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Virtual plenary hearing to hear the Relevant Party’s statement in the judicial review of the BUMN Law, Monday (9/11/2020) in the Plenary Courtroom of the Constitutional Court. Photo by Humas MK/Gani.

JAKARTA, Public Relations of the Constitutional Court—The 1945 Constitution doesn’t ban privatization and competition, as long as there is state control, especially if the privatization brings greater benefits to the people. The Constitutional Court (MK) has also emphasized that state control in the management of oil and gas, including through privatization, contained in the Oil and Gas Law, is not unconstitutional. This was stated by Yusril Ihza Mahendra, PT Pertamina Persero’s(Relevant Party) attorney, at the judicial review hearing of Law No. 19 of 2003 on State-Owned Enterprises (BUMN Law).

The fifth hearing of the case No. 61/PUU-XVIII/2020 was held by the Constitutional Court on Monday, November 9, 2020. The petition was filed by the Federation of Pertamina United Labor Unions (FSPPB), who believes that the provision on privatization in Article 77 letters c and d of the BUMN Law violates Article 33 paragraphs (2) and (3) of the 1945 Constitution.

Also read: Constitutionality of Privatization of Pertamina Subsidiaries

Yusril added that the article in question doesn’t violate Article 33 paragraphs (2) and (3) of the 1945 Constitution because it doesn’t reduce state control, which is the manifestation of state sovereignty over production branches that are important and affect the livelihood of the people.

"This is a consequence of our rule of law, in that control in terms of management is not only based on power, but on constitutional law. Production branches that are important to the state and affect the livelihood of the people are controlled by the state not in the context of ownership, but by law [the state] was given the right to control through formulating policies, regulations, management, and supervision," he explained virtually.

Also read: Petitioner of BUMN Law Says Petition Non Nebis in Idem

People’s Welfare

Yusril also explained that, according to Article 1 paragraph (2) of the 1945 Constitution, the state’s control is the manifestation of the sovereignty, which lies in the hands of the people and is carried out according to the Constitution. The Preamble to the 1945 Constitution also states that sovereignty is implemented for public welfare, which means that state control over the earth, water, and natural resources contained therein are used for the greatest welfare of the people.

Yusril also stressed that the 1945 Constitution doesn’t reject privatization, especially for oil and gas. The Constitutional Court in the Decision No. 002/PUU-I/2003 also didn’t require that state control the equity of the companies not be an absolute majority, but a relative majority. This means the state is to remain in a position to determine the decision-making process for the policy of the business entity.

Also read: Govt: Sale of Subsidiary Shares Not Privatization

The Petitioner believesArticle 77 letters c and d of the BUMN Law prohibits the privatization of limited liability companies in certain business lines. They argued that based on the amendment to PT Pertamina’s (Persero) articles of association No. 27 of December 19, 2016, it does energy businesses. Therefore, it cannot be privatized based on the provision of Article 77 of the BUMN Law. Its businesses are integrated from upstream to downstream, covering upstream/exploration, processing/refinery, marketing and trading, as well as distribution/transportation and shipping.

The Petitioner stated that to improve competitiveness, increase value, expand business networks, and manage independence of State-Owned Enterprises (BUMN), the government may form a holding company for SOEs/company group/holding companies. One of the ways is to establish sub-holdings and subsidiaries of PT Pertamina as shown in the Decree of Pertamina Board of Directors No. Kpts-18/C00000.2020-SO on the Basic Organizational Structure of PT Pertamina: Subholding Upstream, Refining & Petrochemical, Commercial & Trading, Gas, Power & NRE, and Shipping Co. The privatization of PT Pertamina subsidiaries by the government has been planned to be done through IPO at sub-holding level.

Before concluding the session, Chief Justice Anwar reminded the litigants that the hearing would resume on Monday, November 23, 2020 at 11:00 WIB to hear statement from the DPR’s (House) and the Petitioner’s expert.

Writer: Sri Pujianti
Editor: Lulu Anjarsari
PR: Lambang S.
Translator: Yuniar Widiastuti (NL)

Translation uploaded on 11/14/2020 09:50 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian version, the Indonesian version will prevail.

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