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I. INTRODUCTION

1.1. Background

State-Owned Enterprises (SOE) is one of the national econony actor,

which is mandated by the Law No.19 of 2003 regarding State-Owned Enterprise,
that to: (1) contribute to the development of the national economy and state
revenues, (2) pursuit of profit, (3) held a public benefit in the form of the
provision of goods and services for the people, (4) be a pioneer business activities
can not be undertaken by the private sector and cooperatives, and (5) actively
participate to provide guidance and assistance to entrepreneurs in low economic
group, cooperatives and communities1
Meanwhile, for limited liability SOE is also attached to the provisions of
Law No. 40 of 2007 regarding Limited Liability Companies, where the intent and
purpose of establishment Limited Liability Companies is to: (1) provides goods
and / services are in high quality and strong competitiveness, and (2) pursuit of
profit in order to enhance shareholder value. Thus, Limited Liability SOE is
required to even become a healthy business entity that is always doubled the
profitability, improve productivity, operational efficiency and create competitive
advantage within the industry but still adhere to the principles of good corporate
governance.
In order to create a healthy and robust state-owned enterprises, the
Government through Ministry of SOEs plans to restructure some of the stateowneed companies to enhance efficiency at all levels and promote better good
corporate governance. It also aim to improve companies performance and value,
so they will be able to provide more benefits in the form of dividends and taxes to

In the General Explanation section of the Law No.19 of 2013 regarding SOE No.VII, with regard
to the nature of business of SOEs which are (1) to foster profit and (2) to carry out public benefit,
SOE is simplified into two forms. The first is Limited Liability Company (Persero) which aims to
foster profit and the second is Public Company (Perum) that conducting public service, yet should
be sought for profit to sustain their operation.

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the state, deliver better product and services at competitive prices to consumers
and facilitate the implementation of privatization2
By most managers, restructuring usually considered as a negative
condition that could be a symptom of the business declining, where companies
are forced to react to face the competition changes and the financial condition
declining (Adrianti, 2004). However, restructuring can also be a compannys
anticipation strategy to face competition in the future, through drastical changes in
order to reach or maintain a sustainable business growth.
One of the SOE who will have to face increasingly tight competition in the
future is PT. ASDP Indonesia Ferry (Persero). Post-issuance of Law 17 of 2008
regarding Voyage and Government Regulation 61 of 2009 regarding Ports, ASDP
Indonesia Ferry should be ready to compete with the private company domestic
and foreign in ferry ports business sectors. Both of the rules are encourage
private enterprises to invest and manage ports in Indonesia by establish a Port
Business Entitity ( Badan Usaha Pelabuhan) that already obtained a license
from The Ministry of Transportation.3
Business competition environment in the port management sector will be
more intense if the revised Negative List of Investment (DNI) be published in
the near future. One of the revisions, is to remove port business sector from DNI
and foreign capital ownership will be allowed up to 100% 4 . In addition to
potential threat from external competition, PT. ASDP Indonesia Ferry (Persero)
also must respond to customers who are more critical and demanding, particularly
regarding demand for maximum services from the service provider.
In order to fulfill the customers satisfaction and also to accelerate the
company's growth, a company restructuring strategies that is tailored to the
2

Indonesias Ministry of State-Owned Enterprises, Master Plan of State-Owned Enterprises Year

2005-2009, 2010-2015. Retrieved December 8,2013 from http://www.bumn.go.id/masterplanbumn/
3
One year after the issuance of Government Regulation 61 of 2009 regarding Ports, 10 private
entity has obtained an official license as a Ports Business Entity (BUP) and 15 others is in the
process of obtaining licenses. Kemenhub Telah Keluarkan 10 Izin Proyek Pelabuhan Swasta , Retrieved
December 15, 2013 from http://industri.kontan.co.id/news/kemenhub-telah-keluarkan-ijin-10proyek-pelabuhan-swasta--1
4
Presiden Akan Hati-hati Revisi DNI. Retrieved December 15, 2013 from
http://bisniskeuangan.kompas.com/read/2013/11/13/1222529/Presiden.Akan.Hatihati.Revisi.DNI

