CHAPTER 3 COMPANY PROFILES

There are thirteen publicly listed SOE that will be rated regarding their implementation of GCG under this study. The company profile which consists of the brief history, business activities, structure organization, and implementation of GCG of the thirteen state owned enterprises will be as the following.

3.1

PT. Adhi Karya (Persero) Tbk PT. Adhi Karya (Persero) Tbk (hereafter referred to as “Adhi Karya”) was founded by Menteri Pekerjaan Umum through his decree on March 11, 1960. In 1974, Adhi Karya, as a state company, changed its status into a limited liability company. On March 18, 2004, Adhi Karya first listed its stock in Jakarta Stock Exchange. At first, Adhi Karya was only a construction company. However, with the change of its vision and mission, currently Adhi Karya has three business areas, which are construction, EPC (engineering procurement and construction), and investment. Construction area, which consists of eight divisions and four branches spread all over Indonesia, has shown the excellent performance in accomplishing big national level projects. EPC area is the expansion of the construction business. Through EPC, Adhi Karya actively involved in preconstruction activities, which are designing, planning and procurement. Investment area is a new business that totally different from construction area.

34

35 Therefore, in taking an investment decision, Adhi Karya acts selectively and focuses on infrastructure area. The company organs of Adhi Karya consists of General Meeting of Shareholders, Board of Commissioners, Board of Directors and a number of Committees under the Board of Commissioners, which consists of Audit Committee, Nomination and Remuneration Committee, Risk Management Committee and Company Secretary. The organization structure of Adhi Karya is as pictured below. Figure 3.1 Organization Structure of Adhi Karya

Extracted from: Adhi Karya’s annual report (2006)

Lastly, Adhi Karya has implemented the GCG principles, which are transparency, accountability, responsibility, independency and fairness. The implementation of GCG is based on Keputusan Menteri Negara BUMN No. 117/M-MBU/2002 Tanggal 1 Agustus 2002. In addition, Adhi Karya has got its own GCG Manual and Board Manual as the guidelines in implementing the GCG principles. Adhi Karya even involved in the pilot project of the implementation of GCG in 2002. (Adhi Karya’s Annual Report 2006).

36 3.2

PT. Aneka Tambang (Persero) Tbk PT. Aneka Tambang (Persero) Tbk (hereafter referred to as “Antam”) was established on July 5, 1968 as the result of a merger between several singlecommodity state owned mining companies. Antam is a vertically integrated and export oriented Indonesian mining and metal company. With operations and ore deposits located throughout Indonesia, Antam undertakes activities from exploration, excavation and processing to marketing of nickel ore, ferronickel, gold, silver, bauxite, and iron sands. Antam possesses among the largest nickel and bauxite reserves in Indonesia. It also owns substantial gold reserves. However, as at 2006, it is basically a nickel company in terms of revenue and income. Antam was first listed on the Jakarta Stock Exchange when the government sold 35% of the company to the public in 1997. In 1999, Antam listed its shares as a Foreign-Exempt Listing on the Australian Stock Exchange and became a full ASX Listing in 2002. The company’s shares are actively traded on the Jakarta Stock Exchange, with the 35% public ownership mostly comprised of over 100 foreign institutional investors from the UK and USA. The Antam group consists of PT Antam Tbk (Antam) and three whollyowned subsidiaries. PT Antam Resourcindo runs Antam’s iron sands business and Antam’s near-exhausted gold mine in Cikotok, West Java. Antam Finance Ltd (Mauritius) and Antam Europe BV (Netherlands) are finance related

37 companies used for the 2003 corporate bonds issuance. With the bond redemption in December 2006, the subsidiaries may be liquidated in 2007. Antam’s main products are ferronickel, high grade nickel ore (saprolite), low grade nickel ore (limonite), gold, silver, and bauxite. Antam’s main services are precious metal refining and geological services. The most important cash generators are the nickel and gold products which together accounted for 96% of revenues in 2006. Antam’s operations are divided into four strategic business units (SBUs) which function as profit centers: nickel, gold, other minerals (bauxite and iron sands) and exploration (at the moment the exploration SBU is a cost center as it only serves Antam). Antam is organized according to the ‘two tier’ system, where a distinction is made between the management board (Board of Directors) and the supervisory board (Board of Commissioners). The Board of Commissioners has established five committees, each led by a commissioner, to technically support it in satisfying its roles and responsibilities. The five committees consist of Audit Committee, Risk Management Committee, Corporate Governance Committee, Nomination, Remuneration & Human Resource Committee and Environment & Mine Closure Committee. The Board of Directors consists of President Director, Director of Development, Director of Finance, Director of Operations, and Director of HR & General Affairs.

