State Owned Enterprises’ Debts

Currently, SOE’s debts, especially those engaged in the construction sector (construction SOEs), are in the spotlight. The solution can only be formulated by understanding the root of the problem.

KOMPAS/HERU SRI KUMORO

A Prasetyantoko

A state-owned enterprise (SOE) is a combination of a business interest and public service. The global financial auditing and consulting company PricewaterhouseCoopers (PwC) calls it a vehicle for the acceleration (catalyst) of public value creation. We know that managing an organization with multiple goals is much more complicated. There must be a balance between social goals (mission) and sustainability (business).

In a bad situation, SOEs function as saviors as in the 1998 crisis, during which their assets were sold (privatization) to cover government debts. In a good situation, SOEs become the accelerating pendulum; as in recent infrastructure development. In short, SOEs are at the forefront of the economic cycle: In a good time, they are advantaged and in a bad time, they are sacrificed. So far, SOEs have been in the center of government procyclical policies so that a new direction for the SOE management is needed in the future.