Jamsostek management brawl

Jan 22, MSOE Sugiharto issued a decree to revoke Jamsostek's board of commissioner decision to oust Iwan Pontjowinoto from his posisiton as CEO. Sugiharto, a friend of Pontjowinoto, resumed the former Sharia Economy Society (MES) chairman to his position with off duty status.

The ministry hopes the latest decree would ultimately end the 1.5 year internal dispute at Jamsostek. Sugiharto appointed Wahyu Hidayat, official at the ministry, as interim deputy president director in charge of daily operation of Jamsostek.
The company's workers union regrets Sugiharto's decision even though some say that would be the most sensible thing to do to prevent further conflict in the state-owned company. Workers union supports BOC's decision to have Pontjowinoto ousted. But SOEs Workers Union Federation and SOEs legal aid institute (LBH BUMN) urged Sugiharto to replace BOC and Ahmad Andi (the one appointed by BOC to be interim CEO) instead. They even plan to file a report of power abuse to Corruption Eradication Commission (KPK).
As a worker with regular payment to Jamsostek for almost 15 years, I don't really care who will be the CEO or BOC of the company or which political group he/she is associated with. I care only about the return Jamsostek give for my investment over the last 15 years and the rights of millions of fellow workers in the country to get payments easily without being corrupted.

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Iwan Pontjo ousted, Sugiharto rejects

Board of commissioners of state-owned social security company PT Jamsostek ousted Iwan Pontjowinoto from his post as CEO, Kompas Cyber Media reported.

The decree was signed by Prijono Tjiptoherjanto (president commissioner) with approval of three other commissioners last night. Why?
The board argued no chemistry between Mr Pontjowinoto, former managing director of state-owned investment bank PT Danareksa, and stakeholders. Jamsostek workers union had filed petition to replace Pontjowinoto. Jamsostek managed Indonesian workers fund of UD6 billion.
The board appointed Andi Ahmad M. Amien, director at Jamsostek, as interim CEO. What a mess in the board changes of SOEs in the last few months after what's happened at Bukit Asam, PGN, etc.
It's interesting to see MSOE Sugiharto's response to the crisis, especially the fact of their close relationship. Muhammad Said Didu, secretary to the ministry of SOEs, said Sugiharto sent a letter to BPKP (development & finance supervisory agency) asking for an audit on Jamsotek. I bet Sugiharto is buying time with the move.
Didu admitted the board of commissioners have the rights to oust Pontjowinoto according to the company's deed. "But whether the conditions met, I don't know yet."
On Sunday, Sugiharto defended Pontjowinoto saying his friend can't be ousted, unless he committed crime acts. The minister also defended Jamsostek's performance under Pontjowinoto's leadership.
SOEs Workers Union (SP BUMN) rallied behind Sugiharto and calling for replacement of Jamsostek board of commissioners instead. SP BUMN accused Jamsostek's workers union (SP Jamsostek) of politicking the replacement of Pontjowinoto.
Well, I bet both sides are playing politics. We need strong leadership of President SBY to end the dispute. Wouldn't he?

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Cabinet reshuffle preview

What's the urgency of a cabinet reshuffle if the leaders (President & VP) can't agree early on about their future, especially what kind of arrangement for 2009 election?

"Well, our real problem is the conflict betweeen the inner circles of both President & VP. Level of trust has been eroded in the past two years. President's inner circle suspicious about the VP and vice versa. This is not healthy at all, and a cabinet reshuffle would useless in such situation," one political analyst said.
Such resolution will work only if both leaders agree to run as a team in 2009, right? What if they decide to compete?
"That's gonna be disaster," he said.
Despite the skepticism, rumors about cabinet reshuffle have been intensified in the political circle. MSOE Sugiharto, for example, is rumored to be replaced by Sofyan Djalil (the communication minister). This is not new. Sofyan was member of Lembang Nine, success team for VP Kalla. Other name mentioned is...

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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!

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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%.

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PPA offloads Jasa Marga bonds

PT Perusahaan Pengelola Aset (PPA), a company established to manage assets left after the closure of Indonesia Bank Restructuring Agency (IBRA), has started the sale of two bonds issued by PT Jasa Marga for the Jakarta Outer Ring Road (JORR) project with combined outstanding of Rp440 billion. PT Indo Premier Securities, once linked to people close to MSOE Sugiharto, acts as selling agent and financial advisor for the offer.

