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Indonesia drops plan to establish own Temasek

Jakarta Globe - December 2, 2019

Antara, Jakarta – New State-Owned Enterprises Minister Erick Thohir has said he would drop a plan by his predecessor Rini Soemarno to establish a super holding company for state-controlled companies in the mold of Singapore's sovereign wealth fund Temasek, and replace it by rearranging the companies into smaller groups with clear core businesses.

"Instead of a super holding company, we'll form sub-holdings that can focus on each business unit's activities," Erick told the House of Representatives' Commission VI in a meeting on Monday.

For starters, Erick said he was unlikely to merge port operators Pelabuhan Indonesia I, II, III and IV under one holding company.

Instead, the government will establish separate port operators to manage different activities, including container shipping, bulk shipment and marine catch. They will replace the current region-based port operators.

"I went to the Tanjung Benoa Port in Bali yesterday. [The port arrangement] was very counterproductive. It's impossible to have operators for containers or bulk shipping operate side by side with an operator for fish catch," Erick said.

He also named flag carrier Garuda Indonesia as a company on the verge of restructuring.

The airline now owns an airport handling management which should run under airport operators Angkasa Pura I or II in the first place, Erick said.

"Why should there be overlaps [of authorities] that will eventually become counterproductive?" he said.

Erick's predecessor Rini revealed in April a plan to establish a super holding company similar to Singapore's Temasek or Malaysia's Khazanah.

Rini's plan emerged after President Joko "Jokowi" Widodo revealed an idea to manage state-owned enterprises under several themed holdings and a super holding company above them in a presidential debate in April.

As of today, the State-Owned Enterprises Ministry already has six holding companies, including Indonesia Asahan Aluminium (Inalum), a holding for state mining companies, and Semen Indonesia, for cement companies.

Source: https://jakartaglobe.id/business/indonesia-drops-plan-to-establish-own-temasek