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In his clearest statement yet on the roles and expectations governing state-owned enterprises, President Susilo Bambang Yudhoyono has raised the bar in terms of how these companies are to be judged and evaluated.

The president has made it clear he expects SOEs to be one of the main drivers of the government’s Master Plan for the Acceleration and Expansion of Economic Development (MP3 EI).

As a new economic policy, the MP3EI — within a stated time frame from 2012 to 2025 — aims to sharply raise the country’s per capita income from the current $3,000 to an estimated $14,250 to $15,500 by 2025.

This is an ambitious plan that will require all segments of the economy — the government, SOEs and the private sector — to play their role and contribute. As the president noted, if the state enterprises do their bit, it will expand job opportunities across the spectrum. Improving their performance is therefore critical.

Indonesia’s 145 SOEs can and should play a central role in the economy. If one compares the total assets of the SOEs with other state-run companies such as Singapore’s Tem asek Holdings or Malaysia’s Khaz anah, Indonesia comes out ahead. But unlike their regional counterparts, many Indonesian SOEs are poorly managed and loss-making. This must change.

If managed correctly, SOEs can drive the nation’s efforts to improve infrastructure and boost economic growth. They have the financial muscle as well as the expertise to carry out large projects which the private sector would find it difficult to manage.

In order to succeed, SOEs must be managed according to bottom-line, market-based principles and methods. They must be allowed to make profits and pay dividends to their shareholders. In essence, they must be managed and run as private sector firms but with a nation-building mandate.

We fully agree with the president that SOEs must also contribute to social development by fulfilling their corporate social responsibility. This is where the bulk of their profits should be channeled, but in a transparent and strategic manner.

Some SOEs such as Garuda Indonesia have shown that with the right management and with a strategic vision, they can compete with the best in the region.