Toto Pranoto, BUMN Researcher: The competence levels of BUMNĀ (SOE) Commissioners are not yet met
Nino Eka Putra ~ PR of FEB UI
DEPOK – (19/8/2020)
Dr. Toto Pranoto, Senior Advisor of the Management Institute (LM) FEB UI as well as Researcher of BUMN Research Group LM FEB UI, released the following article published in the online media, Gatra.com, on Wednesday (19/8/2020).
“SOE Researcher: Competency levels of SOE Commissioners are not yet met”
Discussions and discourses on the function and effectiveness of the Board of Commissioners in supervising SOEs have recently been hotly discussed. The trigger was the massive restructuring in the ranks of the Board of Directors and the SOE Board of Commissioners carried out by the Minister of SOE since the beginning of his tenure. And then there was the big issue initiated by the Ombudsman relating to the concurrent positions of state civil employees (ASN) and Army (TNI) / Police (Polri) as the Board of Commissioners of an SOE (BUMN). There are 397 BUMN Commissioners with concurrent positions.
How important is the role of the Board of Commissioners (BOC) in the SOE organizational structure? Article 31 of Law No.19 / 2003 on BUMN,Ā states that the task of the BOC is to supervise the performance of the Board of Directors and provide advice to the Board of Directors. If the direction of the company is deemed contrary to the established performance target, the Board of Commissioners has the right to reprimand the Board of Directors. The Board of Commissioners also has the right to propose the dismissal of the Board of Directors at the GMS in the event of a violation deemed dangerous for the survival of the corporation.
The BUMN Law does not regulate the qualifications of members of the board of commissioners in detail. Article 28 of the BUMN Law states that the requirements for BUMN Commissioners are to have integrity, dedication and understand the problems of company management. In the BUMN Ministerial Decree No. PER/MBU/02/2015, the requirements for the appointment of SOE commissioners are regulated, including candidates for BUMN commissioners who are competent individuals, who are not bankrupt, have never been sentenced for criminal losses to state finances, have adequate knowledge in the business sector the Persero/Perum where the person concerned is nominated and can devote sufficient time to carry out his duties. It also stipulates that the candidates for members of the Board of Commissioners are not officials of political parties or legislative candidates. The candidate for Commissioners from the technical ministry or other government agency must be based on a letter of recommendation from the agency concerned.
To carry out its duties, the BOC is assisted by several committees that provide technical assistance related to corporate performance analysis and the board of directors includes the Audit Committee, the Nomination & Remuneration Committee, and the Risk Monitoring Committee. These committees are very useful in providing input regarding the supervisory duties of the Board of Commissioners. Moreover, BOC members’ backgrounds vary. With all these requirements, there should be no reason for weakness in the supervisory performance of the BOC in state-owned companies and their directors.
The findings of the Ombudsman released to the public stated that the performance of the BUMN BOC was weak due to conflicts of interest, competency issues, influence and transparency of assessments. What is the reality? Does the placement of echelon 1 ASNĀ in strategic SOEs such as PLN or Pertamina have the potential to create a conflict of interest? Of course, the Government has an interest in protecting its interests in these BUMNs because its function is not only profit oriented, but also the assignment of Temporary Officials (PSO) for the public interest. The Minister of BUMN also conducts a tour of duty for echelon 2 of the Ministry of BUMN as Commissioner / Director of BUMN with the aim of providing a “sense of business” to regulators so that they understand the reality in the business world to enhance policy making. How to protect interests so that the role of the ASN Commissioner does not harm the interests of the company? I think in the current climate of transparency and the functioning of a supervisory institution such as the Ombudsman or KPPU, neutrality can be maintained.
The problem of competence of BUMN Commissioners is an issue that must be resolved. It is noĀ secret that many desirable commissioner qualifications have not been fulfilled, especially in relation to the basic competence of supervision and understanding of the BUMN businesses that are supervised. It is recommended that in the future, the recruitment of candidates for BUMN Board of Commissioners must follow the assessment stage (fit & proper test) as has been carried out for the selection of candidates for BUMN Directors.
Regarding the tug-of-war for influence, is it related to the BOC profile who comes from a political party background? In my opinion, as long as the candidate is committed to being inactive from party political activities and is considered competent in the field of BUMN supervision, then it is perfectly fine that the candidate can be recruited as a BUMN Commissioner. Unless, after being appointed as a BUMN Commissioner it turns out that the person concerned is still active in political/party activities, then the Commissioner can be dismissed for violating applicable regulations. Are the majority shareholders able to enforce these rules? Hopefully this can be realized with close monitoring from the public.
The performance assessment of the Board of Commissioners is carried out by shareholders in the GMS forum. Usually the responsibility of the Board of Commissioners is carried out collegially. In accordance with GCG practice, each member of the Board of Commissioners must fill in the attendance level at regular meetings and extraordinary meetings. There is a limit to how many members of the Board of Commissioners may skip meetings or field surveillance visits. So this rule is not a formality but an obligation that must be fulfilled. If the performance of Board of Commissioners members is not able to meet the minimum limit of stipulated obligations, the GMS may dismiss the members of the Board of Commissioners. Has there ever been an incident like that? I’ve never heard of it. Whether for reasons “ewuh pakewuh” (Javanese courtesy for saving face) or other reasons. In the future, with the increasing challenges in the responsibilities of the Board of Commissioners’, the Government as the largest shareholder in BUMN is obliged to evaluate the performance of the BOC in a more rigid way.
The strength of state-owned corporations is of course not only determined by the character of the BOC or its directors, but also must be reflected in the strength of its institutions. Here it is important to embed consistency in enforcing the implementation of good corporate governance (GCG). Research in the ASEAN GCG Scorecard several years ago revealed the weaknesses of Indonesian corporations, especially in the facets of Disclosure and Transparency. That is, the limited number of independent commissioners, lack of independent experts on the Nomination and Remuneration Committee, BOC and BOD election processes considered to have weaknesses, weak disclosure of insider trading, and weaknesses in disclosure of the company’s constitution. In fact, several studies, such as that conducted by Abravanel (2006) show that public companies that implement good GCG will get a premium price from investors of up to 20%. So improving the character integrity of the BUMN Board of Commissioners’ profile must also be in line with the improvement of the quality of its institutions. It’s never too late to change. Let’s do it. (hjtp)
Source: https://www.gatra.com/detail/news/488006/ekonomi/peneliti-bumn-kompetensi-komisaris-bumn-belum-terpenuhi
(am)