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SBY vs JK in the brawl over SOEs

Below is the list of brawls between SBY & JK over important issues at state-owned enterprises, including the management selection (member of the board of directors plus commissioners). It's almost similar with their competition in overseas trips (state visits). It's everywhere! Anybody has the original version of SBY & JK memorandum of understanding on how they would share the power when they decided to join forces in 2004 election?

The recent 'mini' reshuffle at the state-owned oil and gas company PT Pertamina could well explain the brawl. "It's clear that the former chairman of board of commissioner Martiono Hadianto couldn't get along with board of directors. Internally, we could sense that," one Pertamina executive told me this morning.
"The replacement is not merely a management issue, it's a political issue. Everybody knows Martiono was seen as VP's man, while his successor has close relationship with the president," said one executive at SOE who happens to be proposed by MSOE Sugiharto as commissioner at Pertamina but failed to get approval from The Final Evaluation Team (TPA, which selects executives for SOEs).
"Now the balance at Pertamina is two VP's men and two president's men, another one represents SOE Ministry who happens to be close confidante of Sugiharto," executive at the MSOE said.
A week before that, major shakeup occured at another giant SOE, PT Perusahaan Gas Negara (PGN) Tbk. This time, Sutikno named as the new CEO, replacing WMP Simanjuntak (appointed president commissioner).
"Some says Sutikno got the position thanks to strong lobby from PAN's chairman Sutrisno Bachir. But don't expect they'll confirm that. Sutikno is known for his close relationship with Amien Rais, key patron leader of PAN. So, this is a political bargaining as well," another SOE executive said.
But where is the brawl?
"Actually, VP proposed other candidate for PGN but TPA picked Sutikno. As a result, there is on-going battle for other posts still vacant," the executive said.
The ugliest brawl is actually at PT Tambang Batubara Bukit Asam Tbk, the state-owned coal producer. TPA has yet to decide the executives and leaving the company in the hands of board of commissioners for almost one month now.
Similar situations have been emerged at other giant SOEs like PT Telkom Tbk and PT PLN. Look at how the board of commissioner of Telkom led by Tanri Abeng (key ally of VP) sent a letter to Sugiharto in late August asking for Arwin's replacement.

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Holding vs merger of state-owned banks

Responding the Central Bank's Single Presence Policy (SPP), government has launched an initiative to establish a holding company for state-owned banks (Mandiri, BNI, BRI, BTN & BEI). But some prefer merger of these banks. Which one is better?

Legislator Drajad Wibowo (former commisssioner at BNI) told Koran Tempo today that merger would be better to create a stronger bank. His view is completely different with his stance few months ago when he agreed on a BNI-BTN merger plan but rejected a Mandiri-BNI merger arguing the latter would create an overlap functions.
State-owned enterprises minister Sugiharto said earlier that government is reviewing the plan to respond Central Bank's policy. Establish a holding bank, either vertical or horizontal structure, is among the options available besides the merger. Kompas quoted Sugiharto last week saying out of so many options available, the holding company is the option left for further review. The review would be to decide whether to pick one bank as the operating holding or establish a new non-operating holding.
So far, there is no clear guideline from government about its policies on state-owned banks. VP Jusuf Kalla prefers a merger of Mandiri-BNI because of their similar functions, but keep BRI and BTN as independent banks with speficic tasks (BRI for SMEs, and BTN for housing). Guess why?
Previously some politicians argued against the merger saying that would be politically too sensitive. But Drajad told Tempo that a merger would be more sensible politically. Drajad's colleague, Dr Aviliani, who is also member of board of commissioners at BRI, prefers holding than merger. I'm not sure whether her view represents the BRI board or not. Drajad & Aviliani were economists at INDEF (think tank).
After the fuss over SBY's newly established team, it's interesting to watch the competition between the two camps (SBY & JK) over the holding vs merger issue.
Early this year, government scrapped a BNI-BTN merger plan on strong opposition from legislators and the management/workers of BTN. So, I just can't imagine the scale of political opposition on the merger of 5 state-owned banks.
Merger is also considered a violation of Govt Regulation No. 28/1999 about the merger, consolidation, and acquisition of banks which stated the bank emerged of the merger should not have assets more than 20% of the total national bank assets. The merger of 5 state banks would create a bank with 38% of national bank assets, Kompas reported.

