April 23, 2024

Indonesian Minister Struggles to Change State-Owned Sector

JAKARTA — On an overcast Saturday in early January, the man in charge of modernizing Indonesian state companies suddenly lost control of his prototype electric sports car and plowed into the side of a mountain in East Java.

Dahlan Iskan, the Indonesian minister of state-owned enterprises, emerged from the crash unhurt. But his bright red, $300,000 Tucuxi, dubbed “Indonesia’s Ferrari” by the local news media, was totaled.

Now more than a year into his appointment, it is starting to look like Mr. Iskan’s efforts to pull off ambitious changes of his country’s bloated state sector are also hitting a wall.

Most of Mr. Iskan’s initiatives to fix state companies have either been revoked or blocked by the Indonesian Parliament, or remain stuck in ministries, according to government and parliamentary documents obtained by Reuters.

“The political challenge is still huge,” Mr. Iskan said in an interview. “Life is like that. It’s difficult to make this country better.”

Mr. Iskan, who started his career as a journalist and still writes a regular column in his newspaper, has abandoned plans to start mass production of the privately funded Tucuxi, named after a type of dolphin.

Criticism over the crash — he is being investigated by the 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 and champion overhauls.

It is a frustration that, according to those close to him, is motivating the media mogul to consider standing as a candidate in the presidential election next year despite being viewed as a rank outsider.

“I would lie if I say I don’t want to, I want to,” Mr. Iskan said, when asked if he wanted to run for the presidency.

He conceded he held only a small chance of winning, and declined to discuss his reasons for wanting to run because he is a serving minister. But several people close to Mr. Iskan 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,” said a person close to Mr. Iskan who declined to be identified because of the sensitivity of the issue. “He’s frustrated with the political pressure especially from the Parliament.”

President Susilo Bambang Yudhoyono, two-thirds of the way through his second and final five-year term, has made the overhaul of state companies a priority in developing the Indonesian economy. To this end, he turned for help to Mr. Iskan, who made his name turning the near-bankrupt Jawa Pos Group into one of the biggest Indonesian media companies.

But since his appointment in late 2011, Mr. Iskan has struggled to implement any of his plans. On Jan. 23, he announced that he might have to cancel all the initial public offerings he had planned for state companies.

It is not the first time that Mr. Yudhoyono has elevated a reformer and then failed to give them protection. His highly respected finance minister, Sri Mulyani Indrawati, became so exhausted by relentless political criticism that she stepped down in 2010.

Indeed, Mr. Iskan’s challenge was daunting enough before he came under fire for the car crash. Indonesia’s 140 state-controlled companies account for a huge chunk of the Indonesian economy, the largest in Southeast Asia. Their total revenues are estimated to have been 1,500 trillion rupiah, or about $154 billion, last year — nearly a fifth of the Indonesian gross domestic product. Several of the companies control major industries like energy, power and agriculture.

“There is an ownership fetish — the state wants to act as a entrepreneur,” said James Castle, chairman of CastleAsia, a consulting company working with foreign businesses in Indonesia. “They are everywhere, acting like private companies, and they crowd out the private sector.”

Even Mr. Iskan’s attempt to take control of the appointment of senior managers at state companies has largely failed.

Article source: http://www.nytimes.com/2013/02/23/business/global/23iht-rupiah23.html?partner=rss&emc=rss

Many Cities Face a Long Wait for Jobs to Return

In some regions, those years are in danger of turning into a decade. According to a report to be released Monday, nearly 50 metropolitan regions — or more than one out of seven — are unlikely to bring back all the jobs lost in the recession until after 2020.

Among those areas are Cleveland and Dayton, Ohio; Detroit; Reno, Nev.; and Atlantic City, according to the report commissioned by the United States Conference of Mayors.

Detroit, which lost 323,400 jobs during the recession, and Reno, which lost 36,000 jobs, are not expected to regain all of those positions until after 2021.

With job creation having slowed to a crawl and the housing market depressed by foreclosures and falling prices, the economy is struggling to put 13.9 million unemployed Americans back to work.

