IPA17-15-O
PROCEEDINGS, INDONESIAN PETROLEUM ASSOCIATION
Forty-First Annual Convention & Exhibition, May 2017
ENGAGEMENT OF LOCAL GOVERNMENT FOR COMMUNITY EMPOWERING
THROUGH INVENTORIES WRITE OFF
Hani Qonitah*
BACKGROUND: EMOI INVENTORIES
CONDITION
To support Production operations, ExxonMobil Oil
Indonesia (EMOI) has rented houses for their
employees and provided furniture and household
appliances in Jakarta from the 1980s to the 1990s.
Total purchasing value of items was around Rp. 970
million during that time. All goods were fully used
for their designated purposes during the active
period.
According to accounting rules, the useful life of these
types of housing furniture and household appliances
are a minimum of 5 (five) years. After their useful
life was completed, all items were returned to the
company and kept for further action, however their
useful life had therefore expired when they were kept
in storage. The items were maintained well during
their storage so that the condition generally was fair
and can still be reused as can be seen in the pictures
in Table 1.
Within EMOI, the function which is responsible for
handling of physical assets & inventories in Jakarta
is GREF (Global Real Estate & Facilities). GREF’s
responsibilities include but are not limited to:
1. Prepares work plan & budget (WP&B) and
issues to SKK Migas for storage costs including
storage rental and maintenance for Indonesia
affiliates in Jakarta
2. Stewards all items resulting from Business
Functions (BU) activities which are no longer
used & are kept for further actions. Actions
include maintaining a current asset & inventories
database and storage maintenance & cleaning
3. Supports the BU for assets and inventories
related activities including asset physical
verification required by government or
controller and audit and transfer of assets to a
* Exxonmobil Cepu Ltd.
new entity if there is any working area
relinquishment or farm out
All items were kept in a storage location in South
Jakarta with an area totaling 2000 sqm land in a 572
sqm building. For many years, the items were just
stored waiting for further actions. The storage rental,
maintenance and operations costs were subject to
cost recovery and included in the annual WP&B
under BS11.
GREF has kept and maintained housing furniture and
household appliances from BUs for several years but
received no directions from users or management as
to the future plans for these items. The items were
considered as dead stock since they have never been
used after being transferred to GREF. Considering
the storage cost was expensive and that operational
expense reduction was needed, GREF was pushed to
cut off the budget in all areas including the storage
cost. Therefore, in 2011, GREF initiated the
releasing process by studying which was the best
method to release the items from the company in
accordance with and aligned with the following
government regulations:
1. Government regulation no. 6 year 2006 (PP no.
6/2006) regarding management of asset and
inventories belonging to central/local
government
2. Minister of Finance regulation no. 135 year 2009
(PMK no. 135/2009) regarding management of
state assets derived from production sharing
contract
Based on the above regulations, the asset surrender
or transfer of ownership of government asset can be
done through some alternative methods:
1. Selling out: transfer of ownership of state or
government assets to other parties to receive
reimbursement in the form of money
2. Exchange: transfer of ownership of state or
government assets conducted between central
and local government or between local
governments or between central/local
government with other parties, to receive in the
form of goods at least with a balanced value
3. Donation: transfer of ownership of state or
government assets from central to local
government, from local government to central
government, or between local governments or
between central/local government with other
parties, without obtaining any reimbursement
4. Government participation: transfer of state/local
government property which was originally a
wealth that is not separated into separate wealth
to be counted as capital of the country / region in
state-owned enterprises, regionally owned
enterprise, or other legal entity that is owned by
the state.
After consultation with internal management &
ESDM, the company decided to select the donation
option to write off all items after considering that the
process is simpler, faster & would be more useful for
people compared with selling out. In addition, we
have had experiences of failing of auctions in the past
i.e. no parties were interested in purchasing dead
stock items which then caused a delay in releasing
our asset & inventories as well as resulting in more
costs to pay for storage rental and maintenance.
The Ministry of Energy and Mineral Resources
(KESDM) provided advice that donations can be
channeled to several parties including NGO’s,
foundations, communities, etc. In the end, the
company preferred to donate all items to the needy
through a local government community program.
KESDM instructed that the company must strictly
follow regulatory requirements for the benefits of
both parties, the company & local government. No
parties shall be subject to penalty or punishment due
to this process and this advice was taken into
account. Then the company was informed by a
related SKK Migas function that we were planning
to donate all items to the community through local
government and SKK Migas had no objection to this
plan. They provided similar advice as per KESDM
that the donation shall provide benefit for all parties.
IDENTIFY COMMUNITY PROGRAM
