Holding of the Indonesian State-Owned Enterprises and Analysis of the Judicial Review Over the Government Regulation Number 47/2017 Juncto Law Number 19 Year 2003 on the BUMN

DOI

10.2991/aebmr.k.200321.034How to use a DOI?

Keywords

holding of Indonesian State-Owned Company (BUMN), Government Regulation Number 72/2016, Judicial Review, Indonesian Constitutional Court (MKRI)

Abstract

The Government of Indonesia (GoI) recently has enacted the Government Regulation Number 72/2016 concerning Shares Subscription and Arrangement of State Capitals in the State-Owned Enterprises (BUMN) (hereinafter referred as “PP Holding BUMN”). The Indonesian Ministry for BUMN (“Meneg BUMN”) proposes, that the Holding BUMN will cover six core economic sectors: (1) Energy, (2) Mineral extraction, (3) Financial service, (4) Highway infrastructure/construction, (5) Property (real estate), (6) Food. For example, Inalum (Persero) has been a Holding BUMN for 3 (three) other BUMNs, namely: Aneka Tambang (Persero), Timah (Persero) and Bukit Asam (Persero) by virtue of Government Regulation Number 47/2017. The BUMN is principally regulated in the Article 33 paragraphs 1, 2 and 3 of the Indonesian Constitution 1945, which provides a legal basis for the state-owned monopolies by BUMN. Article 33 para. 2 of the Indonesian Constitution confers the right of state monopoly to BUMN in the economic or business sectors vitally for the life sustainability of people. Respectively, BUMN has the concentration of economic/business power, enabling it to determine prices of goods and/or services. Moreover, the Indonesian nationalizations in late fifties led to the ownership transfers of “essential-facilities” by the existing BUMN, such as transport and distribution networks of energy by Indonesian Electricity Company (PLN). On one hand, the GoI argues that Holding of BUMN is necessary because it would bring beneficial impacts, such as: First, strengthening of corporate performance by creating synergies and economies of scale and reducing inefficiencies in operations and financing; Secondly, the GoI aimed to professionalize the management system by distancing BUMN from unreasonable politics. Thereby granting more business independency to BUMN. Third, through Holding of BUMN, the Government will be relieved of its direct responsibilities of overseeing all the BUMN dispersed across various industries. Instead, the Government hoped to use this energy and budget elsewhere more efficiently. On the other hand, there are public’s pervasive concerns, whereas PP Holding BUMN would lead to unlawful privatization of BUMN. Firstly, there was Appeal for the Judicial Review to the Indonesian Constitutional Court (“MKRI”) against the Holding of BUMN on Mining Sector by Government Regulation Number 47/2017 (“PP Number 47/2017”) juncto Law Number 19 year of 2003 on BUMN (“Case Number 14/PUU-XVI/2018”). The appealing Parties argued that the Holding of BUMN by PP Number 47/2017 and PP Number 72/2016 will decrease the value of the State’s assets. Secondly, the appealing Parties argued that the Holding of BUMN through the injection of State’s share capital (inbreng) in the Aneka Tambang (Persero) and two others BUMNs to PT Inalum (Persero), as the Holding BUMN, will cause the elimination of BUMN status of Aneka Tambang (Persero) and two other BUMN as the new subsidiary companies. The appealing parties argued that this would be “a new form of privatization” because of transformations of BUMN to be subsidiary companies of Holding BUMN (Inalum), without the mechanism of Indonesian State Revenue and Expenditures Budget (“APBN”) and a consent of the House of Representatives. Accordingly, this research attempts to analyze the Holding of the Indonesian State-Owned Enterprises (BUMN) pursuant to the Government Regulation Number 72/2016 (“PP 72/2016”) and the Constitutional Law Analysis of Judicial Review over the Government Regulation Number 47/2017 and Law Number 19year 2003 on BUMN.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Satya Arinanto
AU  - Dian Parluhutan
PY  - 2020
DA  - 2020/03/27
TI  - Holding of the Indonesian State-Owned Enterprises and Analysis of the Judicial Review Over the Government Regulation Number 47/2017 Juncto Law Number 19 Year 2003 on the BUMN
BT  - Proceedings of the 3rd International Conference on Law and Governance (ICLAVE 2019)
PB  - Atlantis Press
SP  - 254
EP  - 261
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200321.034
DO  - 10.2991/aebmr.k.200321.034
ID  - Arinanto2020
ER  -