(Corrects first name of parliamentarian in paragraph 31)
By Janeman Latul
JAKARTA Feb 22 On an overcast Saturday in early
January, the man in charge of modernising Indonesia's state
companies suddenly lost control of his prototype electric sports
car and ploughed into the side of a mountain in East Java.
State-Owned Enterprises Minister Dahlan Iskan was unhurt,
but the $300,000 bright red "Tucuxi", dubbed "Indonesia's
Ferrari" by local media, was a write-off.
It looks like his chances of pulling off an ambitious reform
of the bloated state sector are heading the same way.
More than a year after his appointment, most of Iskan's
initiatives to fix state firms have either been revoked or
blocked by parliament or remain stuck in ministries, according
to government and parliamentary documents obtained by Reuters.
"The political challenge is still huge," said Iskan, who
started his career as a journalist and still writes a regular
column in his newspaper, in an interview. "Life is like that.
It's difficult to make this country better."
Iskan has abandoned plans to start mass production of the
privately funded Tucuxi, named after a type of dolphin.
But criticism over the crash -- he is being investigated by
police for driving an unlicensed car on public roads, although
no charges have been filed -- dented his reputation and further
sapped his political capital, making it even tougher for him to
battle powerful vested interests.
It is a frustration that, according to those close to him,
is motivating the media mogul to consider standing as a
candidate in next year's presidential election despite being
viewed as a rank outsider.
"I would lie if I say I don't want to, I want to," Iskan
said, when asked if he wanted the presidency.
He conceded he held only a small chance of winning, and
declined to discuss his reasons for running because he was still
a serving minister. But several people close to him said he saw
the presidency as the only way to achieve change.
"Iskan is impatient over the lack of action just like any
private sector guy. He's frustrated with the political pressure
especially from the parliament," said a source close to Iskan
who declined to be named due to the sensitivity of the issue.
President Susilo Bambang Yudhoyono, two-thirds of the way
through his second and final five-year term, has made reform of
state companies a priority in developing the G20 economy.
Yudhoyono turned for help to Iskan, who made his reputation
turning the near-bankrupt Jawa Pos Group into one of Indonesia's
biggest media companies.
Just over a year since his appointment in late 2011, Iskan
has struggled to implement any of his ambitious plans. On Jan.
23, he announced that he might have to cancel all his planned
initial public offerings (IPOs).
It is not the first time Yudhoyono has picked a reformist
and then failed to give them protection. His highly respected
finance minister, Sri Mulyani Indrawati, became so exhausted by
relentless politically motivated criticism she left in 2010.
Indonesia's 140 state-controlled firms account for a huge
chunk of Southeast Asia's biggest economy -- their total
revenues are estimated to have hit 1,500 trillion ($155 billion)
last year, or nearly a fifth of gross domestic product.
Several of the companies have complete or near control of
key industries such as energy, power and agriculture that
underpin Southeast Asia's biggest economy.
"There is an ownership fetish -- the state wants to act as a
entrepreneur," said James Castle, chairman of CastleAsia, one of
Indonesia's leading consultancies for foreign firms.
"They are everywhere, acting like private companies, and
they crowd out the private sector."
ALL THE PRESIDENT'S MEN
Even Iskan's attempt to take control of the appointment of
senior state company managers has largely failed.
In November 2009, Yudhoyono, criticised over repeated power
cuts, gave Iskan the job of heading state electricity monopoly
PT Perusahaan Listrik Negara (PLN) and agreed to allow him to
choose his own board. The appointment was seen as a success.
As state-owned enterprises minister in 2011, he wanted
similar freedom to make appointments free of political
considerations. He discovered quickly that wasn't so easy.
Executives connected to political party chiefs and the
presidential palace are on the board of more than half of the
top 25 state firms, according to state-owned enterprises
ministry data and the companies documents from 2012.
Two presidential decrees, issued in 2005 a year into
Yudhoyono's first term, gave the authority to choose top
managers of state firms to a "Final Assessment Team" (TPA) led
by the president.
"These are, of course, assignments ... they are missions
from the government," Firmanzah, a special advisor to the
president with responsibility for administration and financial
matters, said in defence of presidential staff appointments.
"This is to push for good governance."
ENEMY OF THE HOUSE
Iskan has also antagonised members of two parliamentary
commissions with oversight of state companies.
"He is not an expert in bureaucracy, politics and lobbying.
He's a businessman," said Muhammad Said Didu, chief commissioner
of state planter PT Perkebunan Nusantara IV.
He faced a setback only a few months into the job when he
was forced to revoke his first decree to give more flexibility
to executives in state firms to take major business decisions.
Parliament warned Iskan the decree, which gave his ministry
such powers as deciding share buy backs, was illegal.
"My questions are: Does he have the authority to do that?
And is it in line with the state-firms law?" said Benny K.
Harman, vice chairman of one of the parliamentary commissions
overseeing state firms, who is from Yudhoyono's party.
Differences of interpretation and overlapping, sometimes
conflicting, laws also hinder Iskan's attempts at major reform
and can make executives afraid to act for fear of prosecution.
In 2012, he planned five state firm initial public
offerings. Only one, builder PT Waskita Karya, went to
the market and that had already been approved by parliament back
in 2008, before he came into office.
Last month, he announced that all IPO and rights issue plans
by state firms would probably be postponed because of technical
and regulatory issues.
He declined to discuss a plan to create one of the world's
largest palm-oil and rubber firms with $5.6 billion in assets,
which had once been set for completion in March 2012.
"Changing the law in this country is like changing the
Koran," senior Iskan aide Wahyu Hidayat told Reuters. "Next to
($1 = 9,680.5 rupiah)
(Additional Reporting by Fathiya Dahrul and Neil Chatterjee;
Editing by Jonathan Thatcher and Alex Richardson)