
The commitment is in line with President Joko Widodo's policy to recruit 1,000 young talents from Papua and West Papua to work in SOEs across Indonesia.
Reporter: Juwita Trisna Rahayu; Editor: Fardah Assegaf (c) ANTARA 2022.
Photo: ANTARA FOTO/Dhemas Reviyanto/hp
Copyright 2022 ACN Newswire. All rights reserved. www.acnnewswire.comThe State-owned Enterprises (SOEs) Ministry aims to involve more women, millennials, and Papuans either in its companies or in the ministry itself, in a bid to build a diverse, equal and sustainable leadership.
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