Strategy to Accelerate SOE Indonesia Restructuring
Increase Value Creation
This plan has been approved by the DPR and is just waiting for execution. Likewise, efforts to increase competitiveness by merging similar companies, for example, the unification of all Pelindos in one company, then the unification of BGR with PPI and the merger of Perindo with Perinus.
Another effort is to increase the effectiveness and value creation of state-owned holding companies. Based on BUMNINC’s observations, the synergy between BUMN and BUMN holdings has been planned for quite a long time, but the implementation has been somewhat stalled.
Value creation is technically possible in the implementation of this holding company through the capitalization of the strategic fit concept, especially in sectoral holdings where optimization of resources in the entire value chain of the company’s operations can be carried out.
Coupled with the downstream policy that allows increased added value in the domestic market. Holding Tambang estimates that the downstream policy is expected to increase the added value up to 32 times.
The problem is how to slow down this downstream process for the most significant benefit to the country. Of course, this process is not simple, it requires a large CAPEX and also high technology. The establishment of the Indonesia Battery Corporation (IBC) is a big step so that the added value of nickel can be fully enjoyed by this country. An important issue is how to accelerate the implementation of IBC Cooperation with global players such as CATL or LGChem
in real action. There has been good news, for example, Elon Musk decided to relocate the Tesla Gigafactory to Indonesia instead of India, for example. It’s just a matter of how the domestic battery industry accelerates its action to capture this business opportunity.
The establishment of a strong competitive BUMN Holding in the domestic market and able to compete in the regional market and even in the global market is the public’s dream. A study by Booz Allen (2014) shows that Indonesian business respondents are the least prepared in ASEAN to face regional market integration, less than those of Malaysia, Singapore, Thailand, and Vietnam.
The main issues are unpreparedness to face MN competitors, high logistics costs, difficulties in adapting to become a regional-scale company, and limited international talent.
In the BUMNINC discussion with several top regional SOE executives, it was stated that the key to their success in entering the regional market was understanding the target market in detail, accurate due diligence, cultural adaptation and comprehensive handling of post-merger integration (PMI).
