Two Danareksa directors resigned

Two directors of state-owned investment bank Danareksa---Harry Wiguna and Wazhary Wardaya---have been asked to resign.

"They agreed to resign as of August," one executive at the state-owned enterprises ministry said.

Harry Wiguna, former director of Indonesia Stock Exchange (IDX), will be replaced, reportedly, by Stephanus Turangan who has just resigned from Deutsche Bank. Turangan was managing director of PT Mandiri Sekuritas, a subsidiary of Bank Mandiri. 

Meanwhile, Wazhary Wardaya will, reportedly, be replaced by Heru Adiningrat, former director of PT Mandiri Sekuritas, who is currently vice president director of PT Semen Gresik (SMGR) Tbk. 

READ MORE!!!

PGN divestment closed at Rp11,350, behind the story

MSOE Sugiharto had finally decided to sell 185 million shares of PT PGN Tbk at Rp11,350, slightly above majority of submission at Rp11,300. As a result, the so-called Malaysia investor's offer at Rp12,000 dropped. What's up?

Bookbuilders (Danareksa, Bahana & Credit Suisse) had apparently met the 'investor' from Malaysia who wrote a letter to minister Sugiharto that he could buy PGN shares at Rp12,000 with closing date of transaction on December 22.
"But when we confronted him with some questions, he sais just ignore his letter to the minister and let's talk. He claimed that he has the money, but payment should be extended to two months," one investment banker involved in the transaction said.
The Malaysia investor has close friend HL, who is also the confidante of minister Sugiharto.
"Well, it looks good, but with the potential increase in share price in two months, you could easily suspect of something if you receive such offer," he further said.
But the Malaysian denied that. "The truth, brokerage firms hired by government asked as to put on the table last night at the amount of USD247 million while the mechanism is T+3," representative of the Malaysian I met this morning said.
"We have no connection with HL. We have direct relation with the minister himself," he said.
"I'm not surprised if later on you'll find Credit Suisse take all the benefits of this transaction. We told them that we have OSK behind us to support, not CIMB nor PNM, but they just didn't care," he complained.
When I asked him why not bought the shares in the market at cheaper price, he said, " because we know government will divest 5.31% shares and then we sent the offering letter last Thursday."
It means this guy got information from the ministry prior to the bookbuilding. The question, why the Malaysian guy didn't submit offer to bookbuilders?
"My analysis, Sugiharto's connection like AS mounts pressure like...see, Jamsostek and Malaysia's PNB are behind this investor, so you better entertain them. But if the guy is a qualified investor, he should have submitted the offer to bookbuilders, not to Sugiharto," an analyst said.
Hm...interesting. Let's wait what Sugiharto will say this afternoon.
Antara quoted M Said Didu, secretary to the ministry of SOEs, saying the Rp11,350/share already a record for Indonesia because this is the first time such divestment got premium price. He should read archives!

READ MORE!!!

PGN divestment turns sweet & sour for Sugiharto

After more than one year of suspension, government finally divests 185.8 million shares of PT Perusahaan Gas Negara (PGN) Tbk, represents 5.31% outstanding shares, through bookbuilding process handled by Danareksa, Bahana, and Credit Suisse on Thursday.

