Published articles

Rising the Bar


State Owned Enterprises Minister Dahlan Iskan is moving fast to improve the performance of the state firms.

By Ulisari Eslita

 I guarantee that what happened during the Garuda listing will not happen again.

Dahlan Iskan has been the minister for state-owned enterprises only since October of last year, yet in that time he has already moved fast to implement reform. According to Dahlan, 61, the number of SOEs, 141 in all, is too many and he wants to reduce them. He also has been moving authority out of the ministry and into the SOEs, to allow their directors to have more power—and more responsibility—in managing their firms. His style and his decision-making process are deeply influenced by his background as an entrepreneur and businessman. Starting with one newspaper, he built his Jawa Pos group into a media concern with 80 newspapers and magazines, 40 printing companies, and six local TV stations spread all over Indonesia. Dahlan also owns two power plants in East Java and East Kalimantan. Dahlan was from December 2009 until his appointment as minister the chief executive officer of the state power firm PT PLN. In trademark multitasking style, Dahlan conducted the interview with Forbes Indonesia while driving his own car (he doesn’t use a driver) in and around Bogor to appointments.

 

Forbes Indonesia (FI): What is your plan for the SOEs?

Dahlan Iskan (DI): We have 141 SOEs now. We need to resize them all, so I don’t have to attend all the shareholders meeting every two days.

 

FI:  Could you elaborate on the plan?

DI: We can’t apply one recipe in the SOEs’ resizing plan, because it will not necessarily fit all SOEs. We’ve prepared some actions under the plan, such as forming holding companies, and doing mergers and acquisitions. For instance, we are going to establish a plantation holding company for the state-owned plantation companies. We also plan to merge PT Barata Indonesia and PT Boma Bisma Indra [two engineering companies].

 

FI: How will you design the holding company for the plantation firms?

DI: We have already picked PTPN III [PT Perkebunan] as the champion to lead the plantation holding firm. The company will have 13 subsidiaries, PTPN I to XIV. Besides taking care of itself, PTPN III should take care of the subsidiaries.

 

FI: How is the resizing project going so far?

DI: We are now working on the government draft regulations for SOEs resizing. We are hoping by the end of this month to get it finished. After that, we will try our best to get approval on the draft, as we will pass the draft to the Finance Minister, the parliament and to the president.

 

FI: The resizing project will take time. Meanwhile, elections are two years away. Are you sure this project will be accomplished by 2014?

DI: The resizing project is not only the state-owned ministry’s work, but also involves institutions such as the Finance Ministry, parliament and the president. The important thing is I do my part as the SOE minister. In turn, I am also doing an intensive consultation with the finance minister so the plan can be realized as soon as possible. By text message or phone, we talk about resizing all the time, so we don’t have to wait until a meeting is scheduled.

 

FI: How initial public offerings? Which SOEs will be listed in the stock exchange this year? How will you manage it so it will not turn out badly as it did with Garuda Indonesia and Krakatau Steel?

DI: Yes, a few companies are going for IPO this year. They are Semen Baturaja, PTPN VII, Pertamina Geothermal Energy and Pertamina Drilling Services. We hope to have domestic investors be the biggest buyers of these SOEs shares in IPOs. The government, however, must hold no less than 51% shares in each listed SOE. I guarantee the IPO process will run very well since we let the process be managed entirely by the companies. It will turn out badly only if there is outside intervention during the process—such as politics, other business interests or both. I will not be involved in the process. I guarantee that what happened during the Garuda listing will not happen again.

 

FI: How do you see SOEs changing role in the country?

DI: I used to think the state shouldn’t run a business. In the contrary, it should be people whom run businesses. If they compete with each other, I’m sure people will lose. One can look at the U.S. and Germany, which don’t rely on SOEs and they are developed countries. But years ago, when we experienced the 1998 economy crisis, I changed my mind. I realized that my concern was misplaced. On the contrary, free trade is precisely what can hurt people. I think it is better for the state to do some businesses, as long as it is restricted to particular fields, such as finance, food and strategic industries. On the contrary, in the transportation sector, we do not necessarily need to have a state-owned transportation companies such as PT PPD or PT Damri.

 

FI: Can you give us an example?

DI: For instance, the banking sector. If we had a European-style crisis and all the banking institutions were private, the rupiah would be shaken and the economy would be getting worst and worst. In the contrary, we can stabilize the rupiah if we have some state-owned banks.

 

FI: After almost two years serving as the head of state-owned power firm PLN and half a year as the SOE Minister, what do you think about the state-owned companies?

DI: Generally, the state-owned companies move very slow, including the state-owned ministry itself. That’s why on the first week serving as a minister I bestowed 18 minister’s authority to the board of directors and commissioners in each SOE to make the bureaucracy more efficient and simple. Now each SOE company can make its own decisions very quickly since they don’t have to wait for my decision.

 

FI: Some people think SOEs here can’t be run efficiently and effectively because the board of directors doesn’t run the company as they should be. Any comments?

DI: The main thing I want to know is why do they can’t work well? If it is because of the working climate, then we have to fix it. If it is because of the directors, we will motivate them to do well or else we replace them.

 

FI: You made many breakthroughs while serving as the PLN CEO and now as the minister. Some people say that these were done to bolster your image. Is that true?

DI: That kind of issue really annoys me because if I didn’t perform, people would be mad at me. But what can I say? I’m a professional, I don’t engage in political debates. I just do the best I can do.

 

FI: Your background is a journalist and a businessman. Is it difficult for you to get used to your current position?

DI: To prepare for the job of SOE minister, President Susilo Bambang Yudhoyono already gave me “on-the-job” training for almost two years at PLN. So, more or less, I do understand. I just have to make so many reports, as well as meetings. I was a bit shocked at the beginning. I used to be the number one person in my company. I have no boss, I didn’t take any commands, and I have no one to obey. At PLN, I had so many bosses: the board of commissioners, the former SOE minister, the president and the parliament. As a minister, I still have bosses: the president, the coordinating minister and the parliament. Then I came to the conclusion that above the sky, there is another sky. For me serving either as a minister or as the CEO at PLN are life lessons.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s