Saving State Property
The government is busy sprucing up assets owned by the state. It must not fall into the same trap twice.
LIKE a curse passed down for generations, management of state assets always leaves a never-ending problem. The government seems to be busy thinking about the difficulties of optimizing neglected assets. Much of the cooperation with third parties ended with losses. More than a few of these assets changed hands without any explanation.
Now the finance ministry is trying to sort things out. Through the State Asset Management Agency (LMAN), the government is compiling a new inventory of property assets belonging to the state. The agency has been tasked with dealing with problematic assets that have proved difficult to manage. Some of them are bank assets that have been neglected for 20 years after the previous owners went bankrupt as a result of the 1998 monetary crisis. All of them must be repaired and used in a way that contributes to state coffers.
It is this commercialization of state assets that is not easy, especially in the middle of a recession like now. As well as the high cost of repairing these assets, many of the prospective buyers are keeping a low profile.
The government should learn from the management of assets in the past so that it does not fall into the same trap. For example, two years ago an audit by the Supreme Audit Agency (BPK) uncovered losses in the management of state assets around the Bung Karno Sports Stadium, the Kemayoran Complex and the Taman Mini Indonesia Indah (TMII) theme park.
For example, many of the land assets that should have been free and clear at the TMII, were still being used by other parties. A number of the agreements for the use of state assets in the past did not include a penalty clause for late payment. This was also the case for the cooperation between the managers of Bung Karno Stadium and Senayan Trikarya Sempana, the manager of the Plaza Senayan shopping and office complex. The BPK also found that the payment of compensation and dividends as well as the clause on termination, sanctions and force majeure were not included in the government’s agreement with the joint venture company that had been established by Titiek Suharto and Kajima Overseas.
The Bung Karno Stadium management also had problems implementing the Supreme Court reexamination ruling concerning the land now occupied by the Sultan Hotel. A BPK audit found that HoSultan Hotel manager Indobuildco only paid royalties plus interest on the use of the land from 2003 to 2006. No royalties have been paid by the hotel formerly known as the Hilton for the period between 2007 and the end of the land use permit in 2023. Indobuildco subsequently promised to pay its obligations if it were awarded an extension of the land use permit.
These bad examples from the past must not be repeated. The LMAN must carefully draw up a business development strategy. It is also time the government began to think realistically. The management of assets requires substantial amounts of capital. Not every asset must be managed by the government or developed through a third party.
In other words, the finance ministry should consider more options in the optimization of state assets. Not everything has to be transferred to the LMAN. If there is a sudden need for funds for strategic projects, the government could push for these assets to be sold as it is, no matter what condition they are in.
Rather than a pointless tug-of-war, it would be better for assets that might be fall into disrepair to be quickly auctioned off and the profits used to fund productive projects. Meanwhile other assets in strategic locations could be turned into city center’s public facilities managed by regional governments. The final aim is simple: make use of state assets as quickly as possible for the benefit of the public.