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Infrastructure Summit (Too)

Infrastructure Summit II has entered the second day with foreign creditors flocked to the arena to extend their credit lines. With them, are insurers like OPIC or state-sponsored export credit agencies like China EXIM and brokers/investors. Wish I could be there. But I have some blogger fanatics there to report what's going on.

"I hardly found people with white-hair, white people (bules). I'm afraid most attendees are Indonesian brokers/proxy-investors," said head of US investment bank in Jakarta.
"Well, the fact that most attendees are black-hair (excluded bules with black hair), few bule, shows the emergence of China as the new global power in investment. I met some real investors from China, including guys from EXIM Bank of China. I guess the US investment banker discounted too much other-than-bule investors..he3," another banker clarified.
"Besides, most global investors have their representatives in Indonesia and increasingly headed by Indonesian, black-hair," a head of local investment bank argued.
"You're dead wrong when you wrote that Indonesia government rejected US investor's plan to build US$2 billion coal-fired power plant in South Sumatra. The fact, your newspaper printed the story as headline today," one reader complained in an email this morning.
"You're just too cynical about the Summit and its impact. No investor would jump-in just like that, pouring hundreds of million dollars on something. Government deserved second chance with The Summit," another reader wrote.
How good the cabinet's performance there?
SBY: OK
JK: Like usual, sharp (sometimes scared investor off), plain business language (English so...)
Boediono: Good
Sri Mulyani: Good
Sugiharto: So...
Poernomo: So...
Hatta Radjasa: Good
On average, good...(These guys are good in drafting presentations, hopefully better in drafting & implementing what they've written)
Well, deep down my heart, I always hope the best for the nation, and thanks for those who come to town from thousand miles away and flocked to the conference. I'm sure the organizer also get very good return from its investment. I could only echoe the wishes of many people: Government and other parts of the society should make up their minds, get things done, move fast, don't spend too much time in conferences/seminars but rather behind the desk, making decisions, checking the implementation of programs in the field, and reviewing what's left behind or cynicism prevails.

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Workers union urge SBY to kick out Sugiharto

State-Ownes Enterprise Workers Union Federation (FSP-BUMN)urge president SBY to kick out Minister Sugiharto for poor performance, Detik.com reported. This would heat-up the internal conflict at the ministry, already divided with competing political groups/motives.

FSP-BUMN said the conclusion was made based on a survey with 10,000 SOE workers as respondents. Go to detik.com story for a complete report.
FSP-BUMN is in legal battle with Sugiharto's camp after Lendo Novo, one of his right-hand men, filed lawsuit against the organization which claimed to have 8 million supporters for defamation. Lendo filed the lawsuit on FSP-BUMN's statement that Lendo's ad hoc team to investigate corruption at SOEs have squeezed BODs and have been selective in eradicating corruption at SOEs.
At the same time, some groups reported MSOE's secretary M. Said Didu for alleged corruption. Didu's supporters consider this move as part of Sugiharto's camp campaign to kick Didu out of the ministry.
In another not-so-unrelated development, yesterday, members of Geram (Anti-Corruption Student Activists Movement) three rotten eggs to Hendarman Supandji, deputy attorney general for special crime. Geram mad at Supandji because he was believed to be the one who set free Eddie Widiono, state-owned electricity company PLN CEO. Widiono, detained for few months, was in a meeting with VP Jusuf Kalla at PLN's headquarter discussing 'crash program' on development of 10,000 MW power plants when Geram throwing the rotten eggs to Supandji.
Supandji himself is under the spotlight following the accusation of Rusdi Tahir, former Jakarta Attorney Chief, that the former regularly intervene the prosecution of corruption cases.

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The Richest Indonesians & The Ironies

What a coincidence! Out there, Dow Jones quoted Forbes Asia's rich list, naming Sukanto Tanoto (owner of Raja Garuda Mas/RGM) as its Indonesia richest. At home, newspapers quoted SOE Minister Sugiharto pledge his support for state bank PT Bank Mandiri Tbk to take legal action toward recalcitrant debtors. Mandiri had named RGM as one of the debtors with no good faith.