38 As a listed company in Indonesia and Australia, GCG has always been considered as an important element for Antam in achieving sustainable growth and becoming a world-standard mining company. There are many significant instances of GCG practices that were in place in the fiscal year of 2006, which are finalization and execution of Director’s Key Performance Indicators (KPI), early stage implementation of Enterprise Risk Management, corporate sustainability report, and assessment of the effectiveness of Internal Audit Department. (Aneka Tambang’s Company Profile, Annual Report 2006)

3.3

PT. Bank Mandiri (Persero) Tbk PT. Bank Mandiri (Persero) Tbk (hereafter referred to as “Bank Mandiri”) was established on October 2, 1998 as a part of banking restructuring program performed by Indonesian government. In July 1999, four government banks which consist of Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia and Bank Pembangunan Indonesia merged together into Bank Mandiri. On July 14, 2003, Indonesian government divested its 20% stock ownership of Bank Mandiri through Initial Public Offering (IPO). In addition, in April 2003, Bank Mandiri issued Medium Term Notes (MTN) for the period of five years that was listed in Singapore Stock Exchange. Bank Mandiri provides various banking services which divided into many Strategic Business Units (SBUs). The first SBU, Corporate Banking, provides

39 transaction services, credit products, and capital market services for big corporations in Indonesia. The second SBU, Commercial Banking, provides regular credit products for individual business owner with the gross annual sales from Rp 5 Billion up to Rp 300 Billion. The third SBU, Consumer Finance, provides individual credits, credit card services and Syariah products. The fourth SBU, Micro and Retail Banking, provides credit products for micro and small individual business owner that is aimed for business or productive purposes. The fifth SBU, Treasury and International Banking, provides many services such as treasury, remittance, trade service, trade finance and funding sources. The last SBU, Special Asset Management, is aimed to perform the restructuring and the settlement of non performing loan. The company organs of Bank Mandiri consist of General Meeting of Shareholders, Board of Commissioners, and Board of Directors. There are many Committees under the Board of Commissioners, which are Audit Committee, Nomination & Remuneration Committee, Risk Management Committee and GCG Committee. The structure of organization in Bank Mandiri is as pictured below.

40 Figure 3.2 Organization Structure of Bank Mandiri

Extracted from: Bank Mandiri Annual Report 2006

The implementation of GCG in Bank Mandiri, as a publicly listed state owned enterprise, is based on Undang-undang Perseroan Terbatas, Keputusan Menteri BUMN No. 117/M-MBU/2002 tentang Penerapan Praktek GCG pada BUMN, Peraturan Bapepam, GCG Red Map released by Komite Nasional Kebijakan Governance (KNKG) and the regulation released by Bank Indonesia, which are PBI No. 8/4/PBI/2006 tentang Pelaksanaan GCG bagi Bank Umum and PBI No8/14/PBI/2006 tentang Perubahan atas PBI No. 8/4/PBI/2006. In July 2005, Bank Mandiri formed the GCG Committee whose job are to supervise the management of the company by the Directors and to monitor the effectiveness of GCG implementation and best practices. In addition, Bank Mandiri has carried out many activities in order to socialize the principles and practices of GCG to all of its personnel. The socialization is performed directly

41 through forum, training/ workshop and focus group, and also by media through internal bulletin, intranet and Knowledge Based Management System (KMS). Moreover, Bank Mandiri carried out the socialization of GCG implementation to the other stakeholders through Corporate Governance forum, routine discussion and both national and international GCG seminar. (Bank Mandiri’s Company Profile, Annual Report 2006)

