Ministry of State-owned Enterprises Republic of Indonesia
Good Corporate Governance Implementation In Indonesia’s State-owned Enterprises
Presented by Gatot Trihargo, Deputy Assistant for Strategic Industry & Manufacturing SOEs II
May 18th 2011
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian BUMN. Dilarang memperbanyak tanpa izin tertulis
AGENDA 1
Profile of Indonesia’s State-owned Enterprises (SOEs)
2
Rightsizing Policy to tackle uneven Performance between SOEs
3
Implementation of GCG in Indonesia’s SOEs
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian BUMN. Dilarang memperbanyak tanpa izin tertulis
2
142 SOEs in Various Industry Sectors Currently there are 142 state-owned enterprises.. and 18 companies in which the government has minority stake. Total Number of SOEs
Listed Corporations (Non Listed) Special Purpose Entities Total SOEs Corporations in which the Ministry has a minority stake
2007
2008
2009
2010
2011*
14 111 14 139
14 113 14 141
15 112 14 141
17 111 14 142
18 110 14 142
21
21
19
18
18
* As of February 2011
SOEs by Industry Printing 6 Telecommunication 5 Energy 5
Fishing 2
Forestry Plantation 6 15 Agriculture Supporting 5
Strategic Industries 12 Mining 6
Transportation & Infrastructure 17 Miscellaneous 8 Industrial Area Construction 6 13
Banking 4 Insurance 10 Finance 8 Logistic & Certification 11 Tourism 3
Portfolio encompasses various sectors providing diversification and synergy opportunities 3 3
Vision and Role of the Ministry Vision
Increasing the role of State-Owned Enterprises as state instruments for national welfare based on corporate practices Role of the Ministry Focus on on implementing a strong corporate mechanism to ensure sustainable valuevalue enhancement of SOE… Focusing implementing a strong corporate mechanism to ensure a sustainable enhancement of SOEs Improving quality of SOEs’ management to become more accountable and transparent Strengthening succession and selection process of SOEs’ top management and continuously enhancing
their compensation structure Implementing a stricter performance goal setting and evaluation through the Board of Commissioners of
SOE …Whileencouraging encouragingSOEs a stronger role by SOEsrole in accelerating nation …while to play a stronger in accelerating the development nation’s development Increasing role of SOEs to promote economic growth and to contribute to state revenue Increasing quality of the execution of Public Service Obligation
Increasing role of SOEs in pioneering business to increase participation of micro and small business
players
Creating world class corporations …
4 4
SOEs’ Significant Capex & Opex Spending Help Enable and Sustain Indonesia’s Economic Growth The multiplier effect created from SOEs’ expenditures is a significant engine of growth for Indonesia’s economy
The SOEs’ total capital expenditure and operating expenditures consistently exceed the State’s capital expenditure budget, reflecting the relative importance of SOEs in powering Indonesia’s future economic growth
SOE’s capex investments in basic infrastructure (e.g. to increase connectivity) lay the groundwork for Indonesia’s future economic growth Capital Expenditure (Rp Trillion)
State’s expenditure budget in APBN P 2010 & APBN 2011 SOEs * Percentage of SOEs to State GDP Percentage of SOEs spending to GDP
Operating Expenditure (Rp Trillion)
2010
2011F
2010
2011F
95.0
121.7
112.6
131.5
196.9
210.1
932.2
1,020.9
207.3%
172.6%
827.9%
776.3%
6,253.8 **
7,019.9 ***
6,253.8 **
7,019.9 ***
3.1%
3.0%
14.9%
14.5%
*) Excluding the subsidiaries of SOEs **) Source : APBN-P 2010 ***) Source : APBN 2011
5
SOEs are Market Leaders in Strategic & Competitive Sectors Such as Telecommunications, Banking, Cement, Energy, Mining, Infrastructure
