Editorial: Garuda Sets the Bar For State Companies

Just a few years ago, national carrier Garuda Indonesia was facing financial difficulties. It had been banned from flying to many European destinations because of safety concerns following accidents involving domestic airlines.

Today, the carrier has been listed on the Indonesia Stock Exchange, it has resumed flights to Europe and its financial position has turned around. Garuda received an extra boost this week when it won two awards at the Farnborough International Airshow in Britain. Garuda Indonesia was named the world’s best regional airline as well as Asia’s best regional airline by British-based airline service reviewer Skytrax. It beat out Bangkok Airways and Hong Kong-based Dragon Airlines in both categories.

The awards are a significant landmark in Garuda’s effort to boost its reputation and become one of the world’s best airlines. It has recently added new routes and ordered more aircraft as its business continues to grow.

The awards and the strong position the airline is now in, both domestically and regionally, is testament to the leadership, vision and hard work of its president director, Emirsyah Satar, and his management team. Garuda has also proved that Indonesian state-owned enterprises can compete with the best companies in the world.

As such, it should spur other SOEs to also raise their game. Given the size of many of these companies, they should at least be regional powerhouses if not global players. Indonesia has some 140 SOEs and while many of them are well managed, a large number are not.

If SOEs are to play a bigger role in the economy, they need to be profitable, create new jobs and add value to the industry. The industry is a sterling example of how deregulation and competition serve customers best.