The state-owned investment bank received huge demand from investors with 1.9 times of amount of shares on sale with average price of Rp11.300 per share, even though government actually offered 5% discount from Tuesday's closing. But things changed quickly when one investor, reportedly from Malaysia, submitted an offer to buy the whole shares at Rp12,150 which is 7% premium.
It was 3PM on Thursday. Danareksa stunned with the information because this 'ghost' investor was said to have direct deal with officers at the state-owned enterprises ministry.
"The bookrunners then start to ask who the hell is the guy. We're confused because if we quote the price at Rp11,300 while public get the information that someone actually offered better price for the government, we'll be under public pressure. But if we sell all the shares to that 'ghost' investor, the question is what kind of deal he/she has with the ministry," a dealer at Danareksa said.
"I'm not surprised if the Malaysian investor is the one with under-the-table agreement with certain officers. Or may be there is no Malaysian investor, but a proxy investor," said an investment banker in Jakarta.
"We're quite suspicious with the transaction. We even heard the so-called Malaysian investor was ready to buy at Rp14,000/share. But you know, it's just too good to be true," a Tempo editor said.
But the Rp11.300 is clearly not the best price. It reflects almost 17% discount from PGN's highest price this year. Politicians have something to play, especially those who want to mount pressure toward Sugiharto.
Kompas in its Friday edition quoted two legislators from PAN, Drajad Wibowo & Didiek J. Rachbini, criticizing government's failure to get the best price. They called it too low, too slow.
At the same time, these guys indirectly defended Sugiharto calling the divestment shown poor coordination about privatization and the intention behind it, which is merely to fill budget gap (this year's target is Rp3 trillion from privatization).
"Sugiharto might be blamed or charged for potential loss to the state and it's a corruption, but he could defend himself saying he sell PGN to meet the target set under the 2006 budget law and blame his colleagues in the cabinet. Blame games," a political analyst said.
This is big game. Those who have information about when Sugiharto will push the button might have bought PGN shares at very low price in the last few months and get the upside.
"The shares must have been swept at cheap price, and will get huge amount from the upside once Sugiharto push the button," other investment banker said.
That's a conspiracy theory. JSX suspended PGN shares trading on Wednesday. Prior to the placement, government controls 59.357% shares of PGN. The second largest shareholder is RS + Co International Ltd at 8.843%.

READ MORE!!!

The coup d'etat against Iwan Pontjowinoto

President Director of PT Jamsostek (Persero) Iwan Pontjowinoto, a close aide to minister of state owned enterprises Sugiharto, is facing a coup d'etat from workers and fellow board members.

Jamsostek workers union threathened to stage nationwide protest if government as shareholder failed to meet their demand to replace Mr Pontjowinoto, a former chairman of Sharia Economy Society (MES) and managing director at state-owned investment bank PT Danareksa (Persero). Workers described Pontjowinoto as an authoritarian leader and always intimidating other officers of the company.
Four board of directors joined the workers demanding the replacement and supported the vote of no-confidence in Pontjowinoto, the first of a kind in the country.
Internal rifts have put Mr Pontjowinoto on the hot seat, especially when he tried to give away Rp6 trillion of funds for stock trading to two state-owned investment banks, Danareksa and PT Bahana Securities. Board of commissioners and BOD vetoed Pontjowinoto's proposal though.
Jamsostek managed social security funds from 25 million workers in the country. As of December 2005, Jamsostek managed Rp36.85 trillion (US$4 billion) of which around US$2 billion invested in bonds and Rp14.75 trillion in bank deposits.
There are some reports of fishy deals at Jamsostek that have been filed to Corruption Eradication Commission. The previous CEO and investment director have been sentenced few years behind the bars in corruption cases.
But Sugiharto came quickly to defend Pontjowinoto saying government will keep the man in the job arguing the company's first quarter performance has been on track.

Read my previous posts on Jamsostek:
1) Iwan Pontjowinoto & our money
2) Jamsostek Airways
3) Shariah Principle on Jamsostek: Ooops...
4) Adi Sasono-Sugiharto Connection
5) Ahmad Djunaedi, the fugitive

READ MORE!!!

Titiek Soeharto off the screen tonight! Sugiharto surrendered!

Good news for those who protested to SCTV for having Titiek Soeharto (daughter of former president Soeharto) as the prime-time presenter for World Cup 2006 games. As reported by Detik.com few minutes ago, SCTV confirmed that Titiek will be off the screen tonight amid protest from spectators.

SCTV didn't confirm on a possible permanent off-the-screen of the former wife of general (ret) Prabowo Subianto. Detik.com did survey on dotcommers and the result is 85% football fans want Titiek completely out of the program. They feel annoyed with Titiek's sub-standard performance.
Meanwhile, this is completely nothing to do with Titiek politics and economics, state-owned enterprises minister Sugiharto finally lift his hands up on Cemex's plan to sell its 25.5% shares at PT Semen Gresik Tbk to Rajawali Corporation.
This is a good news for Rajawali and Cemex. I tried to tell football mania and asking their comments and they said: Who cares? Well, but Lin Che Wei (president director of Danareksa) wrote in Kompas today that with the decision of Cemex, one of the bridges to foreign investors is collapsed. "Really?", an annoyed journalist said. "Anyway, can FIFA move forward the Italy vs Ghana to, let say, 8 PM Indonesia Time?," he asked. "No, because it will make SCTV cancel their decision and Titiek will be on screen if FIFA do that."

