Privatization of State assets: A loss of national sovereignty?

61
(illustration: IO/Rudraksha)

IO, Jakarta – Over the past year, the Government of Indonesia has been revealing its plans to allow pri­vate parties and foreign companies to manage airports and seaports. The Government reasons that such private and foreign management is meant to improve service and facili­ties of transportation infrastructure. Furthermore, the Government hopes that a cooperative management would be able to economize on the operational budget, which originates from the State Budget (APBN).

Minister of Transportation Budi Karya Sumadi said that there are at least 10 airports and 20 seaports with potentially profitable infrastructure construction that could be operated jointly with private parties.

Airports include Maimun Saleh in Aceh; Ferdinand Lumban Tobing in Sibolga, North Sumatra; Raden Inten II in Lampung; Has Hananjoeddin in Bangka Belitung Island; Blimbing­sari in East Java; Juwata in North Kalimantan; Sentani in Papua; Muti­ara Sis Al-Jufri in Central Sulawesi; Komodo in Labuan Bajo, East Nusa Tenggara; and Syukuran Aminuddin Amir in Central Sulawesi. The sea­ports include Probolinggo; Tanjung Wangi in East Java; Sintete in West Kalimantan; Bima, Lembar, Badas in West Nusa Tenggara; Waingapu, Kalabahi, Ende, Tenau in East Nusa Tenggara, Sorong, Manokwari, Fak­fak in West Papua; Biak, Merauke in Papua; Kendari in Southeast Su­lawesi; Pare-pare in South Sulawesi; Bitung in North Sulawesi; Ternate in North Maluku; and Pantoloanin Central Sulawesi.

The Government’s plan is part of a series of moves. In 2016, Minis­try of Transportation completed its revision of the List of Negative In­vestments (Daftar Negatif Investasi – “DNI”) according to Presidential Regulation Number 39 year 2014 concerning the List of Restrict­ed Business Fields and the List of Conditionally Open Business Fields. The Minister of Transportation at the time, Ignasius Jonan, explained that there were at least 7 fields in the Ministry of Transportation, especially in the service sector, that would open up for a maximum foreign ownership level 67%. Earlier, foreign ownership level was limited to 49%.

The opening of a larger share of foreign ownership in managing business services in the Ministry of Transportation means that an in­crease of domestic and foreign partic­ipation and investment is supported. With greater participation, logistical progress is expected to accelerate and improve. The Ministry of Transporta­tion’s business services to be opened to foreign investments include air­ports and seaports.

Many people are concerned about surrendering the management of national public facilities to private parties and foreigners, because it concerns national interest and sov­ereignty. Should the Government continue to take such steps?

Two Sides of the Coin
According to Chappy Hakim, Avia­tion Expert, planning is fundamental in aviation. This is because flight depends closely on technological progress. “It must be based on planning. You can’t do five year-cycles: you have to make long-term planning. Technological ac­celeration is so swift, you can’t keep up without a plan,” said the former Chief of Staff of the Air Force.

Chappy states that the Govern­ment’s plan has 2 sides. “The plan can be good, or it might be other­wise. It can be negative when people start to ask, “Why don’t we manage it ourselves? Why don’t we empow­er our own people?” Our people ac­tually have capabilities, but we see many weaknesses. These weakness­es result from inconsistent planning; there is a lack of long-term master planning. Plans are anticipative in nature,” he said.

On the other hand, Chappy said, this could be a useful plan, as it means that the Government realizes that we have been left behind in avia­tion in comparison to other countries. “We don’t have solid plans, we don’t have a master plan, we don’t have any long-term master planning. We should therefore just give up and leave it to private parties,” he added.

Chappy said that the world of avi­ation cannot be managed moderately, but must be managed aggressively.

“Being ’aggressive’ requires strong capital backing, and powerful HR. In terms of airports, we’re talking about infrastructure. Our infrastructure and HR have been falling behind since 2002, which was a time of a boom in aviation,” he explained.

Chappy observed there is much potential and positive impact if man­agement rights are handed over to private parties. “That way, we can see how the Westerners work. We have a low-level work ethic. Private parties will try to keep it healthy, because it’s their money at stake. They’ll recruit people who want to work. So it will become more efficient in high-tech field – they not only need good work­ers, but also good thinkers. That’s what we don’t have yet – that’s why we’re always left behind,” he said.

Meanwhile, a different view is held by Member of Commission I of DPR RI from Gerindra Party, Andika Pandu Puragabaya. He disapproves of the Government’s plan to hand over the management of airports and seaports to private parties. “That’s because airports and seaports are public facilities, both in terms of economy and security. If we hand them over to private parties, what is the duty of the Government then? If we hand over assets to private parties to save APBN; that’s illogical. That’s like handing over our house keys to random strangers. If that’s the case, the Ministry of Transportation should just be disbanded! Why do we have this Ministry if we’re going to hand over responsibility to private parties anyway?” he shouted in exaspera­tion.

“If our airports and seaports are left behind and we hand them over to private parties and foreigners: it’s the same thing as giving up our country. It’s the Government’s duty to encourage modernization with our own power like what they promised – lack of money is no excuse. We can still develop our country using foreign funds, but we must not let them manage our development, because that’s our sovereignty. National sovereignty is unnegotiable – you can’t hand it over to private parties, and the Government must remain in control,” Pandu added.

Dirgo D. Purbo, Geo-political and Geo-Economy Analyst, framed his explanation in terms of management: inasmuch as it concerns national strategic public facilities, in the cooperative venture State-owned Enterprises (Badan Usaha Milik Negara – “BUMN”) must control majority interest. “It’s OK for cooperation, but they key is in the ‘75% majority interest’. They (the private and foreign parties) are only to be partners in management, so they do not own the facilities. The key in maintaining majority interest is not a 51%-49% proportion, but in a 75%-25% proportion,” he said spiritedly.

Public Facilities Controlled by Foreign Powers?
It is undeniable that this policy plan would arouse controversy, because there is a concern that this would make it easier for foreign parties to control Indonesia, due to easier entry access.

Chappy has his own view of the matter: he believes that it all depends on the management. “We are rather ‘allergic’ to foreigners (in this case, foreign control). If those Westerners are good, we will employ them. But we should do the managing: we should employ them, not let them control us. So leadership and management have a central role in managing aviation,” Chappy said.

Chappy further stated that the aviation business must be able to compete on a global level. “This is rather urgent – if we can’t comply, we get downgraded. If that happens, our market will fall, which will disturb the global system. It’s good if we have plans, we see something in the future, and we must anticipate. Let private parties participate, but the bulk of management is still in our hands,” he said.

Pandu admits that nowadays many of Indonesia’s assets are controlled by foreign parties. His concern is that with the Government’s policy on airport and seaport management, it will be even easier for them to control us. “We’re not holding negative assumptions about private parties, but we must be careful and wary of everybody. Having private parties manage airports and seaports means that there is an opening, there is a loophole that private parties may use to ‘sell out’ this Nation, as airports and seaports are gateways into our country. The State must keep control of public facilities. The State must be present as a responsible manager,” he explained.

Similarly to Pandu, Dirgo said, “In terms of public facilities, that policy can be called, quote unquote, a ‘selling’ the nation, because that’s the entry point and sovereignty of our country,” he said. Dirgo said that the management of public facilities can serve as the vehicle of foreigners who want to control our country. “That’s actually their vehicle to gain access to our national sovereignty. I compare national sovereignty as our home and yard, and this is like directly opening the gates of the house to allow people in. Public facilities have geo-political, geo-strategic, and geo-economic importance, but they are releasing them and selling them out,“ he said. (Dessy Aipipidely)