3.4

PT. Bank Negara Indonesia (Persero) Tbk PT. Bank Negara Indonesia (Persero) Tbk (hereafter referred to as “Bank BNI”) was established on January 11, 1901. It was the first bank formed and owned by Indonesian government. Enhanced by increased capitalization, the Bank's legal status was formally changed to that of a state-owned commercial Bank in 1995. BNI’s legal status was upgraded in 1992 to that of a state-owned limited corporation under the name of PT Bank Negara Indonesia (Persero) and the bank decided to become a public company through its initial public offering of its shares in 1996. Bank BNI provides various services under many categories, which are consumer banking, commercial banking, corporate banking, international banking & treasury, sharia banking and subsidiary businesses. The Consumer Banking division offers a comprehensive range of banking products to serve the needs of the individual consumer. For instance are helping a BNI Emerald client

42 make investments decision in Jakarta, a university student in Jogjakarta receives monthly living allowance from parents in another city, a small business obtain BNI Multiguna loan, a young family acquire their first home through BNI Griya or a first-time borrower use BNI Oto for a motorcycle loan. The Commercial Banking division offers various credit products to support the growth and development of Small and Medium Enterprise (SME). The Corporate Banking division includes the Institutional Funds and Services division responsible for acquiring and managing third party funds from institutional depositors. Together with funding activity, Corporate Banking provides corporate loans which comprise of working capital loans, investment loans, syndicated loans, and corporate finance services that include trade finance, money market, foreign exchange line and cash management. The International Banking & Treasury division offers an integrated and comprehensive service to its customers with international trade dealings, custodianship service and foreign exchange service. The Sharia Banking division provides many banking operations on the basis of the sharia precepts, including buying and selling and profit sharing. The Subsidiary Businesses enable Bank BNI in providing one stop financial services, such as banking products, insurance, consumer financing, and securities trading. The company organs of Bank BNI consist of General Meeting of Shareholders, Board of Commissioners (BoC) and Board of Directors (BoD). There are three committees under the BoC which are Audit Committee, Risk

43 Monitoring Committee, and Remuneration & Nomination Committee. In addition, there are various executive committees that were formed by the BoD to assist the Directors in discharging their duties in the respective areas. They are Human

Resources

Committee,

Technology

Management

Committee,

Disciplinary Committee, Service Committee, Risk & Capital Committee, and GCG Committee. The structure of organization in Bank BNI is as pictured below. Figure 3.3 Organization Structure of Bank BNI Rapat Umum Pemegang Saham

Dewan Pengawas Syariah

Komisaris

Direktur Utama

Satuan Pengawasan Internal

Divisi Perencanaan Strategis

Financial Control Division

Corporate Communication Division

Wakil Direktur Utama

Direktur Manajemen Resiko

Direktur Komersial & Usaha Syariah

Direktur Kepatuhan

Direktur Konsumer

Direktur Operasi

Direktur SDM

Subsidiaries Management Unit Direktur Tresuri & Private Banking

Direktur Korporasi

Extracted from: Bank BNI Annual Report 2006

Since 2001, Bank BNI has had a Corporate Governance Handbook that sets forth the basic principles of corporate governance which serve as the

44 foundation for all of the Bank’s operational policies and procedures. In addition, Bank BNI also has the Code of Conduct, which provides the behavioral norms and standards that are required of and apply to all of its employees. Enhancing corporate governance practices has become inherent in bank BNI’s operations today and in the future, as provided for by the Navigational Map of the bank for the period 2004-2008. In recent years, bank BNI has striven to enhance its corporate governance structure and framework in line with certain developments such as the Basel Accord II on bank risk management, the Sarbanes-Oxley Act on compulsory financial disclosure standards, the Indonesian Banking Architecture blueprint of Bank Indonesia on the future landscape of Indonesian banking, and the newly adopted International Financial Reporting Standards. (Bank BNI’s Company Profile, Annual Report 2006)

3.5

PT. Bank Rakyat Indonesia (Persero) Tbk PT. Bank Rakyat Indonesia (Persero) Tbk (hereafter referred to as “Bank BRI”) was established on December 16, 1895. It was the oldest bank in Indonesia which at first was only a mosque finance institute. Based on Undangundang Perbankan No. 21 Tahun 1968, Indonesian government re-decided the name of “Bank Rakyat Indonesia” as the public bank and according to Undangundang Perbankan No. 7 Tahun 1992, the legal status of Bank BRI changed into