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company's position in the present and in the future is seems important. With this
regards, the company functions as a service provider for the community and a
business functions remain intact. Spin-off might be an alternatif of restructuring
method for company in orderor to achieve high level of customer satisfaction as
well as to accelerate the company's growth.
PT. ASDP Indonesia Ferry (Persero) core businesses, currently categorize
in two field: (a) managing ferry transportation services, and (b) managing ferry
ports services. Those two field is divided into four business segment which
becomes the source companys revenue are:
a) Commercial Ferry Transportation Business: transportation for passengers,
vehicles and goods
b) Pioneer Ferry Transportation Business: transportion for passenger, vehicles and
goods in the remote area that fund government subsidy
c) Ferry Ports Business: ferry ports management and utilization for operational
(transportion) purposes
d) Other Service Business: ferry ports utilization for non-operational purpose
Refering to the Indonesias Central Bureau of Statistics data in 2012, ferry
transportation industry of 2012 has a market capitalization up to Rp. 3.289 trillion.
From that market capitalization, PT. ASDP Indonesia Ferry (Persero) has enjoyed
market share of 25.56% 5 , and the rest enjoyed by some private operators.
Meanwhile, in the ferry port business, it could be said that PT. ASDP Indonesia
Ferry (Persero) is still a single player within industry that controls nearly 100%
market share.
The company's main revenue comes from Transportation Business
Segmentboth commercial and pioneering business. In the last three year, this
segment revenue contribute average of 60% of total revenue. Unfortunately, the
biggest contribution to companys operational income is come from Port Business
Segment (include other service businness) segment that contribute 62,2%. Detail
contribution from each business seghemnt depict in Tabel 1.1.

The total achieved market share in 2012 contributed by the commercial transportation business
amounted to 18.39%, and pioneer transportation business as much 6.17%. Rencana Kerja dan
Anggaran Perusahaan PT. ASDP Indonesia Ferry (Persero) Tahun 2013

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Table 1.1. Business Segment Contribution to PT. ASDP Indonesia Ferry (Persero)
Revenues, Expenses & Operational Income 2010-2012

Source: PT.ASDP Indonesia Ferry (Persero) Annual Report

2010,2011,2012 (Audited)
This thesis intent to study possibility of using one of restructuring method
as a strategy to boost up PT. ASDP Indonesia Ferry (Persero) performance and
growth. This intent are motivated by the company that has to be focus in operates
a business, the need for clearly separation of revenues and expenses of each
business segment, and also to anticipate tight competition in the future. I argue
that there are still huge opportunity to diversify, especially in Port Business
segment rather than Transportation Business Segment. This potential might can be
more exploited by independent entity that focus in the specific business.

1.2. Problems Identification

PT. ASDP Indonesia Ferry (Persero) have two core business segment as
source of revenue, which are Ferry Transportation Business dan Port Service
Business In last three year, both segment has same level of operational
performance, and also give not to far different contribution to companys financial
and operational performance as a whole.

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On the industry competition side view, is the ferry transportation sectorsm

currently, PT. ASDP Indonesia Ferry (Persero) had been already compete with
private operators already face, especially in the commercial trajectories.
Unfortunately, although PT. ASDP Ferry (Persero) is a first player in the ferry
transportation industry, until now still could not be a market leader. Meanwhile,
for the ferry ports business sector, even though the government had already
opened up opportunities for the private sector to the manage ferry ports, can be
said PT. ASDP Indonesia Ferry (Persero) still act as the only player.
In line with economic growth and business climate openness, challenges
and competition in the future will be even greater. Greater challenge to face is in
Port Business Segment, after issuance of Law No. 17 of 2008 on regarding
Voyage and Government Regulation No.61 of 2009 regarding Ports, where allow
private parties to manage ports in Indonesia, including ferry ports.
To respond existing and future condition in the both two PT. ASDP
Indonesia Ferry (Persero) core business, it is necesarry to find a corporate strategy
that could accelerate the company's growth in the future. One option is: each of
PT. ASDP Indonesia Ferry (Persero) business segment must to focus in their field
and their market. Thus, the problem of this research is:
1. Evaluate and anlyzing existing PT. ASDP Indonesia Ferry (Persero) business
portfolio condition?
2. How to determine the suitable restructuring strategy in order to accelerate
business growth of PT. ASDP Indonesia Ferry (Persero), especially in Ports
Business Segment?

