Shoeb Kagda, Jakarta – A major turf battle for control of Indonesia's state-owned enterprises is unfolding between chief economics minister Rizal Ramli and the junior minister for national economic restructuring, Cacuk Sudarijanto, who is also chairman of the Indonesian Bank Restructuring Agency (Ibra).

Sources told The Business Times that Mr Cacuk, who as Ibra chairman already controls 85 per cent of the country's private corporate sector, is now attempting to also bring the over 100- odd state-owned enterprises under his command.

He is, however, facing stiff resistance from Dr Rizal, who wants to use the proceeds from the privatisation of the state-owned companies to fund his public infrastructure and agricultural policies.

"The two major sources of revenue for the government is going to come from Ibra asset sales and the privatisation of state-owned enterprises," said a well-placed source. "Whoever has control over both these institutions effectively controls the economy."

Just last week, Dr Rizal announced that he would require all state-owned enterprises to contribute one per cent of their net profit to programmes targeted at small families and small-scale enterprises.

BT understands that there is also some jostling between the two men on who has greater seniority in the Cabinet. Although Dr Rizal was appointed as the coordinating minister for the economy by President Abdurrahman Wahid, he falls behind Mr Cacuk when it comes to experience in running both private companies as well as state-owned enterprises.

Before he became Ibra chairman, Mr Cacuk was president director of state telecommunications companies PT Telkom and Indosat as well as headed Bank Mega, a privately owned medium-sized bank.

Dr Rizal, on the other hand, made his name as a brilliant economist when he headed the Advisory Group in Economics, Industry and Trade (Econit), a private think tank. He was appointed to head the State Logistics Board (Bulog) just earlier this year by President Abdurrahman before assuming his current position.

There is also a growing rift between Dr Rizal and Minister of Finance Prijadi Praptosuhardjo over the future direction of state owned Bank Rakyat Indonesia (BRI), which Mr Prijadi was once nominated by the president to head. He, however, failed the "fit and proper" test by the central bank in January.

While Dr Rizal wants to sell BRI's corporate loans book to other banks, which is estimated at around 6.2 trillion rupiah (S$1.2 billion), and return the bank to its core focus of providing loans to small and medium-sized businesses and agribusiness, Mr Prijadi argues that such a move would leave the bank without enough interest income to stay afloat.

The dispute also occurred just one week after the International Monetary Fund (IMF) agreed to the plan under the latest Letter of Intent. The Fund announced last week that it would release the next tranche of US$398 million but added that the government must continue to restructure the banking industry.

According to political observer Umar Juoro, the rift between the economic ministers is still manageable as it is more personality driven and due to misunderstandings. "I am not really concerned that it will explode like the previous economic team but such misunderstandings could hamper the implementation of policies," Mr Umar said.