After getting the ‘green light’ from the government
for the donation, the company then started
conducting an opportunity study for the donation to
a local government entity around Jakarta. We
identified that there are some provinces, cities and
counties located around Jakarta: DKI Jakarta
provincial government, Banten provincial
government, Bekasi provincial government & Depok
Administrative City government. Since the head
office was located in Jakarta, we checked with DKI
Jakarta provincial government first. We realized that
the suitable office that matched with housing
furniture is the Social welfare service office. We then
contacted the head of the Social welfare service
office. Basically, they welcomed our plan to donate
our inventories. We met at the head office, showed
our items and made the offer for him to receive the
items. The head office was happy with this offering
and said that the furniture and household appliances
can be reused by the parlors and halls of the social
services office. The head office agreed and he
appointed his subordinates to work with us. We
communicated through letters and by phone several
times. However, since the write off process took
months to process, the appointed officer was
replaced with another officer. It was therefore
advised that the PSC has to have another local
government option as a backup.
In our case, the local government organization who
responded to our contact was the Sukabumi district
government (Pemerintah Daerah Kabupaten
Sukabumi). Its regional secretary expressed his
interest and said that the local government would be
glad to receive housing furniture & household
appliances from the company. There were some
programs matching with items that we would donate
such as the parlors or working centers or low cost
housing programs. He informed us that the local
government also received many requests from public
or private organizations such as foundations or
NGO’s in the Sukabumi district area to have
assistance in all forms from local government.
We then realized that we have to contact the regional
secretary (Sekretaris Daerah) for the donation
purpose instead of the services office directly. This
was a lesson learned we got from the DKI Jakarta
province since we communicated directly to the
services office. This was the reason why we got no
response from the DKI Jakarta government office.
With the positive response from the Sukabumi
district government, the company followed up by
requesting the local government to send an official
Letter from regional secretary to Minister of ESDM;
confirming that Sukabumi district government is
willing to receive donation of furniture and
household appliances from EMOI. This letter was
copied to relevant parties: Head of PPBMN ESDM,
Supply Chain Division Head of SKK Migas & VP
Finance & Support Services of EMOI. Once the
letter was accepted by ESDM, then the company
proceeded with the write off process (WOP) to SKK
Migas.
WRITE OFF PROCESS (WOP)
As per the Write off process through the donation
method that was explained previously, EMOI strictly
follows government regulations requirements as
follows:
1. Government regulation no. 6 year 2006 (PP no.
6/2006) regarding management of asset and
inventories that belong to central/local
government
2. Minister of Finance regulation no. 135 year
2009 (PMK no. 135/2009) regarding
management of state assets derived from
production sharing contract
3. SKK Migas working rules (Peraturan Tata
Kerja SKK Migas) no. 007-revisi
1/PTK/IX/2009 book III regarding Asset
management of production sharing contract.
Write off is the final action taken by a PSC for its
asset and inventories that have not been no longer
being utilized. A PSC can write off their asset &
inventory with valid justifications such as being
broken or uneconomical to repair, lost/destroyed,
obsolete, poor quality/expired, natural shrinkage,
dead stock, due to regulations or due to force
majeure. Our items fully met the write off
justifications.
There are some stages that the company has to follow
for WOP:
1. Write off preparation.
a. At this stage, the company has to categorize
the item. In this case all items were
categorized as Harta Benda Inventaris/HBI
(Inventory) since their purchased value of
each item was less than Rp. 5 million
b. Conducted initial verification:
‐ matched specifications, amount,
condition, location and completeness of
the items
‐ clarified with the financial function of
SKK Migas for matching the number &
net book value
‐ prepared supporting documentation/data
such as weighting, purchasing value &
year and police letter for missing items,
if any
‐ separated physical items for write off
with other equipment, etc.
2. Submitted pre write off document to SKK Migas
including Form1 regarding summary of the write
off proposal (signed by user, logistics & finance)
and Form 2 consisting of inventories detail with
pictures. Then SKK Migas together with the PSC
reviewed and conducted a physical check to
ensure their conformity & current condition
3. After completion of item no. 3, the company
submitted the write off proposal to the Supply
Chain division of SKK Migas and attached the
following documents: Cover letter signed by the
highest level of inventories owner, Form1
regarding summary of the write off proposal
(signed by user, logistics, finance & the highest
level of inventories owner) and Form 2
consisting of inventories detail with pictures,
physical verification report between PSC & SKK
Migas and other supporting documentation. This
proposal was equipped with an affidavit letter
signed by the VP Finance & Support Finance of
EMOI as the highest ranking officer of the
asset/inventories owner.
