Lecturer and researcher of the Faculty of Economics of Trisakti University, Tulus T. H. Tambunan, as expert presented by the petitioners for the judicial review of the Law on State-Owned Enterprises, Wednesday (23/5) in the Plenary Courtroom of Constitutional Court. Photo by Humas MK/Ganie.
The establishment of SOEs has social objectives as mandated in Article 33 of the 1945 Constitution and profits are not the purpose of the establishment of a SOE. This was conveyed by lecturer and researcher of the Faculty of Economics of Trisakti University Tulus T. H. Tambunan as the expert of the Petitioners in the follow-up session of the judicial review of Law No. 19/2003 on State-Owned Enterprises (BUMN Law). The hearing presided over by Chief Justice Anwar Usman was held on Wednesday (23/5) in the Plenary Courtroom of the Constitutional Court.
Tulus said Article 2 paragraph 1 letter b of the BUMN Law along the phrase "make a profit" implies capitalism and is contrary to the principle of the establishment of SOEs. According to him, the establishment of SOEs is a logical consequence of Article 33 of the 1945 Constitution. SOEs, he added, should have social objectives similar to the Cooperative Law. In his opinion, the article does not mention the purpose of cooperatives to seek profit. However, it is with the understanding that profit is the positive margin between sales and costs. If there is no positive margin between the two, the Cooperative Law is referred to as business revenue residual (SHU).
"Making a profit is not a goal, but a condition or requirement to achieve that goal. Pursuing or generating profits is not the objective of the establishment of SOEs, but it is very important in order that SOEs can play an optimal role in accordance with their social objectives, so just like the Cooperative Law that has a separate article on SHU, the profit aspect in the BUMN Law can be listed in a separate article," he explained.
For that reason, Tulus asked the Constitutional Justices to change the phrase with a word that is more positive from a social perspective. He proposed the word ‘business profits.’ "So the contents of Article 2 paragraph (1) letter a would more or less be, ‘In order to support SOEs in order to be able to play an optimal role in accordance with the objectives of its establishment, SOEs should be managed professionally like a modern private company so that the efficiency of 8 business is achieved and then generate business profits\'," he explained.
Furthermore, Tulus elaborated that the role of SOEs still needs to be reviewed by Article 2 paragraph (1) regarding the purpose and objective of SOEs establishment. In the article, SOEs have a role in the national economy, especially as a motivator of GDP growth, the source of job creation, and the source of state income. Similar to the role of SOEs, although they are all implicitly important, there will be a tendency to prioritize, especially when all necessary resources are limited.
Potentially Multi-Interpretative
At the same hearing, constitutional law expert of the Udayana University Johanes Usfunan stated that the legal norm of the substance of Article 2 paragraph (1) letter a of the BUMN Law is vague, and potentially resulting in multiple interpretations. This, according to Johanes, is reflected in the formulation of contributing to the development of the national economy in general and state revenues in particular. The use of the phrase ‘donation and development’ means voluntary, non-binding, and non-targeting. Supposedly, Johanes said, the clear formula is to encourage economic progress.
In addition, Johanes added, the phrase ‘donation and development,’ potentially resulting in arbitrariness. With the meaning of the phrase, there is abuse of authority in the form of corruption, collusion, and nepotism that harms the interests of the community including the Petitioners. He added the phrase is used as a justification for the failure of an SOE activity or vice versa. Furthermore, because it only contributes to the development of the economy, it may be misused as an excuse by certain elements of SOE management to circumvent the allegation that the SOE has not succeeded.
"So, the elucidation to the provisions in the a quo article is clearly more vague and the clear formula should be that SOEs are obliged to improve the quality of service to the community while contributing to the national economic growth," said Johanes.
Involving the House
In relation to Article 4 paragraph (4) of the BUMN Law that is the object in case No. 14/PUU-XVI/2018, Johanes asserted the importance of House supervision in participation and administration of state capital in SOEs in relation to the delegation of authority to regulate government regulations (PP). According to him, the House of Representatives is the representation of the people as well as budgeting legislative through the mechanism of the state budget. Therefore, he added, House supervision is important.
Then, Johanes explained that the implementation of SOEs capital participation that is not done through the state budget (APBN) mechanism is contradictory to the Constitutional Court Decision No. 2/SKLN-X/2012 dated July 31, 2012, which determines that the participation of state capital in a SOE or limited liability company (PT) is the constitutional authority of the government.
"Thus, the delegation of authority regulating government regulations as regulated in the a quo article undermines the functions of legislation and budgetary oversight through the state budget bill by the the House. In addition, it is likely to cause abuse of authority due to the management of SOEs without House supervision," said Johanes.
Albertus Magnus Putut Prabantoro and partner as Petitioners of case No. 14/PUU-XVI/2018 argue that both articles impair their constitutional rights as citizens. They claimed that the articles were normatively abused and it led to the issuance Government Regulation No. 47 of 2017 on the Equity Participation of the State of the Republic of Indonesia in State-Owned Limited Liability Company. In the government regulation, also known as PP Holding BUMN Tambang, shares of three SOEs are transferred to PT Indonesia Asahan Aluminum Persero (Inalum). The three SOEs are PT Aneka Tambang Tbk (Persero), PT Timah Tbk (Persero), and PT Bukit Asam Tbk (Persero). In addition, the Petitioners claimed the implementation of Article 4 paragraph (4) of the BUMN Law shows the effect of state equity participation in other SOEs, so the SOE becomes a subsidiary of the other SOEs. This provision has eliminated the SOE and can be categorized as a new privatization model due to the transformation of SOE into SOE subsidiary without the mechanism of the state budget and House approval.
Before closing the session, Justice Anwar reminded that the hearing will resume on Tuesday, June 26, 2018 at 11:00 a.m. to hear the statement of the House and three experts for the Government. (Sri Pujianti/LA/Yuniar Widiastuti)
Thursday, May 24, 2018 | 14:36 WIB 96