State-owned enterprises play a big role in the Indonesian economy, and are estimated to account for about 40% of all economic activity, according to the IMF. Today, Indonesia’s goal is to improve the governance of these corporate behemoths to better compete with global companies. Vice-Minister of State-Owned Enterprises Budi Gunadi Sadikin explains Indonesia’s future plans for boosting the professionalism of these companies, and explores the potential for cooperation with the United Arab Emirates
How many SOEs are there in Indonesia and how do you plan to make them more effective to compete in international markets?
There are 142 state-owned companies and around 30 of them are publicly listed; they are the largest companies in each of their sectors. These companies play a big role in Indonesia and we realize there is a need to improve the governance and professionalism of the board of directors and commissioners to make sure that they are on a par with global companies. I believe that the more advanced state-owned companies can represent Indonesia before the global community.
In terms of transforming Indonesia into a manufacturing hub, what is the future for electric cars, mining and petrochemicals?
We realize that our manufacturing sector is lagging behind. God gave us rich natural resources, but without a manufacturing industry we will never rise about $5,000 per capita GDP, and that is why we would like to focus on developing a manufacturing sector that is globally competitive where we have an edge, such as for example a manufacturing sector based on natural resources and on building things that can be consumed by a lot of people, because we have a very large population – so something like cars, motorcycles and consumer goods.
The Defense Ministers of Indonesia and the United Arab Emirates (UAE) are signing an MOU. What are the prospects for exporting more defense equipment to UAE and lowering the accounts deficit?
Some of our companies have been in talks with UAE companies and there are some business opportunities there, because the UAE has good connections with the global defense markets while Indonesia has cheaper resources and cheaper labor, so there are very good linkages. There are several defense-related products that the UAE can buy from us, and some that we can buy from them. The third opportunity lies in MRO, Maintenance Repair Operations, in which we believe that the UAE has expertise and connections but needs access to cheaper labor and access to the Asian region. So by integrating these MRO strengths that each one of us has, we can create a strong MRO business for the defense sector globally.