Directives of President of the Republic of Indonesia to President Directors of State-Owned Enterprises, 14 October 2021 at the Ballroom of Meruorah Komodo Hotel, West Manggarai Regency, East Nusa Tenggara Province
Assalamualaikum warahmatullah wabarakatuh,
May prosperity be upon us all,
Greetings of virtue,
Honorable Minister of State-Owned Enterprises, Cabinet Secretary;
Honorable President Directors of State-Owned Enterprises attending this event and all their ranks;
I forgot, Honorable Vice Minister of State-Owned Enterprises, Pak Tiko (Kartika Wirjoatmodjo), Pak Pahala (Pahala Nugraha Mansury);
Ladies and Gentlemen.
I think it is very clear what Minister of State-Owned Enterprises has said, so I am just going to state further that actually seven years ago I had ordered to immediately merge, consolidate, and reorganize our State-Owned Enterprises which are too many in number. Minister of State-Owned Enterprises have said that previously there were 108 State-Owned Enterprises and now there are only 41 State-Owned Enterprises. It is a very good foundation, and then the enterprises are clustered which is also good.
Most importantly, later, we want to build core values. That is what we want to build. So, in terms of selection, you are all have been carefully selected. You must be confident. That is my point.
Once again, I have to say, and actually I have said this before, that what we want to build is professionalism. I want you all to start to build the work culture. Do not let State-Owned Enterprises create bureaucracy. It is very complicated. You can all imagine, there were 259 permits needed to build an electricity generation, although each permit has different name. There were permits, recommendations, letters of statement, it is all the same, it is permit, and it consists of 259 permits. If they are put in a luggage, maybe ten luggage will be needed to put them all. Also, it would take three, four, five, six, or seven years. Someone told me it took seven years to obtain the permits. So, this what should be simplified. State-Owned Electric Company, for instance, cannot do such a complicated procedure anymore.
Who wants to invest if the procedure is so complicated? In the ministry, the procedure is complicated. In the region, it is complicated. In the State-Owned Enterprise, it is complicated. All investors will leave. In the past days, we have so many State-Owned Enterprises, and many times we had to cover them with protection. When they were ailing, we increased the budget. When they were ailing, we supported them with capital injection. I am sorry, but that is too much!
Those things lower the values of professionalism that I have said before. If State-Owned Enterprises do not have determination to compete and to take chances, how can they be professional? So, there will be no more protections. Forget about protections, Minister.
This time, we want the State-Owned Enterprises to go global, to compete at the international level. So, they should start, should start, should start to manage, to be able to adapt to current business model and technology. That is what is most important. The world has changed, there are industrial revolution 4.0, technology disruption, and pandemic. If you do not respond to the uncertainties by adapting immediately, and then the Minister tells me, “Sir, there is a State-Owned Enterprise in such condition …”, I will immediately order, “just close it down!” No more protection. So, how if that happens? You all, once again, have been chosen and selected, and are also very clever. I am not going to teach you about management. You are way better than me.
So, once again, you have to adapt to current business models and its technologies. Some companies have started to do so. They have quickly adapted. I see that banks have started to adapt. And Telkom, Telkomsel, too. How about the other ones? Not yet. I am sorry but State-Owned Enterprises in infrastructure sector and transportation sector have not started yet. And if you want to adapt immediately, the quick way is to build partnership. Just ask the best global companies to join, they will certainly say yes to us. Our future prospect has been predicted that in the next 10-20 years, we will be the fourth global economy. So, who will say no to us? They will certainly say yes.
So, once again, as mentioned by the Minister, be confident to compete. Please make a calculation because State-Owned Enterprises are the Government’s companies, then calculate the social impact. Most importantly, keep reviewing the economy. Please calculate, so we can predict the growth in the future. Not just doing projects because the Government requests it. I can give you order “build toll roads!”, but you must also make calculation, and inform me, “Sir, here is the Internal Rate of Return. So, we need some financial support from the State Budget.” Do not just scramble to win the project ordered without making calculation, and then take out a short-term loan, whereas the infrastructure project needs long-term loan. No accurate calculation. It is your task to calculate the project ordered. If it is not logic, then make it logic with calculation. So, leave the old work culture behind.
