Professor of the Faculty of Law of Gadjah Mada University, Nindyo Pramono, as expert presented by the Government delivering his expertise in the judicial review hearing of the BUMN Law on Monday (9/4) in Plenary Courtroom of the Constitutional Court. Photo by Humas MK/Ganie.

Privatization of State-Owned Enterprises (SOEs) will actually increase the value of SOEs in accordance with the objectives that the law enforces so that privatization will not cause harm to the Government and the public. Thus was affirmed by economic law expert Nindyo Pramono in the next judicial review hearing of Law No. 19/2003 on the State-Owned Enterprises (BUMN) held by the Constitutional Court on Monday (9/4) afternoon. 

In his statement as a government expert, the Professor of Faculty of Law of Gadjah Mada University affirmed that with privatization the investment value of the Government in SOEs actually increases along with the progress of SOEs after given funds and assistance from strategic investors. "This is how we should understand what is meant by privatization and the benefits for the state and society," he explained before the panel led by Deputy Chief Justice of the Constitutional Court, Aswanto. 

Should Not Be Arbitrary 

Nindyo also emphasized that the Government must go through several considerations to privatize and it is not easy. Some things should be considered, including the need of substantial funding for business development, which is restricted by limited Government funds, and to encourage continued development of corporate assets through collaboration with strategic partners. 

"The government cannot arbitrarily privatize. I would even say it is impossible to privatize before the privatization policy is decided; the Government is obliged to conduct a comprehensive analysis related to the privatization plan. The Government will not be able to decide whether to privatize if the results of a thorough analysis of the privatization plan will not add values for the state and society," Nindyo affirmed in response to petition No. 12/PUU-XVI/2018. 

On the same occasion, Nindyo also expressed about the nature of privatization. "According to Article 1 paragraph 12 of the BUMN Law, privatization is the sale of shares of a limited liability company, either partially or entirely, to other parties in order to improve the performance and value of the company, add benefits for the state and society, as well as expand share ownership by the community," Nindyo explained. 

Employees of the state-owned PT PLN (Persero) [(electricity firm)] review Article 14 paragraph (3) letters (a), (b), (d), (g), and (h) of the BUMN Law that reads, "The authorized party as intended by section (2) mustobtain approval of the Minister to make a resolution in the General Meeting of Shareholders on matters with respect to: a. a change in the amount of capital; b. amendments to the articles of association; d. a merger, consolidation, acquisition, division, and dissolution of the State-Owned Limited Liability Company (Persero); g. formation of subsidiaries or participation; h. transfer of assets." 

Petitioners of case No. 12/PUU-XVI/2018 argue that if the Government Regulation No. 72/2016 on the Amendment to Government Regulation No. 44/2006 on Procedures for the Investment and Administration of State Capital in State-Owned Enterprises and Limited-Liability Companies is one of the tools to privatize State-Owned Enterprises (SOEs) without exception. According to the Petitioners, SOEs whose production concerns the public will be privatized as stipulated in Government Regulation No. 39/2014 on the List of Business Fields Closed to Investment and Business Fields Open, with Conditions, to Investment. Private power plants, power transmission, and power distribution can have up to 95-100% of the shares, which will eliminate the state function to control the production branches that are important to the state concerning the lives of the people. 

The Petitioners consider that Article 14 paragraph (3) letters (a), (b), (d), (g), and (h) of the BUMN Law, the government represented by the minister as the shareholder may amend the Company\'s Articles of Association, including elements of mergers, consolidation, and transfer of assets, changes in the amount of capital, changes to the articles of association, acquisition and separation, without supervision by the House. (Nano Tresna Arfana/LA/Yuniar Widiastuti)