READ MORE!!!

Gov't want to buy, Cemex rejects

Indonesia government had decided to exercise its rights to acquire Cemex SA's 25.53% shares in state-owned cement maker PT Semen Gresik Tbk through a consortium of SOEs, but Cemex is most likely reject the offer.


SOE Minister Sugiharto told the press after a meeting with coordinating minister for the economy Dr Boediono that government had sent the letter of intent to Cemex.
"But it's up to Cemex to decide," he said.
Bisnis Indonesia reported that Sugiharto asked Cemex to give two months time to exercise the right.
"The problem, legally according CSPA between government and Cemex in 1998, government can't transfer the right to buy. The legal opinion is that government has no legal basis to assign rights and to seek extension," source at the ministry said.
So, it's a matter of interpretation of the CSPA. Sugiharto (and Vice President Jusuf Kalla) argued that government could buy the shares outside the budget mechanism deploying SOEs.
SOEs like Jamsostek, Taspen, and Danareksa---all fund management companies would act on behalf of the government to buy after government decided to use its first right of refusal. This is not a surprise. Jamsostek led by Iwan Pontjowinoto (Sugiharto's colleague at Sharia Economy Society) claimed financing support for government to rescue the ailing flagship carrier Garuda Indonesia just days after Sugiharto openly said about the option to divest up to 49% shares of Garuda.
Minister of Finance Sri Mulyani Indrawati had turned down Sugiharto's proposal on Cemex arguing no state budget allocated but she said that she could understand if Sugiharto take another options.
But even if these SOEs would be allowed to buy, it's not easy to raise equity or to rely on their own funding. Bisnis Indonesia reported that Sugiharto have approached international lenders such as Macquarie Bank, UOB (Singapore), West LB (Germany), and Presidio Advisors (in partnership with PT Andalas Tuah Sakato, a company owned by West Sumatra administration). These companies claimed US$400 million funding in hands.
Cemex, reportedly, rejects the offer and only want to sell the shares to Indonesian company Rajawali Corporation owned by Peter Sondakh at US$337 million. Cemex and Rajawali had signed the conditional sales and purchase agreement (CSPA)to bring an end to long legal dispute with government.
So, the card is in Cemex's hands now. If the company reject Sugiharto's proposal and go ahead with the deal with Rajawali, I think Rajawali would feel the heat. But definitely it's also depend on how Rajawali deal with the government officers like Kalla and Sugiharto at the national level and local leaders in West Sumatra, East Java, and South Sulawesi---the locations of Semen Gresik's operations.

READ MORE!!!

Danareksa's poor performance

State-owned investment bank PT Danareksa (Persero) reported net loss of Rp182 billion (US$18.5 million) for financial year 2005 against net profit of Rp32.5 billion the previous year.
According to its financial report published Saturday (April 29), Danareksa booked total revenue of Rp225 billion, dropped sharply from Rp416 billion in 2004.
Why? The company recorded net loss of Rp18 billion in securities trading against net profit of Rp107 billion in 2004. The company's revenue from services also reduced significantly. Not to mention the heavy drop in revenue from issuance fee from Rp53 billion to Rp3.6 billion.
One may argue that Danareksa has huge debts. But the company's interests payment actually decreased last year to Rp128 billion (against Rp143 billion).
Bad loans chanelled in the past also cost the company huge allowance of losses at Rp111 billion. But even without that, Danareksa would still in red.
So, it is a combination of poor loans management in the past and poor performance of its operation last year. Danareksa's president Lin Che Wei, a confidante of state-owned enterprise minister Sugiharto, might has better explanation on why public will not get the dividend from the company this year.
An analyst, and one of the panelists at the presidential candidate debate in 2004 election, Che Wei surely has to proof that he has the capability to turn the state-owned company around.
With total assets of almost US$200 million, people can't afford to live with the loss-making state-owned companies.
Minister Sugiharto moved his office to Danareksa building since late last year for undisclosed reasons. He occupy the office previously for Danareksa's CEO. As a result, Danareksa had refurbished and built new office for Che Wei. Just like when then SOE Minister Tanri Abeng (during BJ Habibie administration) moved to Indosat building.
So, the problem is right in front of Sugiharto's nose. Should be easier to fix. At least the CEO could have been easier to make appointments with the minister, right?

