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Tri Hayati testifying for the Relevant Party virtually at the judicial review hearing of Law No. 19 of 2003 on State-Owned Enterprises, Monday (7/6/2021). Photo by Humas MK/Ifa.

Tuesday, June 8, 2021 | 13:29 WIB

JAKARTA, Public Relations—Since the amendment to the 1945 Constitution, the privatization ban on sectors that affect the people’s livelihoods no longer applies. However, the state control still applies as per Article 33 of the 1945 Constitution, so this control only means that the Government plays a role as a regulator, while the operators might come from the private sector, said Tri Hayati, an expert for PT Pertamina (Relevant Party) at the tenth judicial review hearing of Law No. 19 of 2003 on State-Owned Enterprises (SOE/BUMN) on Monday, June 7, 2021.

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In the petition, the Federation of Pertamina United Labor Unions (FSPPB) states that Article 77 letters c and d of the BUMN Law violates Article 33 paragraphs (2) and (3) of the 1945 Constitution. Tri said of the case No. 61/PUU-XVIII/2020 that the government’s role as an operator means there is an opportunity to eliminate the privatization ban. However, the government still carries out nonprofit activities in relation to that role, while the profit-oriented ones may be delegated to private enterprises.

In her testimony, the mining law expert of the University of Indonesia (UI) said that post-amendment to the elucidation to Article 33, the state controls natural resources while the government manages them and the people own them. This means that the ban on the privatization of natural resources as stipulated in Article 33 pre-amendment no longer applies. Therefore, the government’s role in exercising its control right is focused on policymaking in the management of those natural resources.

“So, the most important thing in the management of natural resources is for the greater welfare of the people, by the government and/or by private enterprises. The key thing is that the management is controlled by the government, which reflects state control, through the government’s legislation and policies,” Tri said before Chief Justice Anwar Usman and the other eight constitutional justices.

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Business Entity Like Others

Tri also said that the legal politics of oil and natural gas management in the Reform era has changed the paradigm of the privatization of natural resources. Essentially, the evaluation of and amendment to Law No. 44 of 1960 and Law No. 8 of 1971, which resulted in Law No. 22 of 2001 on Oil and Natural Gas, states that the state control over the management of natural resources is no longer in the hands of Pertamina. the state control is carried out by the government as the controller of mining, and then the government establishes an exercising body. Tri said that, this way, the legal politics of Law No. 22 of 2001 has returned the state control to the government—as the executor of the people’s mandate—in the form of control over mining.

“Therefore, PT Pertamina is a business entity that equals other oil and gas contractors. However, its capital comes from the state [finances]. Even if parts of Pertamina are privatized, it won’t degrade the state control because PT Pertamina is no longer the controller of mining as stipulated in Law No. 8 of 1971,” she said virtually from her residence.

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At the preliminary hearing, the Petitioner asserted that 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. 

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

Translation uploaded on 6/8/2021 20:51 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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