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The government hopes to increase the remuneration of top
managers in state-owned enterprises next year in an effort to improve
executive performance, says a senior official at the State Enterprises
Ministry.
"Minister Sofyan Djalil himself will head the discussions on the
proposed pay hikes," the ministry's secretary told reporters Friday in
Jakarta. He said that higher executive pay packages in the SOE sector
were essential as the salaries of commissioners and directors in most
state enterprises were well below what their counterparts earned in the
private sector. He said that according to the proposal, the executives
of SOEs would receive fixed remuneration packages comprising basic
salary, allowances and benefits. He said that the plan would harmonize
the remuneration system, meaning that some executives would see their
salaries increased, while others would see theirs decreased, depending
on a determination of who was underpaid or who overpaid Besides the
remuneration proposal, the ministry also planned to issue new internal
procurement guidelines for state-owned enterprises in the immediate
future, following the absence of regulations on procurement in the
prevailing presidential decree.
Didu said the new internal guidelines were expected to provide legal
certainty for ministry officials in undertaking procurements. At
present, president directors of profitable state firms can earn a
monthly salary of more than Rp 100 million. However, the average salary
of those in unprofitable state firms is about Rp 40 million a month.
Economist Faisal Basri, however, opposed the remuneration improvement
plan, saying that it should be based on the performance of each state
company.
"It is not the government's task to establish a remuneration
improvement system. It should be based on business performance. Every
company with a good performance, for example, will naturally offer
higher remuneration packages to its executives," he told The Jakarta
Post. He said the plan contradicted to the government's efforts to
improve the competitiveness of state-owned companies.
"It would not be fair if the executives of companies with poor
performances receive the same salaries as their counterparts from
companies with good performances, " he said. He said that if the
ministry wanted to improve the salaries of state company executives, it
should do so internally within the companies themselves, such as
through a shareholders' meeting.
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