JAKARTA (TheInsiderStories) - Indonesia’s Ministry of State Own Enterprises (SOEs) has unveiled a major program to downsize the number of companies from 119 to 85 by 2019 through merger, acquisition and setting up new holdings, said the SOE Minister Rini Soemarno. The step is part of the SOEs contribution to support President Joko Widodo’s program, called “Nawa Cita”.
“State owned enterprises will be solid and become global players and are ready to face AEC (Asean Economic Community,” Minister of SOEs Rini Soemarno told reporters in Semarang, Central Java.
In four years, the ministry will set up holding companies for mining, shariah bank, general insurance, reinsurance, venture capital, ship yard, port fishery, Information & technology, air service and electronic businesses.
Food Stability
According to SOEs Vice Deputy Minister for Infrastructure Wahyu Kuncoro, Perum Bulog, the national logistic agency, has been given a target to manage food estate. The company also has a duty to develop on-farm (off-take) business. He added warehouse capacity will double to 15 percent from now only 7 percent of total national rice production of 43 million ton, therefore increasing its capacity to absorb farmers rice production. Bulog will also strengthen its food distribution network as well as strengthen overall function of Bulog.
He said Perum Bulog will manage the stocks and distribution of 11 basic food products, including rice, corn, soybean, sugar, beef, fish, chili, chicken and red union. To support the plan, other SOEs such as PT Sang Hyang Seri, PT Berdikari and PT Pertani will help Bulog to reach the targets.
“Later on, Bulog will establish a subsidiary that will focus on logistic and distribution business,” he said.
Holding for Mining, ships yard, air services and high tech
Deputy Minister for Mining, Primary Industry and Media Fajar Hary Sampurno said that now he oversees 25 state owned companies and in five years time, the SOEs under his office supervision will be downsized to become 9-10 companies. The purpose is to strengthen the SOEs’ businesses in areas of shipbuilding, mining and technology-based industry and aviation.
PT Perikanan Indonesia and PT Perikanan Nusantra will use Minajaya’s vessels—which have 100 tons capacity-in Makassar, South Sulawesi become storage for fishes. The SOEs, he said, now own shipyards in Sabang, Batam, Jakarta, Banjarmasin, Semarang, Cirebon, Makassar, Bitung and Ambon in Maluku.
“The purpose is to combine the strengths of the heavy equipment and shipbuilding industries. There are potentials to form holding. Some will be merged,” Fajar said.
Beside shipyards, he adding, the ministry will also set up holding company for mining companies engaging in gold, nickel, tin and aluminum.
PGAS and Pertagas Joint Investment
For energy business, Rini stated, the SOE Ministry would move ahead in merging gas producer PT Perusahaan Gas Negara (IDX: PGAS) and PT Pertagas, a subsidiary of PT Pertamina. In the first stage, she said, starting 2016, PGAS and Pertagas will jointly develop gas pipeline projects through acquisition or renting.
“We will start integrated development planning early next year, with PGN acting as lead. The urgent matter is that assuring there is no overlapping of gas pipelines in supporting the 35,000 MW power plant program,” Rini said.
Deputy Minister for Energy, Logistic, Economic Zones and Tourism Edwin Hidayat added that to secure gas supply for the projects, PGAS, Pertamina, PT Tambang Bukit Asam Tbk (IDX: PTBA) and PT Energi Management Indonesia will involve in power development planning with PT Perusahaan Listrik Negara to secure primary energy supply.
“The target is speeding up geothermal project developments, in which PLN partly own shares (co-share) in geothermal projects,” he said.
Financial sector
The SOEs Ministry is also looking to strengthen state owned enterprises that are involving in financial sector.
Gatot Trihargo, Deputy minister for financial sectors, said the ministry is also looking to set up a holding company for SOEs operating in venture capital businesses, namely PT Bahana Ventura, PT Perusahaan Nasional Madani (PNM) and a unit of Pertamina. The ministry also plans to set up an MSME fund to be led by PNM and a trading house for small medium enterprises (SMEs) led by PT Sarinah, with a long-term goal to create new “Alibaba firm” in Indonesia, referring to the Chinese giant e-commerce company Alibaba.
“We can establish endowment fund for all that can be a potential source of funds for SMEs. The trading house for MSMEs will be led by PNM, while the products (sold through the trading house) will be verified and certified by Succofindo,” he explained.
For banking business, the SOEs will merge their ATMs, EDCs, DRCs and IT business and back offices in order to reduce investment costs and making the banks to be operate more efficiently.
The minister also will set up a holding company for shariah bank called “Bank Syariah Indonesia” with estimated total equity of Rp 10 trillion and will have “Book Three” level. Currently, SOE’s bank have three syariah business units or subsidiary, namely PT Bank Mandiri Syariah, PT BRI syariah, PT BNI syariah, and a shariah unit of PT Bank Tabungan Negara Tbk (IDX: BBTN).
The other program is to merge state-owned reinsurance companies into single entity, called PT Reasuransi Indonesia, by Dec. 14, 2015, with a total assets after merger of Rp2 trillion and targeting to jump to Rp5 trillion by 2019.
“We are determined to ensure that state owned general insurance companies are strengthened so that their market share would increase to 20 percent of total general insurance market and life insurance can increase its market share as well to 40-50 percent,” Gatot said.
The other sector to be developed is the hospital business. According to Deputy Minister Aloysius Kiik Ro, the ministry will set up RS Indonesia network (backward integration) for 70 hospitals under SOEs. The first step for the project will kick of in 2016.
“Our dream is that 2-3 state owned hospitals can launch IPO (initial public offering) and establish center of excellent. We will issue government regulation (PP) for this move and hopefuly we can start the first phase of the plan next year,” he said.
Meanwhile, as for port expansion, Deputy Minister for Construction and Transportation Pontas Tambunan added that the ministry will set up a virtual holding for Pelindo I to IV. In the first phase, these companies will establish joint venture companies in liners, trucking and other businesses. (*)