While it's difficult to verify the exact figures, Sukanto's wealth according to Forbes reached US$2.8 billion, well above Putera Sampoerna (2.1), Eka Tjipta Widjaja (2), Rahman Halim (1.8) or R. Budi Hartono (1.4) and Aburizal Bakrie (1.2). In the previous list, Forbes named Halim as Indonesia's wealthiest while Sukanto was not even in the top five list. Wondering how the Forbes list has changed so significantly in the last few months.
Detik.com reported Sukanto is still in the police's fugitive list. But I'm not sure whether he is listed there still.
It's true that Sukanto once named a fugitive. His name also linked closely with Unibank which was closed down in 2001 but none held responsible for third party liabilities in the bank. The case isn't closed yet.
Sukanto's wealth mainly derived from palm oil business. He has pulp & paper empire, and recently oil and gas as well.
Surprisingly, no Sjamsul Nursalim in the top 10 list. Riady family, Tommy Winata, and Mum'in Ali Gunawan are out of top 10 as well. Riady family is partnering with Forbes for Indonesian edition, scheduled early next year.
Like it or not, agree or disagree, Forbes list could help Indonesia's tax officers chasing their tax payments or Bank Mandiri's bargaining position on bad loans. The list also useful for politicians, regent, governor candidates, or hopeful president candidates.
If you follow years of Forbes’ rich list, there is no significant change on the names of Indonesian richest. The difference is only on the amount of wealth & the rankings. The wealthy Indonesians could be categorized in several groups based on how they got their fortunes.
First, cigarette groups. We have Sampoerna family (even though they sold out the cigarette business to Phillip Morris), Wonowijoyo (Gudang Garam), Hartono (Djarum), and Peter Sondakh (Bentoel).
Second, forestry & plantation groups. We have Eka Tjipta Wijaya family (Sinar Mas Group), Sukanto Tanoto (Raja Garuda Mas), & Prajogo Pangestu (Barito).
Third, consumer goods. We have Salim and Wings Group.
Fourth, energy & engineering groups. We have Bakrie family, Panigoro (Medco), Kris Wiluan (Citra).
Fifth, property group. In this group we have Tan Kian (Dua Mutiara), Haliman Trihatma (Podomoro), Tommy Winata-Sugianto Kusuma (Artha Graha), Riady Family (Lippo).
Sixth, manufacturing. In this group we have Nursalim (Gajah Tunggal) for example.
So, mainly they got the fortunes from Indonesia’s rich & cheap resources (natural & human).
While most of these groups have expanded overseas (mainly China, India, or Brazil), Indonesian operations are still their main source of wealth. Most of these conglomerates were hurt by financial crisis, with the exception of cigarette groups.
But they have recovered in the last few years, thanks to the generosity of Indonesian people, the taxpayers. The state bailed out their bad debts. Some surrendered assets, but others managed to escape the financial responsibility easily.
Salim Group, for example, surrendered assets in 107 companies to pay around Rp56 trillion (US$6 billion) debt following the turmoil at Bank Central Asia (BCA). Government sold almost all the pledged assets with recovery rate of around 35%. Nursalim also did the same to pay his Rp28 trillion (US$3 billion) debt, with lower recovery rate.
Government also spent almost US$2 billion to bail out Bank International Indonesia (previously owned by Eka Tjipta’s Sinar Mas, currently controlled by Temasek).
That’s why there is almost no significant change in names listed in Forbes, the latest edition and in 1990s. The fact that Sukanto & Eka Tjipta are listed as number one and third in the ranking sparked criticism about how they created the wealth.
Both Sukanto & Eka Tjipta have strong pulp/paper & plantation (mainly crude palm oil) businesses through APRIL (RGM) Holdings & Asia Pulp & Paper (APP) respectively. Both groups have been the subject of continues allegation of environmental groups over massive deforestation in Sumatra Island.
WWF report few months ago said that APRIL and Asia Pulp & Paper (APP), the Indonesian paper producers, are accelerating the deforestation of Sumatra's jungles in spite of a bid to portray themselves as green.
According to the report, APP has been responsible for about 80,000 hectares of natural forest loss every year, equivalent to roughly one-half of the Indonesia province of Riau's annual forest loss since 2002. As of 2005, the company controlled nearly one-fifth, or 520,000 hectares, of the natural forests left on Riau's mainland. All these forests are under threat, as are any additional forests that APP acquires in its quest to fill its wood supply gap and expand pulp production.
WWF didn't publish the same press release on APRIL. But WWF Monitoring Brief June 2006 elaborated the organization's analysis on APRIL's activities.
Jikalahari (Riau NGO alliance) investigators have found evidence that APRIL's mills accepted wood from legally questionable third party source as late as May 2006. WWF admitted in the report that it calls APRIL to stop sourcing timber from this area until completion of the government legal verification process.
One NGO leader wrote cynically in Indonesian media recently that if you want to be rich, do the forestry business in Indonesia like Sukanto & Eka Tjipta. Other names listed in the Forbes report also have been regularly accused of various illegal practices such as fraud on reforestation funds or involvement in drugs & narcotics trading, gambling operation, or fishy deals with government and the military. But none of them convicted or worse various interest groups make huge chunk of money from the allegations on these richest men.