SOEs command around 53.2% of market share in the cellular telecommunication sector in terms of number of subscribers
State-owned banks constitute around 37.1% of the banking sector’s total assets
Cement-producer SOEs command 52.0% of sector’s total sales
Energy & Mining contribute more than 50.0% of energy supply
Telecommunications
Telkom
53.2% Subscribers of Cell Telco
Banking
Mandiri BRI BNI BTN
37.1% Total of Assets
Cement
Gresik Group Kupang Baturaja
52.0% Total of Sales
Energy & Mining
Pertamina PTBA PGN
> 50% Energy Supply
as of December 2010
6
AGENDA 1
Profile of Indonesia’s State-owned Enterprises (SOEs)
2
Rightsizing Policy to tackle uneven Performance between SOEs
3
Implementation of GCG in Indonesia’s SOEs
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian BUMN. Dilarang memperbanyak tanpa izin tertulis
7
26 Biggest SOEs (By Revenues) Performance of Indonesian SOEs are unevenly dominated by 26 of its Biggest As of December 2010 (figures are proximate for non listed SOEs and audited for listed SOEs)
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
26 Biggest SOEs (By Asset) PT Pertamina PT Perusahaan Listrik Negara PT Telkom Tbk PT Bank BRI Tbk PT Bank Mandiri Tbk PT Pusri PT Bank BNI Tbk Perum Bulog PT PGN Tbk PT Garuda Indonesia Tbk PT Krakatau Steel Tbk PT Semen Gresik Tbk PT Jamsostek PT Taspen PT Antam Tbk PT Timah Tbk PT Bukit Asam Tbk PT ASKES PT Bank BTN Tbk PT PPA PT Wijaya Karya Tbk PT Adhi Karya Tbk PT Perkebunan Nusantara III PT Perkebunan Nusantara IV Perum Pegadaian PT Kereta Api Indonesia Total of 26 Biggest Total of 142 SOEs 26 Biggest to Total
Revenues 444,855 163,764 68,629 50,160 43,898 33,363 23,850 20,721 19,766 19,534 14,856 14,228 14,124 9,169 8,744 8,339 7,909 7,829 7,756 6,152 6,023 5,675 5,624 5,396 5,373 5,354 1,021,095 1,129,015 90.4%
Net Income 15,829 10,316 11,537 11,472 9,218 3,139 4,103 861 6,239 516 1,061 3,599 1,581 614 1,683 948 2,009 1,733 916 243 285 189 1,012 812 1,222 372 91,511 98,606 92.8%
IDR Billion
% of 26 to Total
Asset
Equity
278,586 369,051 99,758 404,286 449,775 34,790 248,581 15,807 32,087 13,666 17,584 15,136 102,898 43,787 12,311 5,881 8,723 10,898 68,386 6,863 6,286 4,928 7,310 6,771 20,313 6,050 2,290,511 2,476,055 92.5%
103,548 Others 9.6% 149,931 56,415 36,673 41,542 16,733 26 SOEs 33,149 90.4% 5,484 15,101 3,469 9,425 Revenue 11,773 5,555 4,164 9,601 4,203 6,441 26 SOEs 92.5% 7,083 6,447 3,121 1,917 868 3,600 Others 3,314 7.5% 3,337 Asset 4,678 547,574 617,004 88.7%
Others 7.2%
26 SOEs 92.8%
Net Income
26 SOEs 88.7%
Others 11.3%
Equities
8
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
8
Rightsizing Scheme to Optimize SOE Performance Structural restructuring Kontribusi Terbesar Berasal dari 26 SOEs 142 SOEs Mostly with 2011 performance that can still be greatly improved and are small sized
Others 9.6%
Others 7.2%
26 SOEs 92.5%
26 SOEs 88.7%
26 SOEs 92.8%
26 SOEs 90.4%
Revenues
Net Income
Others 7.5%
Others 11.3%
Asset
Equity
Major Consideration to determine whether State’s majority ownership is to be retained Urgency; Sectoral Prospect; Performance of the SOEs; Value Creation Potential; Role in Synergi; Relevant principles laid out in the Constitution regarding public economic interest & wealth of the nation
Rightsizing Policy Restructuring through various shareholder actions based on rigorous mapping aimed at addressing uneven performance between 142 SOEs
By end of 2014
± 81 SOEs Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
9
SOEs in FORBES GLOBAL 2000 In 2010, 7 (seven) SOEs made their way to Forbes Global 2000, almost doubling the number from 4 SOEs in previous years. More SOEs are expected to be included in the list as rightsizing policy progresses.