1.3. Research Objectives

According to the problem formulation, this research objectives are:

1. To evaluate and analyze existing PT. ASDP Indonesia Ferry (Persero) business
portfolio mapping
2. To explore the potential of using one of restructuring strategy in order to
accelerate business growth of PT. ASDP Indonesia Ferry (Persero), especially
in Ports Business Segment

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1.4. Research Benefits

According to above problems indentification and research benefits, this

thesis could give benefit to several group or parties
1. The Company. The results of this study are expected to provide input for the
company in making decisions related to the company's strategy in the future
2. Academic. The results of the study are expected to enrich scientific study
regarding implementation of the corporate strategy
3. Government. The results of this study are expected to provide relevant
regarding performance model and development strategy of SOE

1.5. Research Limitation

1.6. Research Operational Framework

1.7. Writing Systematic

Chapter I: Introduction
This chapter contains the background, problem identifications, research objectives
and benefits, and writing systematic

Chapter II: Literature Review

This chapter explains concept and theories that used as fundamental thinking to
find answer of research problem. The concept/theories are related to Strategy,
Growth, Restructuring, Spin-Off and Corporate Performance.

Chapter III: Company Overview & Industry Environment

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This chapter describes company profile of PT. ASDP Indonesia Ferry (Persero) as
a research subject, their existing conditions, and its connection to the related
industry environment.

Chapter IV: Research Methodology

This chapter describes an overview regarding conceptual framework, models and
tools to find answer of research problems. It contains paradigm, approach, source
of data, measurement and tools of analysis

Chapter V: Analysis & Discussion

This chapter discussing finding, result, interpretation and analysis of gathered
research data. Especially that answers research problems.

Chapter VI: Conclusion and Recommendation

This chapter summarizing and conclude of research result, and its
recommendation to fulfill the research objectives.

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II. LITERATURE REVIEW

2.1.

Restructuring Strategy

Strategy is closely associated with a company success factors, because it is

basically related to the process of achieving the company's objectives. Chines
philosopher Sun Tzu, in The Art of War, initiated the strategy as a way to use
internal strengths and exploit your opponent weaknesses in order to win the war.
Refering to Henry (2011), there is agreement that the role of strategy is to achieve
competitive advantage for an organization, and the use of strategy need to take
account of constantly changing external environment as well as use organization
resources and capabilities to exploit opportunities or limit threat in the external
environment.6
Regarding competitive advantage strategy , Porter (1980) developes three
generic strategies to help company outperform rivals within an industry. These
generic strategies are as follow;
- Overal Cost Leadership. Involve a firm being the lowest-cost producer within
the industry, which rivals simply cannot match. Therefore, a cost leadership
strategy allows the firm to make superiors profit
- Differention. Base on an organization producing product or services are
perceived by customers as unique or different. This difference is the basis
which customers are prepared to pay a premium price and thereby allowing the
company to earn superior profit
- Focus. Allow an organization to target a segment or niche within the market. A
focus strategy is aimed at serving a particular target market efficiently. The
company following focus strategy only achieves competitive advantage within
specific niche.

nd

Henry, Anthony E. (2011). Understanding Strategic Management 2 Edition. New York: Oxford
University Press pg.4

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Figure 2.1. Porters Generic Strategies

Source: Porter (1980, page.39)
As mention previously, strategy must always adapt both to external and
internal environment. This conditions drives company to shifting they business
strategy. When the company's strategy shift, it will be also an entry poin for
company to undertake restructuring program. According to Djohanputro,
restructuring is a company's efforts to improve performance in the future, by
reorder the components

components, so that corporate will have better

performance in the future. 7 The company components that can be rearranged

include assets, financing, organization, division of labor, human resources or
corporate wealth or whatever in that in corporate control.
Weston, et. Al (2004) classify restructuring into three major categories: (a)
reorganization of asset and ownership, (b) reorganizing financial claims , dan (c)
other strategies. The most common restructuring & divesture strategy used by
company is reorganization of asset and owenership which consist of of three type:
(1) Asset sale, (2) Equity carve-out, and (3) Spin-Off. Furhermore, corporate
restructuring & divestures is believed can create value by improving incentives an
thereby altering corporate efficiency8.

