Tulisan sim kuring di The Jakarta Post poe Senen kamari. Intina, ngeunaan korupsi. Politics behind disputes at state companies Opinion and Editorial - February 12, 2007 Tata Mustasya, Jakarta The ongoing disputes among top-level managements in the two giant state-owned enterprises -- PT Telekomunikasi Indonesia (Telkom) and PT Jaminan Sosial Tenaga Kerja (Jamsostek) -- should not be seen merely as management problems. Instead, these show the mounted attempt by Indonesia's main political groups to seek economic rents by exploiting state-owned enterprises. In reality, this kind of "competition" also often takes place at most other state companies, even those that constantly lose money. Both the CEO of Telkom, Arwin Rasjid, and the CEO of Jamsostek, Iwan Pontjowinoto, have been accused by their respective boards of commissioners of having failed to manage the companies properly. However, that issue is likely only a cover. The real issue is the CEOs have failed to accommodate the interests of some influential political groups, which have asked for special favors. For politicians, Telkom and Jamsostek are too big and too cash-rich to be ignored. Telkom is the biggest telecommunications firm in Indonesia. Meanwhile, Jamsostek -- which manages the labor insurance and savings scheme -- raised over Rp 35 trillion in new funds in 2005 alone. This ongoing phenomena really matters to Indonesia's economic and political climate. It maintains an unhealthy culture and rampant corruption in political life. No wonder, based on the most recent survey on the corruption perception index (CPI), the House of Representatives, bastion of politicians, has been seen as one of the most corrupt public institutions in Indonesia. The root problem is that political parties have never been able to build a permanent source of adequate funds to finance their operations. In mature democratic countries, citizens who support programs offered by any political party would not only vote for the party in elections but also would provide financial support. It means there are "legal exchanges" between favorable programs from political parties and donations from constituents. However, in Indonesia, most people are not willing yet to financially contribute to political parties. Compulsory dues by members of political parties are considered odd. As a consequence, political parties seek alternative sources of funding, which in many cases are questionable and are sometimes illegal. One of the financing sources often tapped by political parties or politicians is rents from state-owned enterprises. This opportunity has been created by the fact that politicians often have strong bargaining power vis a vis the top-level management of those enterprises by, at least, using two ways. First, they could strongly influence the selection process of commissioners and top executives. They propose and struggle for certain candidates and, in turn, these candidates promise donations after they get the positions. As political parties also already have power over appointments to the Cabinet, intervening in the selection of the management and supervisory boards of state companies is much easier. Second, House members could engage in the "monitoring and evaluation" of incumbent commissioners and top executives. If the management "satisfies" the political parties, they will survive and vice versa. The management, therefore, should always maintain good rapport with major political parties and this process certainly involves financial donations. Most of the top management at state companies have no power to resist the pressures from political parties or political leaders. This has even been experienced by State Minister for State Enterprises Sugiharto. A few months ago, some political parties urged President Susilo Bambang Yudhoyono to replace Sugiharto for some unobvious reasons. But this demand eventually disappeared and Sugiharto survived. This might be related to a win-win deal among the vested interest groups. As the political cost in Indonesia have been rising steadily state enterprises have been seen as potential cash cows by most political parties. Direct elections -- both general elections and regional elections -- require huge amounts of funds. Coming up to the 2009 general election, the years 2007 and 2008 could be the climax of political parties' campaign to raise as funds from state-owned enterprises. As a consequence, similar conflicts like those in Telkom and Jamsostek could hit other state companies as more parties compete to raise funds. State company managements certainly find it quite difficult to implement good corporate governance and at the same time satisfy political parties' hunger for funds, especially as the number of parties is quite big now and looks set to increase. Even managements that get full support from a political party could not rest assured of their positions because other parties might still jump in for a share and make a lot of noises to have their demand fulfilled. This is likely what Arwin Rasjid of Telkom and Iwan Pontjowinoto of Jamsostek are facing. Privatization -- which will abolish the opportunities for political parties to seek rents -- is the simplest solution. However, this is not feasible yet as most of those enterprises have core operations in strategic and vital industries like electricity, oil and gas, transportation and telecommunications. The government has an obligation to control these economic sectors to maintain reliable public service obligation (PSO) for financially disadvantaged citizens. Anyway, House members also have always been known to be the strong opponents of privatization as they are afraid of losing cash cows. Hopefully, civil society groups or organizations can be the vanguard in exposing subtefurges by political parties to collect rents from state companies and inform the general public of the quality of the financial accountability of political parties. The writer is an analyst with The Indonesian Institute, Center for Public Policy Research. He can be reached at [EMAIL PROTECTED]
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