Afternoon Talk #2 FEB UI Anniversary: LM FEB UI, LM Research Developments related to SOEs, Open Corporations, and Climate Change
Rifdah Khalisha – Public Relations FEB UI
DEPOK – (6/10/2021) In the 71st Anniversary Series of Events, FEB UI held the Series 2 Afternoon Talk with the Management Institute (LM) with the theme “Media Briefing Series: Developments of LM Research related to SOEs, Open Corporations, and Climate Change ” on Wednesday (6/10). Present as speakers were As Syahidah Al Haq, M.P.P. (Public Policy Practitioner), Arza Faldy, M.M. (Risk Management Practitioner), Dr. R. Nugroho Purwantoro (Global Business Practitioner), and Dr. Willem Makaliwe (Strategic Transformation Practitioner). Hosting the event was Lisa F. Akbar, M.M. (Banking and Finance Sector Practitioner).
Arza discussed the Public Service Obligation (PSO) in State-Owned Enterprises (BUMN). The hope is that BUMN as development agents must hold a social mission, not only a commercial mission. In other words, also able to serve the public interest and create public welfare.
Basically, the assignment of the PSO is under the legal umbrella of Article 34 Paragraph 3 of the 1945 Constitution and Article 66 of the BUMN Law No. 19 of 2003. He stated that, “BUMN had received the PSO assignment long before the RI Law No. 19 of 2003 concerning BUMN, through sectoral laws and related regulations. However, after the issuance of this law, it became the basis of PSO policy.”
Referring to the law, the government must provide full compensation for expenses incurred by SOEs during carrying out government assignments, including budgeting to cover the difference if the assignment is not financially feasible based on the study, for example there is a difference in market prices and government prices.
In the context of the assignment, SOEs can obtain subsidies and a PSO. Arza also compares the two, the subsidy focuses only on certain goods, while the PSO focuses on activities or capacities as ordered by the government. In general, the PSO process starts from assignment, budget submission and approval, implementation, billing and disbursement, to evaluation and auditing.
Furthermore, As Syahidah explained about the implementation of the PSO at PT Pupuk Indonesia (Persero). The BUMN appointed Pupuk Indonesia as the operator in the procurement of subsidized fertilizer to maintain supplies and distribute fertilizer to farmers.
From this implementation, she concluded that other countries have generally implemented PSO for non-commercial activities. She said, “Based on studies, each country uses very diverse mechanisms, including through compensation contracts.”
“The principles of accountability and transparency and measuring performance comprehensively must be applied in assignments. After that, it is necessary to monitor the PSO evaluation indicators—efficiency and effectiveness—for important SOEs and PSOs. Then, determine that there are certain mechanisms to follow up on the results of the evaluation, especially at the outcome and impact levels.” she added.
Nugroho shared about the complexity in measuring costs for energy transitions. Concretely, there is currently world pressure to tackle climate change by reducing various negative emissions from all economic activities.
“The longer it goes on, the more pressure it will get. However, it is difficult to replace the energy generation system—from fossil-based to renewable-based—because the existing measurement models has limitations.” he said.
He also introduced a high-level macroeconomics measurement technique, namely the general equilibrium model, which was applied to the assessment report belonging to the United Nations (UN) using integrated assessment models.
This model requires a projection of specific global conditions for key economic variables, such as demand, supply, growth, widespread price increases, and others. Then, combine these projections with performance data and technology costs based on current conditions. Finally, it will produce clear findings that can be used in measuring the total cost of reducing emissions.
Then, Willem presented research on the financial performance analysis of 2020 and 1H-2021 public corporations in Indonesia. Based on data published on September 3, 2021, the study uses 702 financial data, considering the availability of financial statements in 2020 on the Indonesia Stock Exchange (IDX) website.
He revealed, “The results of a company’s profit analysis show that out of 702 companies, 65.8 percent failed to record an increase in profits from 2019 to 2020. Only 18.8 percent of companies were able to increase profits by more than 50 percent.”
“Meanwhile, the results of the profit analysis of BUMN companies show that of the 18 BUMNs that recorded profits in 2019, 77.8 percent booked profits and 22.2 percent booked losses in the following year. Then, of the 2 SOEs that recorded losses in 2019, 1 company managed to make a profit and 1 other company continued to lose the following year.” he continued.
Finally, an analysis of the earnings of 402 companies that have published In the 1H-2021 Financial Report on the IDX, 255 companies (63 percent) succeeded in increasing net income. Overall, 402 companies experienced an increase in revenue of about 14.2 percent. (hjtp)
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