Finally, SKK Migas provided a written
recommendation for the EMOI WOP proposal for
donation to the General Directorate of State Asset,
the Ministry of Finance (DJKN KMK) through State
Management of State Property and the Ministry of
Energy and Mineral Resources (Pusat Pengelolaan
Barang Milik Negara Kementerian Energi dan
Sumber Daya Mineral/PBMN KESDM).
DONATION PROCESS
During the Pre-WOP and the WOP itself, the
company simultaneously approached Pemerintah
Daerah Kabupaten Sukabumi for smoothing the
donation process. Before sending the official letter to
the Minister of KESDM, the regional secretary
requested to check the physical inventories condition
at storage. They needed to compare the inventories
data with physical items in order to ensure that the
items condition was still good for use. Several
officers from Pemerintah Daerah Kabupaten
Sukabumi visited the storage location and checked
that all items were there.
In general, they acknowledged that the housing
furniture and household appliances were still
acceptable for use. However, they requested to clean
up several items such as mattresses, chairs & carpets
as well as fixing up some electronic equipment if
possible. GREF followed up on this request. Upon
checking all items at storage and discussing with
their high rank officials, the local government
decided to distribute all items in the form of housing
furniture & appliances for the community through a
community program that they rolled out called “The
Low Cost Housing Program (Program rumah murah
untuk masyarakat). The central government as well
as the company fully supported this plan.
On the other side, the administrative process
continued. After the Pre-WOP and WOP proposal
with SKK Migas was completed, the WOP proposal
was proceeded to PPBMN KESDM. PPBMN
KESDM, in conjunction with DJKN KMK, then
followed the WOP by conducting a thorough
physical check with the company at the offsite
storage location and completed required
documentation before providing approval for
transfer of ownership through donation to local
government based on above regulations. Below is
the analysis and the required documentation for
WOP through donation approval.
Transfer of inventory write off analysis:
1. WOP proposal from PSC to SKK Migas
2. Letter for transfer of ownership proposal from
Minister of ESDM to Minister of Finance
3. Objects that can be transferred are not a state
secret and do not affect the livelihood of the
people and have not been used in the company
operations
4. Letter of confirmation to receive donation
from Pemda Kabupaten Sukabumi
5. Determining of inventories value that would be
written off
6. Conducted physical and administrative studies
on the technical and economic feasibility
before establishing a review team
7. Submitting of review team’s report on the tasks
execution accompanied by an assessment
report.
8. The issuance of the WOP decree which at least
contains the objects, values and the designation
of the goods and the recipient
9. Monitoring and evaluating of write off
execution
So far, the donation process was fully in compliance
with regulatory requirements i.e. PMK 135/2009 and
PP no. 6/2006. A further action during the donation
process was to remove those inventories from EMOI
data in the government database.
RESULT
 PSC to conduct write off as soon as the useful
life ends due to storage rental and maintenance
costs that are subject to cost recovery
 PSC to select the best option for transfer of
ownership of government asset and inventories
based on government regulations
 PSC to engage local government, particularly
regional secretaries, to donate assets and
inventories and support the most suitable
program for the community in the district region
 PSC to closely cooperate with relevant
stakeholders (external and internal parties) to
make the donation process smooth, successful
and of benefit to the community
 PSC personnel to steward and monitor the write
off process as well as follow up on the progress
to ensure write off stages are performed
thoroughly and in a timely manner
 PSC to keep good recordkeeping related to the
write off since this process is subject to audit
both by the government and internally by the
company
CONCLUSION
The donation of EMOI housing furniture and
appliances has complied with government regulatory
requirements as well as having achieved the local
government program objective for the low-cost
housing program and empowered the community in
general as shown in the pictures below. For the
company, the write off contributed to a cost saving
of general administration expenses of up to Rp. 1.4
billion per year, as well as removing the company’s
obligation for managing physical assets and
inventories and its database.
REFERENCE
Government regulation no. 6 year 2006 regarding
Management of asset and inventories belong to
central/local government
Luthfi, Rian Rosita. Analisis Pengelolaan Barang
Milik Negara: Studi Kasus Pengelolaan Barang
Milik Negara yang Berasal dari Kontraktor Kontrak
Kerja Sama (K3S) pada Direktorat Jenderal
Kekayaan Negara. Skripsi. Universitas Indonesia:
Fakultas Ekonomi Program Ektensi Akuntansi, 2013
Minister of Finance regulation no. 135 year 2009
regarding Management of state asset and
inventories derived from production sharing
contract
SKK Migas working rules (Peraturan Tata Kerja
SKK Migas) no. 007-revisi 1/PTK/IX/2009 book
III regarding Asset management of production
sharing contract
 TABLE 1

CONDITION OF INVENTORIES FOR DONATION

TABLE 2

TRANSPORTING DONATION TO KABUPATEN SUKABUMI

 
 TABLE 3

DONATION HAND OVER TO PEMDA KABUPATEN SUKABUMI

 
 TABLE 4

DONATION DISTRIBUTION TO COMMUNITY

IN KABUPATEN SUKABUMI