45 a limiet liability company. On November 10, 2003, Bank BRI listed its stock in Jakarta Stock Exchange through selling its 30% stock ownership to public. Bank BRI provides various services under these categories, which are savings, credit, sharia, business services, financial services, and other services. The savings category includes fixed deposit, clearing account, and saving account. The credit category includes micro, retail, and middle credit. The business services include bank guarantee, bank clearance, Automated Teller Machine (ATM), export and import services, remittance, and SKBDN. The financial services include bill payment, CEPEBRI, INKASO, payment transaction, online transaction, and transfer & Lalu Lintas Giro (LLG). The other services include tax payment, Dana Orang Tua Asuh, Western Union, traffic ticket payment, and Zakat Infaq. The company organs in Bank BRI are General Meeting of Shareholders, Board of Commissioners (BoC), and Board of Directors (BoD). There are many committees formed under the BoC, which are Komite Audit, Komite Pengawasan Manajemen Resiko, and Komite Nominasi & Remunerasi. There are also many committees formed under the BoD, which are Komite Manajemen Resiko, Komite Aset & Liabilitas, Komite Kebijakan Kredit, and Komite Pengarah Teknologi & Informasi. The structure of organization in Bank BRI is as pictured below.

46 Figure 3.4 Organization Structure of Bank BRI

Extracted from: Bank BRI Annual Report 2006

Bank BRI has implemented the GCG principles, which are transparency, accountability, responsibility, independency, and fairness. Bank BRI has developed its own Code of Ethic for all of its personnel. In addition, Bank BRI has developed its corporate planning and governing system, and also a Board Manual, in which the assignments and responsibilities Directors and Commissioners are set clearly. (Bank BRI’s Company Profile, Annual Report 2006)

3.6

PT. Indofarma (Persero) Tbk The history of PT. Indofarma (Persero) Tbk (hereafter referred to as “Indofarma”) began in 1918, as producer of ointment products and bandages, in a small factory with very limited production facilities, to supply the Dutch

47 Government Central Hospital. At later years, the production facilities improved, and an additional product manufactured, i.e. tablets and injection products, and then was known as Pabrik Obat Manggarai. In 1950, the Indonesian government took over ownership and the management right was rewarded to Department of Health. On January 2, 1996, the legal entity of Indofarma changed to a limited liability company. On April 17, 2001, Indofarma first listed its shares in the Jakarta and Surabaya Stock Exchanges. Indofarma engages in the business of integrated pharmaceutical and medical devices industry, which covers from production, marketing, distribution, and trading, supported by strict quality control and continuous research and development. Indofarma has held Good Manufacturing Practices (GMP) Certification from the government for its production facilities, ISO 9001:2001 for the whole production process, and HACCP (Hazard Analysis Critical Control Point) Certificate for its Infant Foods Product. Indofarma owns two production facilities, one for producing Pharmacy & Herbal Products located in Cibitung, Bekasi while the other one for producing Infant Foods Product located in Cikarang, Bekasi. The Pharmacy production facilities produce ethical products (generic and branded), OTC (over the counter) products, while the Herbal production facilities produce herbal extract, traditional medicines and food supplements.

48 The company organs of Indofarma consist of General Meeting of Shareholders, Board of Commissioners (BOC) and Board of Directors (BOD). There are two committees under the BOC, which are Audit Committee and GCG, Remuneration & Nomination Committee. The structure of organization in Indofarma is as pictured below. Figure 3.5 Organization Structure of Indofarma

Corporate Secretary

Direktur Utama

Satuan Pengawas Internal

Direktur Produksi

Direktur Pemasaran

Direktur Umum & SDM

Perencanaan Logistik

Direktur Keuangan

Manajemen Resiko & GCG

Pengembangan Herbal & Food Suplement

Extracted from: Indofarma Annual Report 2006

Indofarma has set up the necessary manuals for implementation of GCG: Code of Good Corporate Governance, Code of Conduct, Board Manual, Internal Audit Charter, Audit Committee Charter, and Guideline for Financial Statements preparation. Currently Indofarma is in the process of socializing its GCG manual to all employees. Financial and Development Supervisory Board has assessed Indofarma GCG implementation for 2006, given score of 71.58 based on 160 parameters. Through this assessment result and continuous socialization, it is