/Named a Suspect/
Apart of environmental concerns, the Forbes report has also been responded by Indonesia’s largest lender (by asset), Bank Mandiri, which happens to be the largest lender to Sukanto’s RGM. The bank has, several times, classified RGM as the debtor without good faith in settlement of almost US$500 million debts. Mandiri demands an increase in debt installment following the huge jump in pulp prices worldwide.
The day Forbes announced the rich-list, Indonesian minister for state-owned enterprises (Mandiri’s shareholder) pledged his support for Mandiri’s plan to take legal action against recalcitrant debtors, especially RGM. RGM denied all the charges arguing it follows the debt restructuring agreed upon few years ago.
A director at Mandiri was quoted by Indonesian newspapers saying, “You may rich, but pay your debts,” responding the list.
But it’s the police who surprised many when it announced the plan to reopen the investigation on Sukanto, not for the alleged environmental crime or his debts at Mandiri, but on a suspected banking crime that almost untouched in five years.
Just days after Forbes published the list, Indonesian police announced that it has resumed the investigation on Sukanto, named a suspect in a banking crime few years ago. Police declared that the case, involving Unibank---a bank initially owned/controlled by Sukanto and his wife Tinah Bingei, has been reopened after five years of almost no significant progress in investigation despite the fact that Sukanto had been named a suspect.
Unibank was closed down in 2001 leaving the state paying all third party liabilities (Rp3.9 trillion, almost US$400 million) with no shareholders held responsible. Sukanto was named a suspect on irregularities of export L/C worth US$230 million.
"Based on a meeting between Police Chief and Attorney General in August 2006, Sukanto's case has to be reopened and his status is still as suspect. The case is being handled by police team for corruption crime (Tipikor)," Paulus Purwoko, chief of public relations division at National Police Headquarter as reported by Indonesian media.
The sudden announcement failed to surprise the media at the time of eroding trust on the country’s campaign to fight corruption. Many raised the question, would the police be serious this time? Why the police reopen the case after so long? Could this be just part of ‘political’ game?
"Whatever the results might be, the reopening of the case has made Sukanto, well-known for his generosity overseas, shivering," a journalist from respected magazine commented the move. So far, police has not confirmed yet on when they would summon Sukanto for investigation.
The fellow journalist mentioned about Singapore-INSEAD's Tanoto Library or Carnegie Mellon's Tanoto Professorship. The owner of Raja Garuda Mas (RGM) also established Tanoto Foundation, which provide scholarships.
It’s not about his donations that make people doubt the investigation, but mainly the power politics in the country’s corrupt-legal system. Police might finalize the investigation, but state prosecutors may drop the case like what’s happened with the recent corruption allegation on Eddie Widiono (state-owned electricity company PLN).
Other intriguing issue is the unavailability of legal cooperation between Indonesia and Singapore. While Sukanto normally come to Indonesia, he stays in Singapore. “The problem, we have no bilateral agreement on this,” sighed the deputy attorney general Basrief Arief, who is also the Chief of Corruptors Hunting Team.
Besides, the five-year time lag since the Unibank’s closure in October 2001 is critical especially when it comes to witnesses. That’s why Attorney General’s Office said they would start the investigation all over again. This is clearly a big test for the country’s tattered image on corruption eradication campaign. Without serious efforts to end bad governance in Indonesian business, we can’t expect a cleaner sheet in the future rich lists.