READ MORE!!!

Holding for SOE mining companies

Government seems to be serious on establishing a holding company for the state-owned mining enterprises. Three publicly listed-companies, PT Aneka Tambang (Antam) Tbk, PT Timah Tbk, and PT Tambang Batubara Bukit Asam Tbk, will be under the new holding.
Bisnis.com reported today that the ministry of state-owned enterprises had written to Bapepam (Indonesia's Securities Exchange Commission) on the plan late last month.
The ministry reported earlier to the House of Representative (DPR) that these state-owned mining companies had met with legal, financial, and tax consultants to discuss the plan. The conclusion was the need to establish a holding company.
To implement the plan, the ministry had appointed independent consultants to work out on legal, financial, and capital market aspects. The name of the new holding is tentatively PT Indonesia Resources Company.
Late last year, five groups (Citigroup, BNI Securities-Trans Capita, Rothschild-SMC Silalahi Management Consulting, Danareksa-Boston Consulting-BNP Paribas, and Bahana Securities-Indo Consul) submitted their bids.

As quoted by Detik.com today, minister for state-owned enterprises Sugiharto said Citicorp, JP Morgan, Sumadipraja & Tale, and MS Tax had been appointed as consultants.

But an executive at JP Morgan denied the report. "We gave the idea of holding, but we're not interested to work on it," he said.
The ministry argues that a holding would boost economic of scale, improve synergy and accelerate the growth. The group would be able to takeover some shares to be divested by big companies like Freeport Indonesia and PT Bumi Resources Tbk.
Antam is strong in prescious metals, Timah in tin production, while Bukit Asam is a coal producer. Initial plan was to merge these companies but dropped for undisclosed reasons.
Antam, Timah, and Bukit Asam booked combined sales of Rp7 trillion (US$750 million) in 9 months 2005 with total profit at Rp1.18 trillion (around US$120 million).
Surprisingly, chairman of Bapepam Darmin Nasution said he didn't know the letter.

Director general of mining at the energy department Simon Sembiring raised the question about the plan saying such holding would only apply if the shareholders are all the same. "How could you establish a holding company if shareholders of the three companies are different," he said.

READ MORE!!!

News Roundup: Electricity & Corruption Cases

Electricity tariff hiked 200%

State-owned monopolist PT Perusahaan Listrik Negara (PLN) had raised electricity tariffs for certain groups of customers almost 200 percent amid rejection from industries and suggestion from president Susilo Bambang Yudhoyono to postpone the tariff hike.
Tempointeraktif.com reported that electricity tariff for industries and big customers had been raised, temporarily, from Rp439 per kWh to Rp1.380 per kWh, for their daily usages from 11 PM to 4 PM.
The new tariff applied to new customers and additional power. "The tariff hike would be temporary until there is certainty over basic electricity tariff hike," said Murtaqi Syamsuddin, general manager distribution for West Java and Banten at PLN.

Handoko dismissed, PDI-P put pressure on Firman Ganie
Following the intelligence on legislator scandal, National Police dismissed Sr Com Handoko from his post as chief of intelligence at the Jakarta Police. But PDI-P, the second largest party in the House of Representatives and the main target of the intelligence operation, isn't satisfied. The party intensify pressures on National Police to investigate Jakarta Police Chief Firman Ganie. The party belives it's almost impossible that Handoko carried out the operation without order and simply as his own initiative.

Syafruddin Temenggung case, new suspects

Prosecutors had summoned several witnesses in the corruption case of Syafruddin Temenggung, former chairman of Indonesia Bank Restructuring Agency (IBRA). They're among others Maman Soemantri, former deputy chairman of IBRA, Rinaldy Firmansyah (former director of Bahana Securities, currently finance director of PT Telkom Tbk) and Wazhary Wardaya (director of Danareksa, the state-owned investment bank). Sources told that Wazhary and Rinaldy might be named suspects along with Syafruddin.

Both Bahana and Danareksa were financial advisors for IBRA in the divestment of the sugar cane producer PT PG Rajawali III which is at the center of corruption charges on Syafruddin.