49 expected that all GCG principles would be the way of life in Indofarma. (Indofarma’s Company Profile, Annual Report 2006)

3.7

PT. Indosat Tbk PT. Indosat Tbk (hereafter referred to as “Indosat”) was established on November 10, 1967 as a foreign direct investment company to provide international telecommunications services in Indonesia. In 1980, the Indonesian government took over full ownership of Indosat, which then became a state owned company. On October 19, 1994, the company went public by listing its stock on the Jakarta Stock Exchange, the Surabaya Stock Exchange and its American Depository Receipts in the New York Stock Exchange. At the end of 2002, the Indonesian government divested 41.94% of its shares in Indosat to ST Telemedia Pte Ltd through the holding company of Indonesia Communications Limited (ICL). Indosat provides a variety of telecommunication services which consist of cellular services, fixed data services (MIDI), and fixed voice services (fixed telecommunications). The cellular services consist of three types based on the needs of the each market. They are Mentari, as a GSM prepaid, IM3, for youth market who are active but not yet financially independent, and Matrix, for middle to upper class that familiar with high technology features. MIDI services are provided by Indosat and its subsidiaries, which are PT Lintasarta and PT

50 Indosat M2. MIDI services provide data communications, dedicated internet, wholesale dial, IP-based products and services, internet and multimedia. Fixed telecommunication services provide an international connection that is developed into various telecommunication services from fixed wireless access to leased line access for retail and corporate customers. The company organs consist of General Meeting of Shareholders, Board of Commissioners and Board of Directors. The Board of Commissioners consists of nine persons including three independent commissioners. The Board of Directors consists of nine persons including the President Director. However, based on the Annual Report 2006, the position of President Director has been vacant since the resignation of the former director, effective as of 8 June 2006 until the date the annual report being published. The structure of organization in Indosat is as pictured below. Figure 3.6 Organization Structure of Indosat

Extracted from: Indosat Annual Report 2005 & 2006

51 As a public company whose shares is listed on the Jakarta Stock Exchange (JSX), Surabaya Stock Exchange (SSX) and New York Stock Exchange (NYSE) and listed its bonds at SSX, Luxembourg Stock Exchange and Singapore Stock Exchange, Indosat consistently strives to apply the principles of GCG to the highest standard. The improvement of corporate governance practices in 2006 included the implementation of Article 404 of the 2002 Sarbanes-Oxley Act, the establishment of the Enterprise Risk Management Team, the improvement of the Whistleblower Policy and the Code of Ethics, and the optimization of the company’s website. (Indosat’s Annual Report 2005, 2006)

3.8

PT. Kimia Farma Tbk PT. Kimia Farma Tbk (hereafter referred to as “Kimia Farma”) represents the pioneer of Indonesian pharmaceutical industry. The origin of the company can be traced back to 1917, with the establishment of NV. Chemicalien Handel Rathkamp & Co., the first pharmaceutical company in East Indies. In accordance with the nationalization policy of former Dutch companies in Indonesia, in 1958 the government merged a number of pharmaceutical companies into PNF Bhinneka Kimia Farma. On August 16, 1971, the legal status has been changed into a limited liability company which named PT Kimia

52 Farma (Persero). Since July 4, 2001, the company has been listed at the Jakarta Stock Exchange and Surabaya Stock Exchange. Kimia farma is an integrated health service company, the service of which comprises industry, marketing, distribution, retail, clinic laboratory, and health clinic. The segment industry is managed by the company Head Office that produce pharmaceutical finished, herbal medicine, iodine, quinine and its derivatives, and vegetable oil. Five production plants that have been distributed throughout the major city of Indonesia are the back bone of industrial sector, which all plants have already received GMP certificate and ISO 9001, ISO 9002 and ISO 14001 certificate from abroad institution. The five production plants are located in Jakarta, Bandung (West Java), Semarang (Central Java), Watudakon (East Java), and Tanjung Morawa (North Sumatera). In addition, Kimia Farma operates its owned pharmacy as well as cooperation operated pharmacy that currently totaling 328. Kimia Farma also develops clinic and clinic laboratory service, which provides clinic laboratory checking service, as a support for diagnosis such as medical check up, as well as consultation and health maintenance. The Board of Commissioners (BOC) consists of five members. The composition is one Chairman and one Commissioner and 3 (three) Independent Commissioners. In implementing its duties and functions, the BOC is supported

