POST-EVENT PRESS RELEASE LM WEBINAR SERIES
SOEs in Norway and Russia: Insights and Inspirations from Indonesia in Oslo and the Indonesian Embassy in Moscow
DEPOK – (22-24/9/2021) The Management Institute of FEB UI (LM FEB UI) has successfully held two series of webinars and virtual discussions on the management and implementation of State-Owned Enterprises (BUMN) in Norway and Russia as benchmarks that the Indonesian government can learn from.
Running with two exclusive sessions on Wednesday (22/9) and Friday (24/9), the Indonesian Ambassador to Norway, Dr. Todung Mulya Lubis, LL.M., and the Indonesian Ambassador to Russia, H.E. Jose Antonio Morato Tavares, presented very engaging lessons in every session held.
LM FEB UI itself has the BUMN Research Group (BRG) research initiative, which attracts teachers, students, and practitioners to exchange ideas during discussions with the two Indonesian Ambassadors in the two European countries.
The session with Dr. Todung Mulya Lubis, LL.M. as the Indonesian Ambassador in Oslo shared information that raised the role of the Sovereign Wealth Fund (SWF), and was moderated by the consultant from LM FEB UI As Syahidah Al Haq, M.P.P., who is proficient in the field of economics and public policy.
While the session with H.E. Jose Tavares as the Indonesian Ambassador in Moscow shared information on the development of Russian SOEs, and was moderated by Taufiq Nur, M.Sc., an LM FEB UI consultant with expertise in marketing research, and strategy & organization.
The thinking of LM FEB UI with the Indonesian Ambassadors in Norway and Russia as guest educators in the field of organization and state ownership is an initiative needed in understanding how to manage SOEs wisely in accordance with their roles so that the Indonesian government in sustaining the role of SOEs can continue to improve their performance with external movements that cannot be contained by any industry.
Dr. Todung Mulya Lubis, LL.M. opened the discussion of the LM FEB UI webinar series with the state of the economy or the state of the country’s economy, which is fairly healthy and is reflected in 74 SOEs that are well managed by the government. The country’s GDP, which reached USD362 billion and with a GDP per capita of USD 67,000 in 2020 with an unemployment rate of 4.3% was enjoyed by its citizens of 5.4 million people. As the world’s 13th largest energy producer, the Norwegian economy is supported by the oil and gas industry, and 98% of domestic energy is renewable energy, including hydropower.
Norway can be said to be the first ranked country in the Democracy Index by the Economic Intelligence Unit. The ownership of companies by the state only occurs when it is truly in accordance with the interests of the country, because there is an obligation to limit the risk of market failure.
In order to realize good corporate governance (GCG), every year the government releases a white paper and reports it to the state Storting (Parliament) that owns these state-owned companies. The division of tasks between the Board and General Management is strictly defined.
The founder of the law firm Lubis, Santosa & Maramis also explained the SOE ownership framework that has been going on in Norway since it was established in the early 2000s. Thus, how the state owns these companies is also explained whether the conditions for business operations are initiated by the state, taken over by the state, or the production of goods and services is carried out by SOEs.
Furthermore, Dr. Todung Mulya Lubis, LL.M. introduced several state-owned companies based on their categorization: the first category has no rationalization for why they are state-owned (example: Flytoget for trains to/from airport flights), the second category has rationalization for why they are state- owned (example: Equinor for oil and gas, Telenor for telecommunications, DNB for financial, etc.), and the third category does not compete with other companies (eg Helsenorge for health, Vinmonopolet for alcoholic beverages, and Norfund for private equity).
Dr. Todung Mulya Lubis, LL.M. tells of the practice of SOE ownership by the Norwegian state, such as Equinor, which is equivalent to Pertamina in Indonesia, which is 67% owned by the state because of its large role for the public, but the rest is open to the private sector.
The Sovereign Wealth Fund is quite emphasized in presentations and discussions where investments are made internationally. SWF Norway’s asset allocation is divided into 72.8% shares, 24.7% bonds, and unlisted real estate of 2.5%, and is managed by Norges Bank Investment Management operating under the Central Bank of Norway.
SWF is the Norwegian government’s fiscal buffer. Throughout 2020, the government withdrew SWF funds of around USD 35 billion to cover the country’s state budget deficit. This has implications for the value of investments in Indonesia in 79 Indonesian company stocks and Indonesian government bonds.
Regarding the contribution of SWF, which was born, established, and operates because of a surplus, in Norway itself, the major contribution is because the thought leadership in sustainability is reflected in strategic SOEs, namely prioritizing health, energy, financial, and foreign relations goals.
The Indonesian Ambassador to Russia, Jose Tavares, who is the former Director General for ASEAN Cooperation from the Indonesian Ministry of Foreign Affairs, filled the second series of webinars on the development of SOEs in Russia.
Russia is still developing the management of SOEs in its country, and to provide actual data is a challenge because there are so many SOEs in Russia (there are reports that put the figure at 500,000 companies).
The role of the state in the Russian economy has exceeded 50%, this has hampered/slowed the development of competition, the development of MSMEs, labor productivity, and innovative steps. The Federal Anti-monopoly Service also reviewed the unsatisfactory condition of competition in the banking services market due to the issue of administrative barriers and soft credit programs, in addition to the role of the state which should reduce its control over SOEs (reduced by a minimum of 10% annually). BUMN itself there is no legal definition set one in Russia.
The management of Russian SOE assets is under the Russian Ministry of Finance, which has established a special agency for its management, namely the State Agency for State Property Management called ‘Rosimushchestvo’ because SOEs are state property.
The Indonesian Ambassador to Russia, who earned his postgraduate degree in public policy at Murdoch University Australia, also explained the functions of the ‘Rosimushchestvo’ so that the role of the state does not need to regulate the balance of ownership of SOEs. The SOE sector includes defense, roads, the economy, weapons or military equipment, natural resources and state assets, and cultural heritage. The current state-owned Russian company that has gone international, and at least has entered Indonesia, is Rosneft, an oil and gas company.
These two webinars lasted more than an hour with virtual discussions from the question and answer session at the end of the series, which was enlivened by senior academics, practitioners, and even media colleagues who continued to explore the thoughts of academics who are also researchers in management institutions.
Stay tuned for the next LM FEB UI webinar series via the @lmfebui Instagram account. Contact Yendra (+62 896-4747-3440 or yendra@lmfebui.com) for information on the SOEs in Norway and SOEs in Russia webinar series.
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