Djohanputro, Bramantyo._____ Designing Implementable Framework of Restructuring.

Retrieved December 18, 2013 from http://bram39.files.wordpress.com/2008/09/konseprestrukturisasi-28-08-08.pdf
8
th
Weston, et.al. (2004). Takeovers, Restructuring, and Corporate Governance 4 Edition. New
Jersey: Pearson-Prentice Hall, page 299.

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2.2.

Spin-Offs

Too often, companies view divestitures as the mark of failure. As such,

they devote inadequate resources to the endeavor. Contrary, Ernst & Young
(2012) see the reality is that divestitures should be viewed as a primary means of
optimizing the business portfolio and an essential means of raising, reallocating
and preserving capital.9.
As one type of divestitures, the idea of a spin-off appears driven by
company desire to develop more rapid and extensive business. Elfring and Fross
(2000) define spin off as,..an individual or an organizational unit leaving an
existing firm to start as a new firm on the basis of their specific knowledge and
competence 10 . By this definition, parent company is expected be able to
concentrate on its core business and the spun off company business opportunity
may have higher value as a separate company.
Refering to Weston et.al (2004), Spin-Off is one possible alternative of
restructuring program. Spin-off is one of the restructuring strategies through asset
reorganization and company ownership restructuring. In Spin-Off, a division,
business unit or subsidiary is separated from the parent company in order to create
new business entities and business independency. Through the management
separation, each company is expected to focus on developing its business.
YingChou Lin (2007) in his dissertation titled Two Essay on Corporate
Spin-Off found that corporate spin-off could be beneficial even though the
efficiency and compensations of divisional managers remains unchanged. Spin-off
serves as a mechanism to adjust an undervaluation of parent firms than their peer
industry before spin-offs. It is likely that managers tend to apply a spin-off
strategy to boost the valuation of firms.
A spin-off is a relatively simple way to improve the focus of the firm and to
avoid the diversification discount. Therefore, a spin-off allows the firm to
concentrate on its core business (Veld, 2008)

Ernst & Young. (2012). Divesting fo Value. New York: Hammes, Paul and Mills, Rich.
T. Elfring and N.J. Foss (2000). Competence Buildding: Understanding the Role of International
Venturing and Spin-Off. Advance in Applied Business Strategy, vol.6A, pg.97-119
10

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In a spin-off, the parent company distributes to its existing shareholders

new shares in a subsidiary, thereby creating a separate legal entity with its own
management team and board of directors. The distribution is conducted pro-rata,
such that each existing shareholder receives stock of the subsidiary in proportion
to the amount of parent company stock already held. No cash changes hands, and
the shareholders of the original parent company become the shareholders of the
newly spun company.11

Figure 2.2. Spin-Off Process

Source: http://www.macabacus.com/restructuring/spin-offs
Stamboel (2012), explain several issues that motivate company to conduct
Spin-Off , which are: (1) organizational improvement, (2) capital market
improvement, (3) corporate governance improvement, (4) tax advantages, and (5)
regulatory reason.
In her thesis, Stamboel (2012) described several story of Spin-Off case in
Indonesia. After the issuance of the Indonesia Ministry of SOE Master Plan, the
first case of spin-off is PT. Pusri (Persero) that spun off most its asset an liabilities
related to the production and distribution of fertilizer into a newly established
subsidiary company namely PT. Pusri Palembang, while the parents company
transform into a holding company). The next spin-off story in Indonesia is in
banking and insurance sector. The issuance of Law No.21 Year 2008 regarding
Sharia Banking and Indonesias Central Bank Regulation No.11/10/PBI/2009
11

Spin-Offs and Split-Offs. Retrieved December 9, 2013 from

http://www.macabacus.com/restructuring/spin-offs

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require all conventional commercial bank who have sharia business unit to spinoff their sharia unit to become Islamic Bank. In insurance sectors Bapepam-LK is
openly supporting the spin-off of (i) sharia business of conventional insurance
companies and (ii) investment management units of securities companies. Spinoff of sharia insurance business is also believed to help accelerate the
development on the Islamic insurance industry in Indonesia and so will planned to
be include on the upcoming insurance law12

III. METHODOLOGY

Based on the problems and research objectives, this study is an exploratory

study with a qualitative approach. This research will use a case study on PT.
ASDP Indonesia Ferry (Persero).
Research data will be obtained by literature

study and field study.