Posisi Posisi Posisi 2008 2009 2010 1 2 3 4 5 6 7
PT Telkom Tbk PT Bank Mandiri Tbk PT BRI Tbk PT BNI Tbk PT Perusahaan Gas Negara Tbk PT Semen Gresik Tbk PT Tambang Batu Bara Bukit Asam
729 1132 1035 1862
675 1014 988 1960
sumber: forbes.com
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
684 796 843 1412 1915 1977 1986
AGENDA 1
Profile of Indonesia’s State-owned Enterprises (SOEs)
2
Rightsizing Policy to tackle uneven Performance between SOEs
3
Implementation of GCG in Indonesia’s SOEs
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian BUMN. Dilarang memperbanyak tanpa izin tertulis
11
Corporate Governance in Indonesia’s Two Tier System
Taxes
Interest Rate
Gov
Creditors
Bi Dividend
CG in wider context
Capital
AGMS
Dekom
Shareholder Capital & Equity
CG in corporate context
Direksi
Market Price
Productivity
Labor Union
Suppliers
Welfare
Good&Sevices
Manager CSR
Community Corporate Citizenship
Manager
Employee
Corporate Management
Manager Market Price
Consumers Goods & Services
12
GCG Roadmap: From Compliance to Corporate Citizenzhip
GCG Good corporate governance
GGC Good governed corporation
Preparation
GCC Good corporate citizenship
Consensus to comply to all GCG regulation
Sound management practices utilizing proper internal control, risk management & Whistleblower facilitation
Corporation which stands for just cause and contribute to improvement of welfare in general
Continuous Improvement
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
13
GCG Roadmap has been initiated since 2002 Fully aware of the importance of GCG, the Ministry of State-owned Enterprises has started to prioritize steps to ensure implementation of GCG in SOEs since 2002 and has been sustainably continued by different ministers ever since.
Laksamana S
Sugiharto
• Voluntary GCG Assessment & Review assisted by MSOE and Govt Auditors; • Ministerial Decree on Audit Committee
• Appointment of Advisor on GCG to Minister of SOEs;
• Integration of GCG principle to Law 19/2003 on SOEs
Sofyan Djalil
• Mandatory signing of Management’s Integrity Pact for new SOE Directors/Commissioners • Ministerial Decree on Remuneration for SOEs’ Directors and Commissioners
Mustafa Abubakar • Reform on Fit and Proper test for directors, making professionalism count more than political background; • Further reform on remuneration for SOE management; • Mainstreaming sound risk management in all SOEs
• Foundation laid out to facilitate whistleblowers
• GCG implementation started to be included in the SOE’s Management KPI
2002
2003
2005
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
2008 14
Result of GCG Assessments and Review
Assessment Result
2010 Result
Expected 2014 Result
Properly implemented
57
40,14%
90%
Minimum requirements are sufficiently implemented
37
26.06%
10%
Poorly implemented
15
10.56%
-
No Assessment yet
33
23.24%
-
Total
142
100%
100%
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
Regulation Issues
SOEs are mandatory to comply with much more rules & regulations, which are more stringent, in terms of numbers, than private sectors
Such condition will propel inequal level of playing field compared to private sectors
Corporate Law (UU PT)
Capital Market Law (UU Pasar Modal)
Sectoral Law
SOE
(UU Sektoral)
SOEs Law
Private Sector 3 Regulations
(UU SOEs)
8 Regulations
State-Finance Law (UU Keuangan Negara)
Treasury Law (UU Perbendaharaan Negara)