53 by an Audit Committee. The Board of Directors also consists of five members, which can be seen as pictured below. Figure 3.7 Organization Structure of Kimia Farma

Extracted from: Kimia Farma Annual Report 2006

As a public state owned company, Kimia Farma has fully committed to conduct good corporate governance as a need and obligation that stated on Peraturan Pemerintah No 19/2003 Tentang BUMN. The company has already built Corporate Governance guidance, containing the policies on shareholders, commissioners and directors. The guidance also controls the relationship pattern among the directors, commissioners, as well as between directors and commissioners. In 2006, Kimia Farma has prepared for the GCG and Remuneration Commitee established. (Kimia Farma’s Company Profiles, Annual Report 2006)

3.9

PT. Perusahaan Gas Negara (Persero) Tbk PT. Perusahaan Gas Negara (hereafter referred to as “PGAS”) was established on May 13, 1965. The existence of the company is a result of a long

54 struggle started in 1859, when it was still called Firma L.J.N Eindhoven & Co. Gravenhaage. In 1958, the Indonesian government took over the ownership of the Firma and changed its name to Badan Pengambil Alih Perusahaan Listrik dan Gas (BP3LG). Later based on Peraturan Pemerintah No. 37 Tahun 1994, the company changed its status into a limited liability company. On December 15, 2003, PGAS registered its stock in the Jakarta Stock Exchange and Surabaya Stock Exchange. In addition, in the year of 2003 and 2004, the company through its subsidiary, PGN Euro Finance 2003 Limited, registered Guaranteed Notes in Singapore Stock Exchange Securities Trading Limited and Singapore Stock Exchange, respectively. Pursuant to Chapter 3 Company Articles of Association and Peraturan Pemerintah No. 37 Tahun 1994, the company aims at implementing and supporting Government policies and economy and national development in general, and the increase of gas usage and supply to meet the public needs. Currently, the company’s core business is gas distribution (transporting gas to industrial, commercial and household sectors) and gas transmission. To reach a more responsive sales target, the company divides its business area into three Strategic Business Units (SBUs) and one transmission SBU. The three SBUs based on the covering area are SBU Distribution Area I (western part of Java), SBU Distribution Area II (eastern part of Java) and SBU Distribution Area III

55 (northern part of Sumatera), whereas the transmission SBU is SBU Transmission Sumatera – Java. The company organs of PGAS consist of General Meeting of Shareholders, Commissioners, Directors, and several committees established by the Commissioners. The Committees are Audit Committee, Nomination Committee, Remuneration Committee, Insurance and Business Risks Committee and GCG Committee. Meanwhile, Board of Directors is assisted by Corporate Secretary, Internal Audit Department and External Auditor. The structure of organization in PGAS is as pictured below. Figure 3.8 Organization Structure of Perusahaan Gas Negara

Extracted from: Perusahaan Gas Negara Annual Report 2006

Lastly, in order to succeed the implementation of GCG, PGAS has formed the GCG Committee. This Committee has to control, monitor, review and give inputs to ascertain that GCG principles are implemented in corporate management system. In addition, the company has its own GCG Manual as a guideline for the company to operate its business, and Board Manual as a

56 guideline for Commissioners and Directors in doing their job, respectively. (Perusahaan Gas Negara’s Annual Report 2006)

3.10

PT. Semen Gresik (Persero) Tbk PT. Semen Gresik Tbk (hereafter referred to as “Semen Gresik”) was established on August 7, 1957. On July 8, 1991, Semen Gresik was listed on the Jakarta Stock Exchange and the Surabaya Stock Exchange. The company was the first state owned enterprise that publicly listed by offering 40 million shares to the public. In September 15, 1995, the company acquired PT Semen Padang and PT Semen Tonasa, which was then known as Semen Gresik Group (SGG). Semen Gresik is engaging in cement industry. The company produces various types of cement. The main type of cement produced is Type I Portland Cement (Ordinary Portland Cement – OPC). It is hydraulic cement widely used for general construction. In addition, various specific types and mixed cement are also produced, for limited use and in smaller amount than OPC, such as Portland Cement Type II, OPC Type III, OPC Type V, Portland Pozzolan Cement (PPC), Portland Composite Cement (PCC), Super Masonry Cement (SMC), Oil Well Cement, and Special Blended Cement (SBC). The products are mainly marketed in order to meet domestic requirements, and some are exported. Most of the products are marketed in sacks, while the rests are in bulk.

