Yearender - Govt likely to delay establishment of holding firms

"We expect only two state-owned holdings to be completed this year, while the rest are projected for completion in 2017," SOE Minister Rini Soemarno said.
Jakarta (ANTARA News) - The government plans to establish 15 state-owned holding companies to group by sector some 119 state-owned enterprises (SOEs) by 2018, according to the state enterprises ministry.

Currently, SOEs are operating in 15 sectors: energy security, logistics, tourism and culture, food security, plantations, health care, maritime affairs, construction and infrastructure, mining, manufacturing, strategic industries, telecommunications, financial services, housing and peoples economy.

Of the planned 15 state-owned holding companies, six are in the process of being established for energy (oil and gas), banking, mining, toll road and construction, housing, and food-holding companies.

The government has focused on only two of them for completion by the end of this year: PT Pertamina and aluminum smelter company PT Inalum in North Sumatra.

Pertamina, in the energy sector, will group together state-owned oil and gas firm Pertamina and gas distributor firm PT Perusahaan Gas Negara, while PT Inalum, in the mining sector, will group together PT Inalum, coal mining company PT Bukit Asam, tin mining company PT Timah, and multifarious mining company PT Aneka Tambang.

"We expect only two state-owned holdings to be completed this year, while the rest are projected for completion in 2017," SOE Minister Rini Soemarno said in Jakarta last month (Nov 17) after a meeting with Finance Minister Sri Mulyani.

However, over the weekend, on Saturday (Dec 10), the minister voiced some reservations, stating, "We hope to establish the two holding companies before the end of this year, but if (the work) gets delayed, (the plan) will be brought to fruition in the first quarter of 2017."

On the sidelines of the ceremony to celebrate the 59th anniversary of PT Pertamina, Rini noted that preparations for the establishment of the two holding companies were in the final phase.

Speaking of the remaining four holding companies, Deputy for SOE Restructuring and Development Aloysius Kiik Ro stated in Jakarta last month (Nov 23), "God willing, in the first quarter of 2017, those holdings will have been established."

Besides the six holdings currently being established, four others are still in the concept stage and will operate in the ship and heavy equipment, maritime, pharmaceutical, and insurance sectors.

"Those four holdings are still in the concept stage. We expect them to be established in 2017," Aloysius revealed.

Regarding the holding company for maritime firms, however, the SOE Ministry said it had conducted a study, based on which it intended to establish in 2017 a maritime holding company that groups state-owned port operators, shipping companies, shipbuilding companies, and industrial estates.

"The study on the establishment of the holding company has been completed. There are only a few more aspects that need to be improved and discussed," Deputy for Communications Infrastructure and Facility Business at the state enterprise ministry Pontas Tambunan said late last month (Nov 29).

State enterprises in the maritime sector that will be grouped under this holding company are PT Pelindo I, II, III, and IV; PT Djakarta Lloyd; PT Kawasan Berikat Nusantara; PT Kawasan Industri Medan; PT Kawasan Industri Makassar; PT Kawasan Industri Surabaya; PT Jakarta Industrial Estate Pulogadung; PT Pelni; PT ASDP; PT Dok Kodja Bahari; PT Dok Koja Surabaya; PT Industri Kapal Indonesia; and PT Pal Indonesia.

"The point of establishing a maritime holding company is to unite similar businesses, such as ports and industrial estates, to improve efficiency and create a larger business scale," Pontas noted.

The state-owned maritime holding company will also encourage the development of national connectivity as it could unite the Indonesian territory and accelerate regional development, he pointed out.

"Preparations for the establishment of the holding company are in the final phase," he added.

The formation of the 15 holding companies aims to strengthen the capital of companies engaged in similar businesses. According to Aloysius, the establishment of these companies is also expected to improve efficiency and add value to their operations, as strategic alliances that provide leverage could be created.

Earlier, SOE Minister Rini said she and Finance Minister Sri Mulyani were intensively discussing the details of preparations needed to form these state-owned holding companies.

The various issues they discussed included ways to establish a group related to the status of the companies and ways to integrate their assets. Apart from the 10 companies in the process of establishment or in the concept stage, five others remain under study. The government plans to complete the introduction of all 15 holding companies by 2018.

Of the 119 state companies in Indonesia, 20 are listed on the Indonesian Stock Exchange, based on data obtained in 2014.(*)