State-Audit Law (UU Pmeriksaan Pengelolaan & Tg Jwb Keu Negara)
Anti Corruption Law (UU Tipikor)
16
GCG has assisted SOEs Steady Improvement 140
120 115 110 105 100
99 94
90
88
90
96
94
96
97
89
87
80 Healthy Not Healthy
60 53
51
47
51
54 47
45
42
40
52 45
44 36
30
26 20
0 1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
State-owned Enterprises’s Financial Summary (2009-2011) Our SOEs have consistently shown stable and significant growth, as seen by 14,97% increase in revenues and 19,61% increase in net profit
In Trillion IDR
No
Items
2009
2010
2011
(Audited)
(Audited, Tbk)
(RKAP)
Growth 10/09
11/10
1 Assets
2.257,54
2.515,10
2.976,96
11,41%
18,36%
2 Liabilities
1.683,73
1.894,25
2.255,21
12,50%
19,06%
3 Equity
573,81
620,85
703,87
8,20%
13,37%
4 Revenues
987,37
1.135,16
1.294,37
14,97%
14,03%
5 Net Profit
86,90
103,94
113,72
19,61%
9,41%
6 Capital Expenditures
107,45
196,91
210,12
83,26%
6,71%
7 Operational Expenditures
832,99
932,15
1.020,87
11,90%
9,52%
18 Disiapkan untuk diskusi kalangan terbatas oleh Kementerian SOEs. Dilarang memperbanyak tanpa izin tertulis
18
SOEs Play a Major Role in Indonesian Capital Markets As of end of March 2011, among 10 biggest market capitalization in Indonesian Stock Exchange, 5 are SOEs
Market Capitalization, 18 SOEs vs 422 Non SOEs
• As of end of March 2011, 18 SOEs contributed 27% to IDX total capitalization. There are 440 companies in IDX
26,79% 73,21%
• Market Capitalization of 18 listed SOEs as end of march was IDR 837 trillion.
SOE
Others Dec’05 – Mar’11 Total Return for Shareholders – SOEs Top List 30,000
5 of 10 biggest companies in IDX by market cap are SOEs Market Cap Mar 31, 2011 (Rp Triliun)
No. Company Name
1
PT Astra International Tbk
231
2
PT Bank Central Asia Tbk
171
3
PT Bank Mandiri (Persero) Tbk
159
4
PT Telekomunikasi Indonesia (Persero) Tbk
148
5
PT Bank Rakyat Indonesia (Persero) Tbk
142
6
PT Unilever IndonesiaTbk
117
7
PT Perusahaan Gas Negara (Persero) Tbk
95
8
PT Gudang Garam Tbk
81
9
PT Bank Negara Indonesia (Persero) Tbk
74
10
PT United Tractors Tbk
72
25,000 1225.16%
20,000 15,000 495.39% 50.89%
10,000
392.53% 345.18%
5,000
211.29% 277.47% 287.71
Jan-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
May-08
Jan-08
Sep-07
May-07
Jan-07
Sep-06
May-06
Jan-06
0
Total BMRI
BBRI
BBNI
TLKM
PGAS
ANTM
PTBA
1,290
SMGR
19
Key Points GCG has been a major KPI for SOE for a decade and has helped maintain steady performance • Indonesia has 142 SOEs, 26 of which contributed more than 90% of most financial gains. Other smaller SOEs might be important for the state as it carries out mission that the private sector can not accomplish. • Indonesia’s SOEs play major role in Indonesia’s development, be it from direct contribution to State budget or other support to the economy in general. • GCG implementation has been started since early 2000s and has been sustainably maintained by different Ministers of SOEs. • Independent assessments and reviews assessment on GCG implementation have been carried out by State Auditors. More than half of SOEs has implemented GCG, 40% of which has properly implemented GCG principle to their operation. • GCG implementation, along with Rightsizing policy, will continue to be key policies to sustain and improve SOEs performance which has consistently shown steady improvement already.
20
Ministry of State-owned Enterprises Medan Merdeka Selatan No.13, Jakarta, Indonesia http://www.bumn.go.id
Thank You