Once again, business transformation and technology adaptation are a must and inevitable. We are in a race. We only have two years, not because of 2024, no. We only have two years if this country wants to make a leap. It is about preparing the human resources, preparing the ecosystem, and in terms of technology, we need to adapt technology, then this country can make a leap, and we have to struggle more to reach that. Which one needs to be injected so we can make a leap. We need to adapt, that is what we must do.
So, this also applies to State-Owned Enterprises related to food industry, health, and energy. If they want to progress, they should form partnership, find partners. In terms of food industry, for instance, seven years ago, I visited some sugar factories. They used old machines. So how can they produce a higher yield? It is impossible. I ordered to change the machines, but none did it. If it goes on like this, I can demand more.
This is very important for us, as FAO stated that in the future, food sustainability is very crucial for a country and that food crisis is already predicted due to climate change. This is our opportunity. We have vast land, so do not design small-scale projects. Why State-Owned Enterprises came up with small-scale projects? And, it did not even work. Make large-scale ones. Build partnership. I had said that seven years ago, I went to visit Merauke that has flat ground and abundant water. If such lands in Merauke, Mappi, and Boven Digoel are added up, there will be 4.2 million hectares. However, it is impossible that our State-Owned Enterprises work on it on their own, impossible. Firstly, it requires a large amount of capital. Secondly, it requires technology. We do not have current technology for it. So, build partnership. Actually, there are many opportunities of partnership, but we never give any response to it.
I have paved the way for partnerships, but no responses. How come? Frankly, sometimes, I feel disappointed. I have paved the way, but no responses. The investment is indeed in trillions. If we want to be great, then we should think great. So, if we want to be great but dream small, how can we be great?
We just talk about one location, not to mention other locations. We have so many potential locations for food estate or whatever it is for rice, corn, and others, and cassava as well. But, again, do not be project-oriented, but make calculation.
In the future, health resilience is very important. The pandemic that we are facing today leaves us no option but to improve our health infrastructure and facilities totally. It is obvious where the weakness lies. It is so obvious that we are lacking in all aspects. The fastest way is to reform the State-Owned Enterprises related to health sector.
I have paved the way for partnership with Bangladesh and India. I called Prime Minister Narendra Modi by myself. Unfortunately, no response from here. So, how come? He even asked me twice and sent a team here, but no follow ups. It is supposed to be a beneficial partnership for us because generic medicine is cheap there. So, how come? It is concerning medicine and most importantly, the raw material for medicine. We have so many raw material resources.
It also applies to energy sector. Today, if we want to go big and move to a better direction immediately, we should build partnership. All parties should have global vision because we want State-Owned Enterprises to be a locomotive that hauls the small and medium enterprises to explore other countries.
I conclude my remarks at this good opportunity because I think almost all have been mentioned by Minister of State-Owned Enterprises.
In the upcoming one or two years, I really want to see fundamental changes that can bring our competitiveness up to the next level. I am glad that Pelindo I, Pelindo II, Pelindo III, and Pelindo IV have been merged into PT Pelabuhan Indonesia (PT Pelindo) which is expected to improve our logistic expenses, inter-island connectivity for as many as 17 thousand islands we have, so our service to the community in all islands will be better.
Most importantly, the merger shows a great potential. If it builds partnership with foreign company that has good worldwide networking, then it is going to be a great potential. Six years ago, we actually had initiated the merger, but it did not occur. Never mind. If the transition was set to be virtual holding, then the merger will never occur. However, alhamdulillah, it is already set up. I have to extend my highest appreciation for such accomplishment.
I conclude my remarks. I thank you.
Wasssalamu’alaikum warahmatullahi wabarakatuh. (AW/MMB)