Atang Latief case, Husni Mochtar detained

Police detained Husni Mochtar, a close aide to the state debtor Atang Latief, for an aledged embezzlement of Latief's Rp40 billion (almost US$4.5 million) supposedly to pay Latief's Rp170 billion debt to Indonesia Bank Restructuring Agency (IBRA).

Investor Daily quoted police spokes person Anton Bachrul Alam that in 2004 Latief asked Husni to payout the former's debt to IBRA through divestment of PT Bina Multi Finance owned by Latief. The proceeds from the divestment, at the amount of Rp40bn, were embezzled by Husni, the police said.

Once Latief also transferred Rp10 billion to Husni for payment to IBRA, but Husni didn't transfer on the money to IBRA.

Hilton Hotel case, Golkar stand by the suspect side

Golkar Chairman Jusuf Kalla, who also Indonesia's Vice President, said the party is stand by Ali Mazi, Sulawesi Governor's side. Mazi, a former lawyer for Indobuild Co (owner of Hotel Hilton Jakarta), has been named suspect in the Hilton Hotel land scandal along with Pontjo N. Sutowo (the owner of Indobuild Co), Robert J. Lumampauw (chief of Jakarta land office), and Ronny Kusuma Yudistiro (former chief of Central Jakarta Land Office.

READ MORE!!!

Iwan Pontjowinoto and our money

My office normally cut Rp85,000 per month from my salary (which is already low) and send the money to PT Jamsostek. I can’t argue with accounting guys since it is a must, dictated by law. Otherwise, my office could be prosecuted of being against the law. Every six months, normally, I get status report of how much principal and accrued interests or yield, whatever is the name, had accumulated in my account at Jamsostek.

Frankly, I never really take a look at the report. First, the principal amount is just too small even though I’ve been Jamsostek member for more than a decade. Second, my colleges said don’t ever think to get the money easily back.

But when I think of number of co-workers, 400 staffs, that pay the bills to Jamsostek, I started to seriously reconsider my carelessness. My first question was, whether my fellow workers, and so millions of Indonesian workers, get better yields from their investment in Jamsostek.

So I decided to look at the yield column in my account statement. With simple math, I found that yield for 2004 was 8.5%, lot better than interest rates in my bank account.

My curiosity went further with an article published by The Jakarta Post (June 16, 2005) titled Jamsostek to invest more in stocks. The reporter quoted Iwan Pontjowinoto, newly appointed president director of the company. Mr Pontjo said Jamsostek is about to invest at least 15% of its total investment portfolio in stocks this year. How much is the total? Rp40 trillion or equals to US$4.2 billion. It means that Mr Pontjo will invest Rp6 trillion in stocks, increased dramatically from Rp3.44 trillion last year’s.

“Yields from investment in stocks are higher than any other investment portfolio,” he argued.

In the last paragraph, The Post quoted Mr Pontjo saying Jamsostek will invest more on government bonds this year though to help plug the state budget deficit. What? I hope Mr Pontjo as investment manager for all workers in Indonesia reconsider his motive. Jamsostek is not a political venture. By law, Jamsostek should put worker’s interest as an ultimate motive on its investment decision, not to serve political interests like state budget.

Good news is Mr Pontjo promised to give higher yields for my investment at Jamsostek this year onwards. Besides, he also pledged to simplify procedures, including implementation of IT system (he worked for IBM many years) so I could check my account easily.

History is important though. I don’t want to be skeptic on Mr Pontjo. He is an investment banker, former director of PT Danareksa (Persero), the state-owned investment bank. Even though we have to remember that he left the company in 2001 with Rp2.65 trillion debts and productive assets of Rp1.5 trillion only.

In addition to that, Supreme Audit Agency (BPK) found 10 irregularities in Danareksa with potential loss of hundreds billion rupiah. One of BPK’s findings was cross currency swap facility given to PT Jakarta International Hotel and Development (JIHD) which end up with Rp70.8 billion loss for Danareksa.

Unfortunately, none of Danareksa’s board of directors being prosecuted, in contrast with recent investigation on Bank Mandiri loan irregularities.