57 The company organs consist of General Meeting of Shareholders, Board of Commissioners and Board of Directors. The Board of Commissioners consists of six persons, including three independent commissioners. The Board of Directors also consists of six persons, including the President Director. The implementation of GCG has been carried out earlier then the implementation of regulation and requirement for GCG in Indonesia. The company’s Corporate Culture, which serves as guidelines for attitude and behavior development, has been carried out since 1996. The company’s significant step in increasing GCG in 2006 was the expansion of the structure in Commissioner by establishing many committees, namely GCG Committee, Strategic, Risk Management and Investment Committee, and Nomination and Remuneration Committee. Next, in order to place the implementation of GCG in solid footing toward “Best Practice” in the future, the company will compose guidelines for the implementation of GCG in the company. (Semen Gresik’s Company Profile, Annual Report 2005)

3.11

PT. Tambang Batu Bara Bukit Asam Tbk PT. Tambang Batu Bara Bukit Asam Tbk (hereafter referred to as “PTBA”) was established on March 2, 1981 based on Peraturan Pemerintah No. 42/1980. The company was established to support and implement the government’s policies and programs in the development of the national mining

58 sector, especially coal. On December 23, 2002, PTBA registered its stock at the Jakarta Stock Exchange and Surabaya Stock Exchange. The company’s operations include general survey, exploration, exploitation, processing, refining, transportation and trading. The company also undertakes further processing of mined products, especially coal, and trades its own or other’s products. Other business activities include operating ports and special ports for handling coal, operation of steam power plants as well as providing consultation services for the coal mining industry. In addition, the company is active in the mining industry and briquette manufacturing business segments. The coal mining industry is the core business of the company and contributes more than 99% of the company’s total revenues. The company owns two mining units, namely Tanjung Enim Mining Unit in Tanjung Enim, South Sumatera, which is an open pit mine and Ombilin Mining Unit in Sawahlunto, West Sumatera, which is an underground mine. As with other company managements, PTBA has the Board of Commissioners who supervises the operational management performed by Board of Directors, and the Board of Directors who leads, manages and controls the company. Board of Commissioners and Board of Directors consist of six persons, each. The structure of organization in PTBA is as pictured below.

59 Figure 3.9 Organization Structure of Perusahaan Tambang Batu Bara

Extracted from: PTBA Annual Report 2006

As a public company, PTBA is obliged to conduct the applicable GCG implementation standards. Since 2004, the company had its GCG guidance concept for Board of Commissioners and Board of Directors (Board Manual) and GCG guidance (GCG Code) and additional needed policies, which were developed together with the Corporate Governance Specialist and SDP Consultant. One of the GCG practices implemented by the company is e-auction (e-procurement) for the procurement of goods and services. In addition, on July 27, 2006, the company’s management and labor union signed the implementation of GCG practices in front of the Minister of State Enterprises, Komisi Pemberantasan Korupsi (KPK), and the other stakeholders. This step indicates the serious commitment of PTBA in implementing the GCG. (Perusahaan Tambang Batu Bara’s Annual Report 2006)

