Accuracy of statistics on RI's recovery<\/p>\n
Tata Huberta, Economist, Washington<\/p>\n
Over the last few days, newspapers have been filled with
\nquarterly financial statements by a number of Indonesian
\ncorporations.<\/p>\n
Astra International, the Indonesian bellwether company, posted
\na handsome profit in the first quarter of this year, amounting to
\nRp 1.1 trillion, or double the profit of the same period the
\nprevious year.<\/p>\n
Similarly, Indofood also recorded a nice profit in the first
\nquarter of this year, an increase of 41 percent to Rp 308.6
\nbillion.<\/p>\n
In fact, had it not been for changes in the Indonesian
\nAccounting Standard, the profit would have been 102 percent
\nhigher than last year.<\/p>\n
Telkom, the Indonesian telecommunications giant, reported a
\nprofit of Rp 1.5 trillion in the first quarter, a sharp
\nimprovement from last year. Bank BCA, whose ownership changed
\nhands this year, also reported a jump on its profit to Rp 832.7
\nbillion in the first quarter.<\/p>\n
All of this good news is expected to continue in the coming
\ndays, with an endless number of companies reporting substantial
\nincreases in their profits.<\/p>\n
These signs of a rebound for the Indonesian corporates has
\nconsequences for the Indonesian economy, and the accuracy of the
\nrecent report by the Central Bureau of Statistics (BPS).<\/p>\n
The last four years have witnessed the complex process of the
\nrestructuring of the Indonesian corporates.<\/p>\n
A number of big companies, with hundreds of creditors, finally
\nconcluded the lengthy process of their restructuring deals.<\/p>\n
In some cases, the former owners of these companies agreed to
\nswap some of their shares for the debt they owed.<\/p>\n
The most famous example of this was the restructuring deal
\nstruck by the Bakrie Group, in which the Bakrie family agreed to
\nlimit its ownership to just five percent in their companies.<\/p>\n
This sacrifice seems to have finally paid off. Before the
\nrestructuring was completed, these companies were not able to
\npost a profit. Rather, their interest rate burden put them deeper
\ninto the red. Having completed the restructuring process, these
\ncompanies are no longer burdened by huge debts.<\/p>\n
The success stories of the restructured companies has also
\naffected their standing in the eyes of international creditors.<\/p>\n
A number of financing deals have been completed in the past
\nfew months. Medco, a restructured company active in oil and gas
\nexploration, has just been approached by a syndicate of Japanese
\nbanks offering the company another financing deal with
\ncompetitive terms.<\/p>\n
The terms could beat what was achieved by the company in its
\nlast debt offering.<\/p>\n
Similarly, a number of companies have been able to get an
\ninternational rating several notches above the sovereign rating.<\/p>\n
These facts indicate the new reality for the companies that
\nhave completed their restructuring efforts; they have been reborn
\ninto new, much sounder, and hopefully wiser companies.<\/p>\n
Since there are still many companies whose restructuring deals
\nare in the pipeline, as well as companies that are unwilling to
\nmove quicker to restructure, the lessons learned from the success
\nof these restructured companies may serve as an eye-opener.<\/p>\n
The success of the restructured companies could become a good
\nincentive for other companies to expedite their restructuring. In
\nfact, with the rebounding market, there are more reasons for
\nthese companies to arrive at better deals in the restructuring
\nprocess.<\/p>\n
As is usually predicted, the rebound of the Indonesian
\ncorporates should come hand in hand with the rebound of the
\nIndonesian economy.<\/p>\n
In the recently submitted budget draft, the assumptions used
\nfor the upcoming fiscal year are even brighter. The growth rate
\nof the Indonesian economy is predicted to be between four percent
\nand six percent. This prediction is widely shared by the IMF,
\nsince there is a sufficient basis for such a high estimate. This
\nbudget submission, and hence the presentation of the basic
\nassumptions, was made just a few days after the BPS presented its
\nreport on the national economy.<\/p>\n
Therefore, the not so rosy picture of the first quarter of
\nthis year by the BPS might deter Minister of Finance Boediono,
\nand lead him to change the basic assumptions.<\/p>\n
But with the various reports of companies' earnings published
\nin the last few days, the finance minister's optimism seems to be
\nvindicated. The companies' earnings are even rosier than the
\neconomic forecast.<\/p>\n
As we learned from the numbers reported by the BPS, the gross
\ndomestic products for the first quarter amounted to Rp 412.2
\ntrillion. The combined profits of the few companies cited here,
\nAstra International, Indofood, Bank BCA and Telkom, are more than
\nRp 4 trillion. In addition, they also paid wages, interest and
\nother income factors. Therefore, the added values of these
\ncompanies may easily reach more than Rp 10 trillion.<\/p>\n
Therefore, their contributions to GDP are certainly not
\nnegligible. The fact that they experienced a sharp increase in
\nsales and profit in the first quarter of this year indicates that
\ntheir contributions to GDP also experienced a very high growth
\nrate. BPS stated that aside from the agriculture sector, which
\nexperienced a growth rate of 16.51 percent, other sectors only
\ngrew less than 2 percent.<\/p>\n
While it may be argued whether the performance of the four
\ncompanies can represent their sectors, the fact of the matter is
\nthat these companies, which have a reasonable share of GDP, were
\nable to record very high growth in their sales and profits, and
\nconsequently their contribution to GDP. Therefore, to have only
\nless than 2 percent growth in their sectors, the other companies
\nin their sectors would have to perform very poorly, with negative
\nor at least only small growth.<\/p>\n
This argument leads me to a recent experience with statistics
\nin the U.S. Earlier this year, the U.S. Department of Commerce
\nindicated that the growth rate of the GDP in the last quarter of
\n2001, even though in positive territory, was very low. However,
\nthis positive growth cheered the market. A few weeks later, the
\nfirst revision by the Department brought the growth rate to
\nalmost 1 percent. The smiles were certainly broader. In fact, the
\nfinal revision brought the number up further to 1.7 percent, a
\nvery high level of growth. The cheer certainly changed to
\neuphoria.<\/p>\n
Time will tell whether the BPS will learn from the U.S.
\nexperience and revise its numbers, or whether it will continue to
\nbelieve that its numbers are the correct ones.<\/p>",
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