Now, we have Mr Pontjo at the helm of an important fund management company in the country. Sources at the ministry of state-owned enterprise (SOE) said his appointment was mainly minister Sugiharto’s decision, supported by Aries Mufti (expert staff at SOE ministry). Sugiharto and Muftie were board members of Sharia Economic Society (Masyarakat Ekonomi Syariah, MES) where Mr Pontjo is the chairman.

Well, my friend told me nothing wrong with that as long as he could give better yields for workers who pay regularly and as long as he will not lead Jamsostek to debt-ridden company like Danareksa simply because of misallocation of funds under management. So, watch your investment.

READ MORE!!!

Cabinet Hall of Shame!

While too early to conclude, president Susilo Bambang Yudhoyono already shown signs that he might reshuffle cabinet lineup. In fact former minister Kwik Kian Gie, a close friend of Mrs Megawati Soekarnoputri (former president), had proposed cabinet restructuring to President Yudhoyono. Kwik claimed Yudhoyono warmly welcome his proposal for smaller number of ministers, say around 20, very much downsized from the current 34.

We don’t know exactly when he might do that or who might be kicked out. If newspaper articles could be considered valuable source of backgrounds, several ministers surely under public scrutiny and might be the target. Below could be some of them.

Hamid Awalludin (minister of justice and human rights affairs). Hamid might be inflicted by corruption scandal at General Election Committee (KPU) where he is accused of getting US$105,000. Hamid denied the allegation.

Rahmat Witoelar, minister for environment affairs. House Committee on waste materials import accused Witoelar of inadequate response to solve the increasing influx of dangerous waste materials to the country.

Aburizal Bakrie, chief economic minister. Some economists attacked his incapability in handling economic team under SBY’s cabinet. Besides, one company called PT Bakrie Telecom, a subsidiary of Bakrie & Brothers (Aburizal is the owner), is under investigation of loan irregularities at Bank Mandiri. Aburizal denied any wrongdoing on the loan. Aburizal was one of the largest bad debtors in the country with about US$500 million.

Yusril Ihza Mahendra, minister of state secretary. He is the leader of Partai Bulan Bintang (Crescent Star Party). Rumors said investigation on Bank Mandiri’s loan to PT Domba Mas might disclose relationship between Yusril and Susanto (owner of Domba Mas). Susanto is rumored to be major financier for Crescent Star Party.

Adhiyaksa Dault, Minister for sport and youngster affairs. He was missed a discussion on sport conducted by journalist as he was sleeping beauty and awoke late. It was late October 2004, just weeks after his appointment as minister by SBY.

Sugiharto, Minister of State Owned Enterprises. He installed two of his friends at Sharia Economic Society (MES) as expert staffs at the ministry. Sugiharto was treasury of MES. He also appointed chairman of MES as president director of Jamsostek while the man is accused of put Jamsostek into financial loses when he was director of Danareksa. Jamsostek losses were US$8 million, but no investigation ever conducted. Sugiharto also wrote a letter to Vice President Jusuf Kalla regarding names to be promoted as directors of SOEs.

Muhammad Mar’uf, minister for internal affairs. He installed four Makassar-born officers out of 11 newly appointed first echelon staffs at the ministry. Makassar is hometown of Jusuf Kalla. He denied ethnic-based appointment, saying it just a coincidence.

The list of Cabinet Hall of Shame could be longer in the next few weeks.

READ MORE!!!

Payday

In a country where one third of the economy is controlled by state-owned enterprises with huge political intervention, the selection of its executives often neglects merit system. No matter how good is your professional achievement, if you never invest in political process you will end up only in private-owned enterprises.

No matter how bad is your track record, a close relationship with power holders, is surely valuable to be CEO of state-owned enterprise. And even if you made political investment but went to wrong party, you had risked your job.

Some might say, this argument is only valid under Soeharto’s 32-years authoritarian regime. Especially for those who believe reform (reformasi) movement has changed the way we govern the country.

But wait a minute! Is it a coincidence that different presidents have different CEOs of SOEs?

Look at Pertamina, the largest SOE in Indonesia. Soeharto had Faisal Abdaoe as the last CEO, then BJ Habibie with Martiono Hadianto, Abdurrahman Wahid with Baihaki Hakim, Megawati with Arifi Nawawi and Widya Purnama, and now SBY about to kick Widya out and will have new appointee there. First round already started with major shakeup in board of commissioners where Martiono now as the chairman.

