Editorial: Garuda Maps Out New SOE Flight Path

Editorial, Jakarta Globe, May 24, 2010

Garuda is deemed the World's Most Improved Airline (Photo JG)

Indonesia’s state-owned companies seldom win international awards. In fact, we cannot recall the last time a state-owned company won anything at all. So it is especially gratifying that our flagship carrier, Garuda Indonesia, picked up the World’s Most Improved Airline Award, one of 11 categories at the 2010 World Airline Awards in Hamburg.

The awards were presented by Skytrax, a British-based consultancy that conducts research for commercial airlines. It should be particularly pleasing to Garuda that Skytrax based its ratings and awards on surveys of more than 17 million passengers.

Garuda’s success story is now well known, but it did not happen by chance. Under the leadership of Emirsyah Satar, the carrier has undergone a major transformation, overhauling every aspect of its operations. Having bled money for years, the carrier booked a profit of Rp 1 trillion ($108 million) in 2009, and next month it will relaunch its Jakarta-Amsterdam route.

Garuda’s turnaround from a financially indebted company to one that is not only profitable but winning international awards is an example for other state-owned enterprises to emulate. The key is adopting the right mind-set from the beginning that every company, whether private or state-owned, must be profit-driven.

As such, all state-owned companies should be judged on whether they are financially healthy and able to contribute positively to the country’s economic development. This must be the direction for all state-owned enterprises, and no more should they be dependent on handouts from the government. Too many of them are currently operating on handouts with no clear strategy or direction.

It is also important that professional, competent people be hired to manage these companies. We should be past the days when political appointees were installed at the helm of state companies. Now, every CEO of a state-owned company must be held accountable for the bottom line, but also be given the resources to get the job done.

Emirsyah has proven what can be achieved if the right person is put in charge. Highly qualified people with the right experience are worth their weight in gold and should be compensated well, but also be given clear objectives to work toward.

There also needs to be a deeper sense of work ethic and integrity at state-owned companies if they are to fulfill their potential. Employees must be pushed to work hard, but at the same they should be given proper training and motivation. Noneffective employees must be told they no longer will be given an iron rice bowl.

There is an urgent need to change the corporate culture at state-owned companies. They must adopt global best practices, be managed by competent and hard-working leaders and most important, they must generate profits. Garuda has shown the way forward. The other state-owned companies must now take off as well.

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Garuda Indonesia is Awarded World's Most Improved Airline