60 3.12

PT. Telekomunikasi Indonesia Tbk PT. Telekomunikasi Indonesia Tbk (hereafter referred to as “Telkom”) was founded in January 11, 1901. In 1991, Telkom, as a state company, changed its status into a limited liability company. On November 14, 1995, Telkom first listed its stock in Jakarta Stock Exchange and Surabaya Stock Exchange. Currently, its stock is also listed in New York Stock Exchange (NYSE), London Stock Exchange (LSE) and in the form of Public Offering without Listing in Japan. Telkom is the main provider of fixed telephone connection service in Indonesia. Telkom is also the major shareholders of Telkomsel, the biggest cellular phone operator based on customers and revenues. It also provides other various communication services that come in eight categories of its revenue. They are fixed telephone (that consists of fixed telephone and fixed wireless telephone), cellular phone, Kerja Sama Operasi (KSO), interconnection, network, data and internet, Profit Sharing, and other revenue (including revenue from telephone directory services and building management). For segment reporting, Telkom has four segments, which are fixed telephone, fixed wireless telephone, cellular, and miscellaneous segment. Fixed telephone segment provides local telephone connection, Sambungan Langsung Jarak Jauh (SLJJ), Sambungan International (SLI) and other telecommunication services (which included subscription circuit, telex, transponder, satellite and

61 Very Small Aperture Terminal-VSAT).

Fixed wireless telephone segment

provides local CDMA telephone and SLJJ despite of other wireless telecommunication services, which use wireless telephone with limited mobility in local area code. Cellular segment provides basic telecommunication service, especially cellular phone service. Operation segment that does not represent more than 10% of Telkom’s revenue individually is reported as “miscellaneous”, which consists of telephone directories and building management business. The company organs of Telkom consists of General Meeting of Shareholders, Board of Commissioners, Board of Directors and a number of Committees under the Board of Commissioners, which consists of Audit Committee, Nomination and Remuneration Committee, and Planning and Risk Investigation Committee. The organization structure of Telkom is as pictured below.

62 Figure 3.10 Organization Structure of Telkom

Extracted from: Telkom Annual Report 2005 & 2006

Lastly, Telkom has implemented the GCG principles, which are transparency, accountability, responsibility, independency and fairness. The implementation of GCG is based on UU No. 19 Tahun 2003 tentang BUMN Pasal 5 dan Pasal 6 Ayat 3 and Keputusan Menteri Negara BUMN No. 117/MMBU/2002 Tanggal 1 Agustus 2002 tentang Penerapan Praktek GCG pada BUMN. As a publicly multi-listed company, Telkom obliges to obey the requirements and regulations released by Badan Pengawas Pasar Modal Republik Indonesia (Bapepam) and The United States Securities and Exchange Commission (US SEC). Therefore, the obligatory level of Telkom in implementing GCG is relatively higher compare to other publicly listed companies in Indonesia. (Telkom’s Annual Report 2006)

63 3.13

PT. Timah Tbk PT. Timah Tbk was founded on August 1, 1976. However, it had a long history even before Indonesia reached its independence in 1945. In the era of colonialism, tin mining was carried out by both Dutch government and private company. After the Independence proclamation, the Dutch company was nationalized, and in 1976, based on Undang-undang No. 9 Tahun 1969 and Peraturan Pemerintah No. 19 Tahun 1969, the company changed its status into a limited liability company. On October 19, 1995, PT Timah Tbk registered its stock in Jakarta Stock Exchange, Surabaya Stock Exchange and London Stock Exchange (LSE). Nevertheless, since October 13, 2006, the company’s stock in the form of Global Depository Receipts (GDR) has been de-listed. PT Timah Tbk acts as the main corporation and is not involved directly in tins mining operation. Yet, it involved in strategic and long term investment activities for the need of its working units. In addition, it manages the company strategy and governs certain operation activities, such as marketing, business development, finance and treasury. The operation sectors of its working units consist of integrated tin mining business, engineering and docking services, coal business, non tin mining business, and marketing. The company organs of PT Timah Tbk consists of General Meeting of Shareholders, Board of Commissioners, Board of Directors and a number of Committees under the Board of Commissioners, which consists of Audit

64 Committee,

Remuneration

Committee,

and

Company

Secretary.

The

organization structure is as pictured below. Figure 3.11 Organization Structure of PT Timah

Extracted from: PT. Timah Annual Report 2006

In the area of GCG implementation, PT Timah Tbk has committed to perform the GCG practices as an effort to achieve its vision, mission and company’s objectives. As a real act of the commitment, PT Timah Tbk has its owned GCG guidelines as the guidance for Board of Commissioners, Board of Directors, and all corporation personnel in implementing the GCG principles. Currently, the GCG Guidelines is being revised. (PT. Timah’s Annual Report 2006)