16 - PERTAMINA Crisis (1975)

Summary

Introductory Note: On 25 June 1975, I presented the Government's Explanation on the Pertamina crisis to the members of Commissions I, VI, VII, along with the State Budget, in a joint session of the House of Representatives.

The Pertamina crisis stems from measures taken by Pertamina that ran counter to the Law on Pertamina and other Government regulations; among these regulatory infringements were:

1. Undertaking huge construction projects outside of the Company's scope of duty;

2. Financing those projects by short-term foreign loans which it failed to repay;

3. Failure to submit to the Government taxes paid by foreign oil companies in the form of fossil oil;

4. Failure to pay the Company's own corporate taxes.

On top of the above infractions, there have been a number of other measures taken by Pertamina, whose purpose and motivation remain unclear, and which are currently under an in-depth and broad investigation at the time this explanation is being delivered to the Government; these include leasing and purchasing agreements for a great number of huge oil tankers.

The government has taken a great number of measures to resolve the Pertamina crisis. Among the lessons learned from this crisis are that stateowned companies should strictly abide by existing laws and regulations at all times, and that they have a duty to promptly submit comprehensive reports to the government.

To complement the account in Chapter 16 on the Government's Explanations on 25 June 1975, on the “Pertamina Issue”, the following three attachments have been placed at the end of this chapter:

Attachment I: Excerpts from Government Deliberation on the 1976/1977 State Budget at the House of Representatives delivered by the President of the Republic Indonesia on 7 January 1976. (page 315) Attachment II: Excerpts from State of the Nation Address by President of the Republic Indonesia Soeharto at the House of Representatives on 16 August 1977. (page 320)

Attachment III: Excerpts from Chapter 44 “Resolving Pertamina Crisis” from the book titled: Pikiran, Ucapan dan Tindakan Saya (My Thoughts, Words and Deeds), an autobiography by Soeharto as told to G. Dwipayana and Ramadhan K.H. (pages 304 to 306). Publisher P.T. Citra Lamtoro Gung Persada, Jakarta 1989. (page 322)