Indonesia SOE Minister Erick Thohir

Indonesia’s State-Owned Enterprises Minister Erick Thohir said that he wants more state-owned enterprises to go public to boost profitability and transparency. “We want to push more (SOE) to become a public company, with this we can create the right balance,” Thohir said at the Forbes Global CEO Conference in Singapore, held on Sept 26 and 27.

According to Thohir, one of the first SOEs to be listed this year will be PT Pertamina Geothermal Energy, the geothermal subsidiary of the Indonesian energy giant Pertamina, which is still wholly owned by the government. Pertamina is seeking to raise $500 million from the IPO, according to media reports. Based on the ministry’s announced plans, it would like to list another 11 SOEs by the end of next year.

Being public will help Indonesia’s SOEs to become more transparent and accountable, Thohir notes, as several SOEs have been beleaguered by scandals such as corruption. One of the recent examples is the ailing flag carrier, Garuda Indonesia, which has $5.1 billion in debt. “We put in a new board of directors because there is corruption in Garuda,” Thohir said.

Thohir, who took the helm as a minister in October 2019, is implementing other measures to modernize the SOE sector, such as more partnerships with private sector firms. “SOEs were underperforming, and private partnerships create better performance,” Thohir said. One example is New Delhi-based infrastructure firm GMR, which launched a JV this year to operate the airport in Medan, Indonesia’s fifth-largest city by population.

He has also been consolidating the SOEs, which currently have more than $600 billion in assets—equal to more than half of the country’s annual gross domestic product. Thohir is in the midst of reducing the number of SOEs to a target of 41 by 2024 from 108 when he became the minister. Another step is transforming the supervision of the firms to be more streamlined, with 12 industry-specific clusters inside the ministry managed by two deputy ministers, whereas previously there were many levels of bureaucracy.

Thohir’s reforms appear to be paying off. Based on a ministry report, the combined net profit of the SOEs jumped more than 800% from 13 trillion rupiah in 2020 ($858 million) to 125 trillion rupiah last year. This year the combined net profit is forecast to reach 144 trillion rupiah.

Thohir is bullish about Indonesia’s potential and stressed that the country is open to investments to help fuel development. “Targeting [economic] growth of 5% every year is not easy—that’s why we need to create that growth,” Thohir said.