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Mandiri-BNI bad loans settlement, long way to go

State-owned banks, especially PT Bank Mandiri Tbk and PT BNI Tbk, have to wait few more months to get a clearer picture of how to handle their huge bad loans. Why?

Minister for state-owned enterprise (MSOE) Sugiharto admitted yesterday that Supreme Court had returned the draft revision of regulation on non-performing loans (NPL) to the ministry for another review. He didn't disclose Supreme Court's respond. But Investor Daily quoted sources at Supreme Court saying it's up to the government to decide on what to do with the NPLs. So, back to square one.
Government, desperate to clean up the state bank's balance sheets from billions of bad loans, actually wanted to get legal clearance from Supreme Court on policies like haircut, write-offs, or bad loans offloading mechanism.
Sugiharto interprets the Supreme Court respond as a good one, just like what the government expect. The idea was to revise Govt Reg No. 14/2005 about Mechanism to Write-off State/Local administrations debts, especially erasing Article 19 and 20. Under the revised regulation, write-off or haircut should not conducted through Ministry of Finance but could be done by SOEs based on Limited Liability Law and SOE Law.
But the question, whether government or state-bank officials dare to make such decisions without have to worry the future prosecution/investigation under Anti-Corruption Law? Oops, most of them are ping-pong athletes!

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Ministers, The Most Photographed & Quoted

Indonesian ministers are among the most photographed personalities in the newspapers simply because they regularly appear in public events like seminars, workshops, groundbreaking ceremonies, inaugurations, companies' birthdays, hearings with parliament members etc.

I just don't understand what is the benefit for readers to see their faces every day? Don't we have more beautiful sights and sceneries to show how beautiful this country is? Don't we have more dreadful sights and hardships to share with than these same-old faces?
In the last few days, I saw the picture of SOE Minister Sugiharto in various newspapers several times. One newspaper even published two of his photographs. Finance Minister Sri Mulyani is also among the most photographed (not for good looking, I guess). Aburizal Bakrie, the coordinating minister for people's welfare and Energy Minister Purnomo Yusgiantoro are also in the list.
These ministers are also the most quoted officers. We have their statements every day just like the information on stock price movements or rupiah value against US dollar. It's constantly changed, mechanistic, nothing new, just statements, empty words, no meanings, no decisions made. Altogether, we see newspapers increasingly become ministries' newsletters.
Below these ministers, we also see regularly pictures or headshots of SOE CEOs like, among others, Agus Martowardojo (Bank Mandiri), Sigit Pramono (BNI), or Ari Sumarno (Pertamina), while performance of these SOEs are not as good as their photographs.

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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

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Another cabinet reshuffle?

Rakyat Merdeka, as usual, run a provocative headline today quoting Tifatul Sembiring, chairman of Prosperous Justice Party (PKS), saying the party will pull out all its cadres from cabinet after the World Cup 2006.

Hundreds miles away from Jakarta, minister for agriculture Anton Apriyantono, one of PKS cadre was seemengly relax walking side-by-side with president Susilo Bambang Yudhoyono and other cabinet members prior to a meeting in Losari agri-resort, Malang, East Java.
Tifatul said the threat to pull out its support for the government is serious, amid criticism that the party is bargaining with Golkar Party for more seats in the cabinet.
Tifatul went short in details of the party's plan, including the exact timing as World Cup 2006 final is scheduled the end of this week and few months ahead of president SBY's routine annual examination of performance of his ministers (every November). But he disclosed the reason behind the pull-out decision, i.e. tired of being considered as the enemy within.
"This is our respond to Golkar Party's accusation that our party play two faces politics. It's better to serve people's interest than to support an undecisive government," Tifatul said.
PKS has three cadres in the cabinet in charge of agriculture, people's housing affairs, and sports. On top of this, minister for state-owned enterprises Sugiharto is reportedly closer to PKS recently.
So far, no words from the president or his close aides. But Partai Demokrat where SBY is the patron leader/founder, said government should seriously review its relationship (coalition) with PKS. Surprisingly PKS tipped National Police Chief General Sutanto, a close aide to SBY, as its potential candidate to run for Jakarta governor election next year.
So, watchout, whether this time PKS is not bark louder than its bite.

