The public is seeing improvements made in the performance of state-owned enterprises (SOE) through a proposal to dismiss Garuda Indonesia\'s board of directors. That hope must be maintained.
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The public is seeing improvements made in the performance of state-owned enterprises (SOE) through a proposal to dismiss Garuda Indonesia\'s board of directors. That hope must be maintained.
The SOE minister proposed the removal of Garuda president director Ashkara Danadiputra and a number of other directors last week. The proposal was made after it was revealed there had been an attempt to smuggle a used Harley-Davidson motorbike and Brompton bicycles using an Airbus A330-900neo aircraft belonging to Garuda traveling from France (Kompas, 7/12/2019).
Even President Joko “Jokowi” Widodo himself commented on the issue, reminding members of boards of directors of SOEs not to “play around” any longer.
SOE Minister Erick Thohir promised to clean up not only Garuda, but also all SOEs. He also promised to clear up and streamline SOEs.
We welcome the government\'s firm steps while awaiting the continuation of the rearrangement of the organization and management of SOEs to be resilient to compete globally. There are 142 SOEs, some of them are in an unhealthy state. Moreover, a number of SOEs have a lot of subsidiaries whose activities are not related to the business of the parent companies.
Therefore, the government established SOEs dealing in a range of sectors, from clothing and plantations to airlines.
The government initially formed SOEs with the aim of managing state wealth for the greatest prosperity of the people. In carrying out development, the government needs institutions that drive the economy while providing the people\'s strategic needs, but they cannot be done by the private sector. Therefore, the government established SOEs dealing in a range of sectors, from clothing and plantations to airlines.
However, SOEs also have the task not only to earn profits like private companies, but also to become agents of development. SOEs enter strategic areas that must be controlled by the state and or not handled by the private sector for various reasons.
From time to time, not all SOEs grow in a healthy way because of mismanagement or because they are being used as a “cash cow” for crooked officials or corrupt members of the boards of directors of the related SOEs.
However, the total assets of Indonesian SOEs in 2018 amounted to Rp 8.092 quadrillion (US$568 billion), up Rp 882 trillion from Rp 2,210 trillion in 2017. Total profits grew to Rp 188 trillion from Rp 186 trillion in 2017.
In line with the changing era, SOEs are required to adjust to changes in the frame of good corporate governance while maintaining the role of development agents.
There is nothing wrong with considering the possibility of building an SWF through the synergy of SOEs to strengthen savings, stabilization and state investment.
What can be considered in the future is to direct SOEs to become a sovereign wealth fund (SWF), as a state financial vehicle that owns or manages public funds and invests them in broad and diverse assets. An SWF as a form of state savings can invest more funds to get greater returns. Many countries have world-class SWFs, including Temasek in Singapore, Khazanah in Malaysia and the Abu Dhabi Investment Authority in the United Arab Emirates. There is nothing wrong with considering the possibility of building an SWF through the synergy of SOEs to strengthen savings, stabilization and state investment.