According to the mayors’ report, which was compiled by IHS Global Insight, the nation’s 363 metropolitan statistical areas tracked by the Labor Department will generate enough jobs to get back to only the prerecession peak of employment in the first half of 2014, a dreary forecast that poses an increasing political challenge to the Obama administration. The areas lost 7.3 million total jobs during the recession from a peak of 118.3 million in the first quarter of 2008.

The report notes that metro regions account for about 86 percent of all jobs.

“It is striking, it’s sobering and it’s a call to action,” said Antonio R. Villaraigosa, mayor of Los Angeles and the president of the Conference of Mayors. Mr. Villaraigosa suggested that the federal government invest in infrastructure as well as work force training. The mayors’ report projected that the Los Angeles region, which lost 537,100 jobs during the downturn, would not gain them back before 2018.

The forecasts do not account for the number of jobs that need to be created just to account for normal population growth. As a result, said James Diffley, senior director at IHS Global Insight, even when the economy adds back the jobs lost during the recession, the unemployment rate, now at 9.1 percent, is likely to be significantly higher than the 4.4 percent it was before the crisis.

Among the largest metropolitan regions that will have a long road to recovery are manufacturing centers in Ohio and Michigan, where huge waves of layoffs at car plants and other factories affected thousands of workers.

“The type of jobs lost are not easily replaced,” said Lucious Plant, work force development manager in Montgomery County, which includes Dayton and surrounding communities. The region was overwhelmed by thousands of job losses at plants operated by General Motors and the parts supplier Delphi Automotive.

Mr. Plant said that old-line factory workers did not necessarily have the skills for the jobs that are now being added by advanced manufacturers. Dayton, which lost 42,500 jobs — or more than 10 percent of its labor force — during the recession, has had some luck attracting new employers recently, landing a Caterpillar Logistics distribution center that is expected to eventually bring on 600 people. Also, the back-office operations of a law firm added about 200 jobs.

Since losing a job at Delphi in 2008, Josh Hamer has been taking odd jobs repairing computers and is attending community college on government grants to earn an associate’s degree in network management. In the meantime, he has filed hundreds of job applications.

“I want anything that will pay the bills,” said Mr. Hamer, 32. “But they see Delphi and they see me applying for an office job, and they say, ‘You can’t do this job because you’re not qualified for it.’ They see grunt work, and they see a grunt.”

Other regions were hammered by the housing collapse and are having difficulty climbing back. In Naples, Fla., which lost 25,200 jobs during the recession, local economic development officials are focusing on small businesses in the technology and medical device sectors, industries that may not help unemployed construction workers. The mayors’ report projects that the area will get back to its prerecession peak by 2017.

Tammie Nemecek, chief executive of the Economic Development Council of Collier County, Fla., said the region might not recapture all the jobs it lost. “There’s a lot of people saying I want a new economy so we can ensure that there’s sustainability in it,” she said.

The mayors’ report does project faster recovery in some regions, including several metropolitan areas in Texas, as well as Denver; Raleigh, N.C.; and Washington.

Global Insight forecasts that the New York metropolitan region, which lost 385,200 jobs during the recession, will get back to its prerecession peak by 2013, in part because the financial sector did not lose as many jobs as feared. That could change as Wall Street, facing falling markets and an uncertain regulatory climate, plans further cuts to its work force.

Some metropolitan regions disputed the forecasts. In Cleveland, where Global Insight projects a return to peak employment in 2021, Mayor Frank G. Jackson’s chief of staff, Ken Silliman, said that Cleveland’s unemployment rate, 7.6 percent, was the seventh lowest of the metropolitan areas with more than 1.5 million people.

He added that a newly built medical center was “staking out Cleveland as a national leader in medical technology” and that the area would recapture the jobs it lost within three to five years “without a doubt.”

Mr. Diffley of Global Insight said that many regions were trying to brand themselves as leaders in new sectors. “It’s not a zero sum game,” Mr. Diffley said. “But everybody can’t be a leader in the field they’d like to be, by definition.”

Article source: http://feeds.nytimes.com/click.phdo?i=71d37190ea7efb475f405ec975f963b2