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No management reshuffle at Telkom

Despite earlier calls for a management shakeup, the shareholders meeting of PT Telkom Tbk, the largest company at Jakarta Stock Exchange (JSX) by market caps, on Friday decided not to do that.

MSOE Sugiharto, on behalf of the government as the biggest shareholder at the telecommunication giant, in his letter to the shareholders meeting argued against the shakeup and additional directors as proposed by the management.
Both president commissioner Tanri Abeng and CEO Arwin Rasyid maintaned in their position.
Representative from Telkom's workers union attending the meeting urged the management to be solid as they sensed disharmony between them. Competition between directors is reportedly behind the shakeup issue emerged late last week.

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Rajawali failed to close the deal, one week extension needed!

Rajawali Corporation failed to close the US$330 million deal to acquire 24.9% shares of PT Semen Gresik Tbk from Cemex SA this afternoon as no formal approval given by government.

"We've asked one week extension to Cemex SA. We hope we could get government approval next week," said Darjoto, managing director of Rajawali Corporation few hours ago.
The closing deadline for the deal was supposedly this afternoon, but Rajawali didn't get letter of approval from Ministry of State-Owned Enterprises (MSOE), the majority owner of Semen Gresik.
Actually, Rajawali could close the deal without formal government approval (MSOE Sugiharto had given verbal approval this week), but that would put the company in an ackward situation. On the other hand, without formal letter from government, Cemex will unlikely to drop the arbitrary suit against government.

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Judgement Day for Cemex-Gresik saga

The clock is ticking down to final minute of the long dispute over state-owned enterprise PT Semen Gresik Tbk. Rajawali Corporation is expecting the blessing from state-owned enterprises ministry of its plan to acquire Cemex SA's 24.9% shares in the cement manufacturer. What if government don't want to give the blessing?

The worst case scenario is that government will not give the blessing for Rajawali to close the US$330 million deal that potentially put an end to arbitrary suit filed by Cemex SA toward Indonesian government looking for compensation at hundreds of millions of dollar.
Actually, Rajawali could still close the deal. But Rajawali would risk ongoing dispute with government in the future as an unwanted investor-partner. Cemex on the other end would keep playing the arbitrary card that put government at risk of losing the legal battle.
It's like another slap in the face of Sugiharto, the minister of SOEs. Yesterday, in a parliament hearing, minister of finance Sri Mulyani Indrawati knocked Sugiharto down on SOEs planned dividend payment for 2007 budget. Mulyani convincingly downsized Sugiharto's ambitious SOEs dividend payment arguing SOEs needs to use generated profits to expand.
Last year Semen Gresik booked net profit of Rp1 trillion (US$110 million) and projected 40% growth of net profit to Rp1.4 trillion this year.

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State-owned enterprises: From bad to worse

Most newspapers quoted Sugiharto, minister for state-owned enterprises (MSOEs), today on the performance of SOEs in 2005 with different tones. The largest newspaper Kompas, for example, put as the headline about the loss-making SOEs (31) with total losses of Rp6.11 trillion in 2005 against Rp4.84 trillion in 2004 (27 companies). Meanwhile, number of SOEs that booked profit decreased from 113 to 108.

There's always excuse, as usual, that MSOE claimed higher net profit at Rp40.68 trillion against Rp37.79 trillion. In fact, if we look at the details, as available at Kompas, overall performance were decreased. Why? Because three companies, Pertamina, Telkom, and Semen Gresik booked higher profit of Rp7 trillion in 2005. Should other companies recorded the same performance as 2004, total profit from SOEs should have increased by minimum Rp7 trillion, right?
But the problem with Sugiharto's report is the data is not valid yet, especially because no valid data on Pertamina's performance. MSOEs put Pertamina's profit at Rp15.44 trillion as projected data, not actual profit. Even the 2004 profit is still listed as projected profit.
Unfortunately, no newspapers published the data about total assets of SOEs in 2005 against 2004. But some says total SOEs assets were around Rp1,000 trillion and that would translate to around 4% ROA.

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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."

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