Literatury study will collect relevant data from secondary source such as from
books, journal, publication, company report, and other reference in order to
support research objectives. Field studies conducted by directly accessing and
analyzing financial statements or related reports of company performance.
Interviews will also be conducted to deepen the understanding of the research
subject.
To analyze obtained data are used several analyis techniques, including:
1. TOWS Matrix and GE Matrix to identify and analyze PT. ASDP Indonesia
Ferry (Persero) business portfolio
2. Valuation analysis to forecast the potential of

business segment spin-off

strategy implementation.

12

Spin-off Dorong Perusahaan Asuransi Syariah Kompetitif. Retrieved December 15, 2013 from
http://www.republika.co.id/berita/syariah/bisnis/12/02/01/lypncq-spin-off-dorong-perusahaanasuransi-syariah-kompetitif

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IV. REFERENCE
Adrianti, Arietta. (2005). Analisis Dampak Restrukturisasi Usaha Dalam Rangka
Pengembangan Bisnis Inti Terhadap Nilai Perusahaan (Studi Kasus PT United
Tractors Tbk.). Jakarta: University of Indonesia
Asfaroni, Ayatullah.(2011). Strategi Pelepasan Aset Sebagai Sumber
Pembiayaan Program Restrukturisasi PT ABC. Jakarta: University of
Indonesia
Djohanputro, Bramantyo._____ Designing Implementable Framework of
Restructuring. Retrieved December 18, 2013 from
http://bram39.files.wordpress.com/2008/09/konsep-restrukturisasi-28-0808.pdf
Elfring, T and N.J. Foss (2000). Competence Buildding: Understanding the Role
of International Venturing and Spin-Off. Advance in Applied Business
Strategy, vol.6A
Ernst & Young. (2012). Divesting for Value. New York: Hammes, Paul and Mills,
Rich.
Government Regulation No.61 of 2009 regarding Ports
Henry, Anthony E. (2011). Understanding Strategic Management 2nd Edition.
New York: Oxford University Press
Indonesias Ministry of State-Owned Enterprises, Master Plan of State-Owned
Enterprises Year 2005-2009, 2010-2015. Retrieved December 8,2013 from
http://www.bumn.go.id/masterplan-bumn/
Law No.19 of 2013 regarding State-Owned Enteprise
Law No.17 of 2008 regarding Voyage
Masaro, Kerry ( October 1998). Harvard Study Shows Spin-Offs Create Value.
Corporate Financing Week, 10(12) 24,41. October 1998. ABI/INFORM
Proquest Database
PT.ASDP Indonesia Ferry (Persero) Annual Report 2010,2011,2012 (Audited)
Spin-Offs and Split-Offs. Retrieved December 9, 2013 from
http://www.macabacus.com/restructuring/spin-offs
Spin-off Dorong Perusahaan Asuransi Syariah Kompetitif. Retrieved December
15, 2013 from

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http://www.republika.co.id/berita/syariah/bisnis/12/02/01/lypncq-spin-offdorong-perusahaan-asuransi-syariah-kompetitif
Stamboel, Ratna Ayu Sabrina. (2012). An Analysis of The Corporate Spin Offs in
Indonesia: Potential, Regulation and Issues. Tillburg: Tillburg University
Sudarmanto, Jahja Fitriono. (2003). Simulasi Pengukuran Kinerja Strategi
Dengan Strategic Profitability Performance Pada Restrukturisasi Usaha PT
XYZ. Jakarta: University of Indonesia
Veld, Chris & Veld-Merkoulova, Yulia V (2008). Value Creation Through SpinOffs: A Review of the Empirical Evidence. ABI/INFORM Proquest Database
Weston, J.Fred. Mitchell, Mark.L, Mulherim, J. Harold ( 2004). Takeovers,
Restructuring, and Corporate Governance 4th Edition. New Jersey: PearsonPrentice Hall
YingChou Lin.(2007). Two Essays on Corporate Spin-Offs. Old Dominion
University. ABI/INFORM Proquest Database

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