Jakarta – The government will "right-size" or find the most appropriate form for 145 state-owned companies to optimize their profitability and operational cost efficiency, State Enterprises Minister Sugiharto disclosed the plan after a a meeting of 10 ministers led by Vice President Jusuf Kalla here Thursday.
The right sizing would be done with the particiaption of a number of related ministries.
"We have consultation here to discuss whether or not we need right sizing and not only down sizing (reducing the number of companies)," Sugiharto said.
Previously, Indonesia had 158 state-owned companies but the number had declined to 145 after 13 state-owned hospitals were turned into public health centers.
Sugiharto said, the government would make an inventory on companies that could be categorized as strategic and non strategic, which companies are still needed for public service.
He took the example of state-run railway company, PT Kereta Api which continued to suffer financial loss but the government would maintain the status on ground that it is still needed to serve the public in transportation.
After the inventorying, Sugiharto said, the government would conduct mapping and make a matrix on state enterprises which would be sold or be maintained.
"Insya Allah (God willing), the formulation will be completed within a month," he added. Right sizing has a different method with privatization, Sugiharto said, noting that the government would not privatize the companies until it could maximize their value.
The right sizing is necessary considering that of the total Rp30 trillion profit in 2004, some 80 percent contributed by 10 big companies and the rest came from other 100 state-run companies.
Among the 10 major companies are oil and gas company PT Pertamina and telecommunication company PT Telkom.
While the total Rp4.5 trillion of financial loss in 2004 was contributed by 10 companies, Sugiharto said without elaborating.
The right sizing, he continued, is also aimed to improve efficiency of operational cost for state-run companies running in the same field.
"For instance, if we have 15 companies in the same sector, is it necessary to have 15 directors while theie businesswa are the same. In the era of ITC (Information Technology Communication) many things can be done for cost efficiency," he said.
He said that alliances and synergy among state-owned companies could minimize their operational costs while increasing their productivity so that the companies could increase their dividends to the state.
"Insya Allah, within the next 5 to 10 years, there will be no more state-owned companies that ask the governemnt for for cash," Sugiharto said.
Present at the meeting were Coordinating Minister for Economic Affairs Aburizal Bakrie, Industry Minister Andung A Nitimihardja, Trade Minister Mari E Pangestu, Forestry Minister MS Ka'ban, Transportation Minister Hatta Radjasa, Agriculture Minister Anton Apriyantono and officials of the Communication and Information Ministry.