And PT Telkom, the largest listed company in Jakarta Stock Exchange. AA Nasution under Soeharto and Habibie, then Muhammad Nazief under Wahid, and Kristiono under Megawati. In the last few months, many parties have tried to get Kristiono’s post.

The same could be seen in almost all SOEs, especially big companies like Bank Mandiri (the largest bank), Garuda Indonesia (flag carrier), or Jamsostek (the monopoly on social security). SOE Minister Sugiharto just installed new boards in Garuda and Jamsostek. Bank Mandiri will be the next. Partly because of poor handling of bad loans related to high profile businessmen or former military officers, and probably of strong affiliation with previous presidents (Wahid and Megawati).

Analyst Lin Che Wei is seen as the strongest candidate to lead Danareksa (largest investment bank). Che Wei is an advisor for Sugiharto. Is it because of Zas Ureawan’s (current CEO) poor performance? Is it because of corruption committed by the board? Is it because his close relationship with Taufik Kiemas (Megawati’s husband) and bet on looser candidate in presidential election?

Surely most of the executives in SOEs made political investments (not necessarily ideological) but some made right investment (to the winning candidate) and some wrongly and publicly supported the looser. It’s payday for those winning investors. It is the winner takes all.

READ MORE!!!

Syariah principle on Jamsostek, oops on cronysm

A staunch proponent syariah guy has been appointed as CEO of PT Jamsostek, the holder of monopoly rights of millions of Indonesian worker’s social security insurance and the largest player in Indonesian financial market with Rp33 trillions of assets under its management.

I didn’t realize when state-owned enterprises minister Sugiharto said few days ago that Jamsostek should implement more Syariah principles in its businesses. Hopefully the appointment of Mr Iwan Pontjowinoto is not a mere justification of Sugiharto’s decision.

We have to understand that Mr Pontjowinoto is the chairman of Syariah Economic Society (Masyarakat Ekonomi Syariah) where Sugiharto was one of its board members.
It is not clear what kind of syariah principles to be implemented at Jamsostek by Mr Pontjowinoto, a former managing director of state-owned investment banking company PT Danareksa, clearly not run with syariah principles in his tenure.
Neither is clear whether it means Jamsostek will significantly overhauls its investment portfolios, which are heavily in the stock market and financial market instruments.

But one thing is clear that Iskandar Z Rangkuti also appointed as director of Jamsostek in charge of investment. Rangkuti was former director of PT Bank Syariah Mandiri, a wholly owned subsidiary of state-owned PT Bank Mandiri. Bank Syariah Mandiri is running a bank according to syariah principles.
Before the formal assignment, Rangkuti told the press that he will introduce syariah mission into Jamsostek.

Should this happen, the law on worker’s insurance must be changed. Jamsostek is not only take care of Moslem workers, but other faiths, so by law, Jamsostek is a secular institution regardless of faiths. Should Jamsostek be directed according to syariah principles, there must be another institution for those who don’t want syariah principles, in other words we should strip off Jamsostek’s monopoly.

On the investment side, last year, Jamsostek invested almost 44% of its funds in bank deposits and 43% in bonds, both earning interests, which is not line with syariah principles. Any changes in the portfolio allocation will have significant impact on Indonesian financial market and syariah instruments will boost accordingly.

But since Jamsostek should return the funds to workers, government and board of directors of Jamsostek should ask first the workers whether they accept the syariah principles and its impacts on their investment.

Except that the appointment of new board has nothing to do with the new direction of Jamsostek or just a justification for Mr Sugiharto to put his friends there.
It is nice to expect that the syariah-leaning guys at the helm of Jamsostek will combat the corruptive mentality with syariah principles as well and to put corruptors in jail. That’s syariah.

Other figure, Tjarda Muchtar, appointed as director, is a Golkar (the largest political party in Indonesia) politician and a close friend of Manpower and Transmigration Minister Fahmi Idris. In combination with Mr Pontjo, the board changes, is only confirming the fact that nothing changed in government’s policy regarding SOEs. Forget about merit system. Juts like old days, it is just about political appointees.

READ MORE!!!