Indonesia: Govt to set up three holding companies in 2019

  • The State-Owned Enterprises (SOE) Ministry plans to establish three holding companies in 2019 as part of the government’s efforts to strengthen and improve the efficiency of state-owned firms.
  • An official at the ministry confirmed that the three holding companies would operate in the financial services, insurance and aviation industries.
  • According to Gatot Trihargo, an undersecretary at the ministry in charge of financial, survey and consultancy services, the financial services holding company would include four state lenders, namely Bank Mandiri, BNI, BRI and BTN, as well as other non-banking state firms such as public pawnshop PT Pegadaian, financial services firm Bahana and switch operator company PT Jalin Pembayaran Nusantara, would become subsidiaries of state-owned financial services firm PT Danareksa, which was chosen by the ministry to be the holding company.
  • Gatot also said the holding company would also include fintech firm PT Fintek Karya Nusantara, the operator of payment system LinkAja.
  • In addition to the financial services holding company, Gatot said, the ministry was also set to establish an insurance holding company and aviation holding company.
  • Previously, it was reported that state-owned insurer PT Jasa Raharja would head the insurance holding company and that its subsidiaries would consist of eight state insurance firms: Jamkrindo, Askrindo, Asuransi Jasa Indonesia, Reasuransi Nasional Indonesia, Reasuransi Indonesia Utama, Jasaraharja Putera, Asuransi Asei Indonesia and Jiwasraya.
  • As for the aviation holding company, Gatot said the ministry had appointed state air survey firm PT Survai Udara Penas as the parent company to its subsidiaries that comprise airport operators PT Angkasa Pura I and PT Angkasa Pura II, flag-carrier PT Garuda Indonesia and Pertamina’s air service provider PT Pelita Air Service.
  • SOE Minister Rini Soemarno recently said that the ministry intended for the holding company to strengthen the country’s aviation business and increase its value, as airport, airline and cargo management would be integrated under one roof.
  • University of Indonesia SOEs expert Toto Pranoto agreed with Rini, saying that the integration would not only increase the aviation business’ value but also transfer its value to the customers.
  • He said he was confident that the government could establish the aviation and insurance holding companies in 2019. However, he expressed doubt that the financial services holding company could be established on time.
  • Moreover, he said, the establishment of these holding companies would also increase the competiveness of SOEs in their respective industries and also decrease the operational costs of each company.
  • So far, the government has established several sectoral holding companies that consist of SOEs from the same industries.
  • These holding companies are a fertilizer holding company led by PT Pupuk Indonesia, a mining holding company led by PT Indonesia Asahan Aluminium (Inalum), an oil and gas holding company led by PT Pertamina and a plantation holding company led by PT Perkebunan Nusantara (PTPN III).

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