Indonesian government ready to inject capital Rp22 trillion (US$1.48 billion) to state-owned insurance firm, PT Asuransi Jiwasraya through PT Bahana Pembinaan Usaha Indonesia - Photo by SOEs Ministry Office

Jakarta (TheInsiderStories) – Ministry of State Own Enterprises (SOEs) has picked PT Bahana Pembinaan Usaha Indonesia (BPUI) to lead an insurance holding company, the official said last week. The ministry hope that the formation of insurance holding completed in October, 2019.

Deputy minister for SOEs Gatot Trihargo claimed, the ministry had completed a feasibility study related to establishment of the insurance holding. BPUI will manage PT Asuransi Kredit Indonesia, PT Asuransi Jasa Indonesia, PT Asuransi Asei Indonesia, PT Reasurance Indonesia Utama (Indonesia Re), and PT Reasurance Nasional Indonesia (National Re).

After the finalization of other financial businesses restructuring, the ministry will form a financial services holding to manage four state-owned lender, namely PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Bank Tabungan Negara Tbk (IDX:BBTN), PT Bank Mandiri Tbk (IDX:BMRI), PT Bank Rakyat Indonesia Tbk (IDX:BBRI), and PT Pegadaian under financial company, PT Danareksa.

The country’ Financial Service Agency and the central bank have both been pushing for banks to merge to shore up the companies equity. The regulators want only halve of 120 banks operating across the archipelago.

Commenting on the planned, CEO of Bank Mandiri Kartika Wirjoatmodjo pointed out through the program the state-owned banks could combine the automated teller machines (ATMs). It will help to cut the operation costs of the lenders and drive the capital of the banks.

While, CEO of BBNI, Ahmad Baiquni was optimistic after the financial services holding establish the SOE’ bank coil compete with the existing banks in Southeast Asian (ASEAN) region. Now, only Bank Mandiri hass listed as among the top five largest banks in ASEAN, as its assets reach Rp1,000 trillion or around US$750 billion.

Currently, said Trihargo, the unfinished-holdings are infrastructure, insurance, housing, industrial estate, port, defense, pharmacy, cement, and financial sector.

Recently the ministry official has mentioned toll road operator PT Hutama Karya will lead infrastructure companies and state-owned property developer, PT Perumnas in housing sector. But no cleared information the leader of industrial estate, port, defense, pharmacy, cement, and financial sector.

The minister Rini Soemarno has been assigned a special task by President Joko Widodo to merge SOEs under holding in six sectors, namely, mining, oil & gas, infrastructure and construction, housing, financial services, also food commodities.

So far, the ministry has succeed established two holding companies in mining lead by PT Indonesia Asahan Aluminium and Oil & gas holding under energy producer PT Pertamina. The complicated rule and administration become the handicap on the SOEs moves to create new holdco.

The holding companies is very important to strengthen the companies, as well as making them more efficient and transparent. Thus, the reasoning goes, SOEs will gain the capacity to compete not only in the domestic market, but also against multinational corporations on a global scale.

Its expect, the holding establishment aims to ease command and monitoring. It will also be more effective in terms of company’ operation. So state-owned enterprises can act not only as bureaucracy, but also as corporation.

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