Garuda profit

Dahlan Iskan
Former state minister of state-owned enterprises

IO – I differentiate between ‘financial attitudes’ and ‘financial expert’.

The person who has financial ex­pertise is not necessarily a ‘financial character’. It is not necessary to hold a ‘financial attitude’ or be a ‘financial expert’.

Best is a financial expert who has ‘financial attitudes’.

I was amazed by the acts of the Finance Director of PT Garuda Indo­nesia. He must have been a finan­cial expert. Otherwise, how could he manage it? In such circumstances a businesses like Garuda could turn a profit of Rp 70 billion, as indicated in the 2018 financial statements that he submitted.

I want to launch the following mantra:

“They may be smart, but we should not be stupid”. This mantra that I give is good quotes for anyone.

Moreover, trade relations with China. Or with anyone. Never blame them for being clever. But we also must remember: we must not be stupid!

 We must recognize how clever the Finance Director of Garuda was, a highly-skilled financial expert: how to make Garuda see a profit of Rp 70 billion, against a loss of Rp 2.4 tril­lion. Really clever.

But the FSA (Financial Services Authority) is not stupid.

BPK (Supreme Audit Agency) is not stupid.

The Minister of Finance is not stu­pid.

Two Garuda Commissioners were not stupid.

They rejected the 2018 Garuda fi­nancial statements. FSA and capital markets authority imposed penalties: a fine of Rp 100 million for the Com­pany. A fine of Rp 100 million for the entire Board of Directors. And a fine of Rp 100 million, to be shared by the Boards of Directors and Commission­ers who signed the 2018 financial statements.

The cleverness of the Finance Di­rector can be seen here: future in­come plans were classed as “revenue last year.

The value is also large. More than Rp 2 trillion.

Planned revenues “derive from long-term contracts. Signed last year.

Cooperation is – smart again – not carried out directly by Garu­da, but rather by a subsidiary: Cit­ilink. Hence Citilink passengers al­ready know: there will be wifi service on the plane. Soon. Very encourag­ing. Also boasting.

Perhaps many thought wifi was free later. As in the airport terminal.

It would not be free.

Can wifi service make Rp 2 trillion in 10 years time?

I lost count. Not yet available on air revenue data from wifi sector.

I often get on a plane that already has wifi service, over in America. Or on long-haul flights. But only used it once. It was only because I wanted to try it out: there was never been any urgency. It’s too expensive, according to my opinion, especially for Citilink flights within the country, on a flight of only one to two hours. Are there such important affairs that cannot be delayed up to two hours? Have to use expensive wifi service?

For the service I just still feel it is too expensive. Moreover, as a public service. I do not know – maybe I had the wrong attitude, although my fi­nancial people have already contract­ed for a “financial aspect”.

Perhaps also because Citilink had a great consultant, one who knows how to calculate future income. Main­ly revenue from wifi . Maybe they got the use of wifi in planes from another country.

Or is there a more special type of contract? Surer. For Citilink. For example: a contract with a system of take or pay . The private compa­ny was obliged to pay Rp 2 trillion, over the past 10 years. No matter how much wifi is used . Risks exist in the private sector. A loss, or private wind­fall, if lucky.

Not until finished making a fore­cast, I hurried to read the new news: the cooperation was canceled.

All right.

Still, I admit, financial experts are terrific: how could they make compa­ny profit and loss become visible. He that finds his way. How. Tactics.

It was he who found the powder and lipstick.

For a man who has an “attitude” of finance he will not do it. Instead, he will remind his superiors, regard­ing the risk to the Company. If such a thing is to be done.

There are several motives that are usually behind such an action.

For public companies, the intelli­gence is merely to deceive the market and pump up its share price.

For a state company it could be because the attitude of keeping the boss happy. Or political reasons.

For Management, it can be be­cause the pursuit of bonuses. Big profits mean big bonuses.

Garuda is a public company, state, and has a system of bonuses (bonus­es) for management.

In private, there is another “bo­nus”, also seen from the profits. But in fact the “profit” is not the same as a real “profit”. There is a profit with good quality. There are also inferior earnings quality.

Low-quality earnings before I have often referred to as “profit full of fat and cholesterol”.

It may look like profit, but in fact it can be deadly.

One type of cholesterol is “receiv­ables”, especially “doubtful accounts”, which cannot really be called “in­come”.

It could be as sudden as a person dies. Or goes bankrupt. Or even sues.

The reason could also be the ad­ministration: the invoice was wrong, the sound of the contract was not clear, or not until the bills come in.

Receivables boils down to profit. A source of tax income and bonuses – or the basis of a salary increase.

Taxes are already paid. Bonuses have been paid. Salaries have in­creased.

Revenue has been recorded – but it turns out the money does not come in, after all.

Very deadly.

There can be many other types of “fat” and “cholesterol” in a financial report. The source of the disease is sometimes not visible when it is man­agement itself which orders the inclu­sion of fats. And LDL-cholesterol.

Forgive me: such as an accounting class at the kindergarten level.

Which is better: the financial ex­pert who has finance or a financial attitude?

The best thing is: the financial ex­pert who has the financial attitude as well.

If I am faced with only one choice inter alia about financial experts and who has the attitude of financial ser­vices, I will choose which one?

You surely know which is my choice.