Jakarta, IO – State-Owned Enterprises have recently been in the public spotlight, following the arrest of the Managing Director of Waskita Karya as a corruption suspect. Recently, another allegation surfaced, regarding malfeasance in SOE pension funds. Layer by layer, abhorrent Indonesian SOE problems are bubbling to the surface.
What is actually happening in our SOEs? State-owned Karya is embroiled in suspicion of several violations, such as “beautifying” financial reports and questionable contracts. One can easily guess the root of the problem: mismanagement. From the news, we can see how the SOE Ministry responds well and swiftly, so that existing cases can be pursued through legal prosecution. However, such problems should have been anticipated from the very beginning.
I recalled a banter (joking but true) with a friend at the World Bank. If someone wants to run a project whose corruption goes undetected, he should go with infrastructure. Infrastructure projects are prone to corruption, even from early project planning and budgeting.
I am not very familiar with what is happening internally, but such misconduct could have been prevented with the application of strict due diligence.
It is only natural that we are concerned about our SOEs. This should be appreciated as a social control mechanism, as SOEs are state-owned enterprises – owned by the people.
If we scrutinize and examine this further, the essential question would be whether our SOEs can be optimized for the welfare of (many) people.
Delving deeper into the root of the problem, we should see how SOEs fulfil their responsibilities according to Article 33 of the Constitution.
Besides SOEs, we indeed have cooperatives as community business entities. However, they have not performed up to par, until now. What we know for sure is that SOEs should be able to run as machines to realize the people’s prosperity – to manifest Article 33 of the Constitution. This is not merely a discourse, because other countries have successfully made it happen. The closest examples would be those of Singapore and China. Their SOEs have become the backbone for state revenues and people’s welfare, even though they use different systems. Singapore is running SOEs as professional state businesses, while Chinese SOEs are controlled strictly, by the state.
Our SOEs have their own system, guided by the Constitution. They embody a noble and important mission, in striving to realize Article 33 of the Constitution.