Tuesday, May 25, 2021 | 11:48 WIB
SOE Minister Erick Thohir giving a statement virtually at the judicial review hearing of Law No. 19 of 2003 on State-Owned Enterprises, Monday (24/5/2021). Photo by Humas MK/Ifa.
JAKARTA, Public Relations—The Government admitted that they would group PT Pertamina subsidiaries into several subholdings. In addition, they stressed to PT Pertamina that they should avoid layoff in the subsidiaries, said State-Owned Enterprises (BUMN) Minister Erick Thohir at the ninth judicial review hearing of Law No. 19 of 2003 on State-Owned Enterprises on Monday, May 24, 2021. His statement was followed by three experts for the Government: Gadjah Mada University’s (UGM) law professor Nindyo Pramono, University of Jember’s law lecturer Bayu Dwi Anggono, and Gadjah Mada University’s Center for Anti-Corruption Studies (PUKAT) director Oce Madril.
Erick revealed that PT Pertamina’s business would be continued in its subsidiaries, which would be grouped into several subholdings in order to help the company adapt to future changes, work more efficiently, focus on expanded, more aggressive business development, and compete in the global market. The restructure, he said, would lead to changes in the business process and structure of the subsidiaries. However, the Government had requested that it not affect employees.
“We ask and stress to the directors of Pertamina that it doesn’t cause any layoff of the employees in the companies affected [by the policy],” Erick said when testifying for the case No. 61/PUU-XVIII/2020.
Erick said PT Pertamina would form four other subholdings: upstream subholding PT Pertamina Hulu Energi, refinery and petrochemical subholding PT Kilang Pertamina Internasional; power and renewable energy subholding PT Pertamina Power Indonesia, and commercial and trading subholding PT Patra Niaga.
Also read: Constitutionality of Privatization of Pertamina Subsidiaries
Increase in SOEs’ Values
Meanwhile, UGM law professor Nindyo Pramono said that privatization could be a way to improve SOEs’ performance and values. It also promotes good cooperate government and reduces state burdens. Therefore, he added, competitive SOEs should consider privatization, including PT Pertamina.
He added that the constitutional mandate of state control over production branches that are important to the state and affect the livelihood of the people can be relegated to SOEs. He believes a broad interpretation of SOEs, including their subsidiaries, could lead to legal uncertainty. He cited the Constitutional Court Decision No. 01/PHPU-Pres/XVII/2019, which states that SOE subsidiaries are not within the definition of SOE. Therefore, the oil and gas sector as state-controlled strategic natural resources can be managed by the Government as the controller of mining, by establishing working committees.
“So, it is inappropriate that the norm is interpreted broadly so that appointed SOE subsidiaries are given a mandate or authority of state control over strategic natural resources that SOEs are given mandate for,” Nindyo said virtually.
Also read: Govt: Sale of Subsidiary Shares Not Privatization
State Control Not Diminished
In response to the Petitioner’s concern over diminishing state control over PT Pertamina due to restructuring into subholdings, Nindyo stressed that Indonesia’s SOEs follow the golden set. In this set, the Government could always use their right to shares, even if the shares owned by the holding in the subholdings decrease. Nindyo believes that a policy could be set so that the holding has veto power in order to safeguard the state’s control of the subsidiaries to prevent any deviation from the objective of the people’s welfare.
“Even if the shares of the subsidiaries must be sold, the sale doesn’t constitute privatization. By law, privatization is carried out by SOEs and not by subsidiaries. If the parent company (unclear) holds a majority of the shares in the subsidiary, the Petitioner’s concerns were groundless,” Nindyo said before the presiding justices led by Chief Justice Anwar Usman in the plenary courtroom.
Also read: Pertamina: Privatization Not Unconstitutional
Different Legal Entities
The Government also presented UNEJ law lecturer Bayu Dwi Anggono to give a statement regarding the position between SOEs and their subsidiaries. Bayu said both are different legal entities. The SOE is defined in Article 1 point 1 of the SOE Law, while the SOE subsidiary in Article 2A paragraph (2) of the Government Regulation (PP) No. 44 of 2005 on Procedures for Participation and Administration of State Capital in State-Owned Enterprises and Limited Liability Companies as amended by PP No. 72 of 2016 as well as Article 1 point 2 of the Regulation of the SOE Minister No. 3 of 2012 on the Appointment of Members of Board of Directors and Board of Commissioners of SOE Subsidiaries.
Bayu also explained that while a SOE’s capital is mostly owned by the state through direct participation, while a SOE subsidiary’s by the participation of state shares in a SOE. “Therefore, limited liability companies are mostly owned by SOEs or there is state capital in it indirectly. Therefore, SOEs and their subsidiaries are different legal entities,” he explained.
Also read: Expert: Formation of Pertamina Subholdings Allows Unbundling
For People’s Welfare
Meanwhile, PUKAT director Oce Madril said that Article 33 of the 1945 Constitution doesn’t reject privatization as long as state control on the management of natural resources remains. He added that, ideally as set forth in the Constitutional Court Decision No. 36/PUU-X/2012, the state directly manages natural resources in the form of oil and gas for optimum revenues and benefits for the people’s welfare through SOEs.
“However, the Court decision also states that SOEs are not the only actors that can manage such natural resources. Region-owned enterprises, cooperatives, and private businesses also can,” Oce said.
Also read: Restructuring of PT Pertamina Eliminates State Control on Stocks
The Petitioner believes Article 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 subholdings 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 subholding level.
Before concluding the hearing, Justice Anwar informed that the hearing would resume on Monday, June 7, 2021 at 11:00 WIB to hear the Relevant Party’s expert. The expert’s statement is to be submitted to the Registrar’s Office no later than two days before the next hearing.
Writer : Sri Pujianti
Editor : Lulu Anjarsari P.
PR : Lambang S.
Translator : Yuniar Widiastuti (NL)
Translation uploaded on 5/27/2021 09:16 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.
Tuesday, May 25, 2021 | 11:48 WIB 478