Advertorial: PT Aneka Tambang
\nPublication: July 26 - Friday<\/p>\n
Antam's ongoing commitment to conduct profitable business the
\nright way<\/p>\n
The recent string of financial scandals in the United States
\nhas clearly taught a valuable lesson to every company throughout
\nthe world on the importance of good corporate governance.<\/p>\n
Market valuations are plummeting as investors are thinking
\ntwice before assuming companies are free of corruption and
\ndistribute honest financial accounts. Investors are wary of the
\nnext corporate scandal brought on by poor governance, and
\ncurrently no amount of positive news of economic recovery will
\nentice them back.<\/p>\n
This negative sentiment towards the stock market has spilled
\nover to Asia, although the fallout has been far less pronounced
\nas most investors already discount the risk of corruption and
\nfalse reporting. Good corporate governance, which is
\nfundamentally about effective decision-making in consideration of
\nthe best interests of the company and its stakeholders, is hard
\nto detect.<\/p>\n
Although there are exceptions, for the most part, finding a
\nreally well governed company in Asia can be difficult. Prior to
\nthe economic crisis, which began in 1997, the concept was largely
\nunknown or ignored.<\/p>\n
This is also true of Indonesian companies, particularly state-
\nowned enterprises. Most people see them as corrupt and lacking
\ntransparency. This is not the case for state-held diversified
\nmining company PT Antam Tbk (Antam), as good governance is a top
\npriority and in terms of transparency, the company meets
\ninternational standards.<\/p>\n
As would-be equity investors intensify the search for high
\nstandards of governance, and begin to look more towards Asia,
\nthose companies with strong fundamentals and good governance have
\nan opportunity to see their market valuation increase.
\nThis is supported by a survey in the most recent McKinsey
\nQuarterly, which states, \"In emerging as in developed markets,
\ncompanies that adopt strict corporate-governance practices are
\nbeing rewarded by institutional investors.\"<\/p>\n
Antam made improving corporate governance a priority when it
\nlisted on the Jakarta Stock Exchange (JSX) in 1997 and then dual-
\nlisted on the Australian Stock Exchange (ASX) in 1999. The
\nchallenges included implementing a more stringent regime of
\ndisclosure and transparency.<\/p>\n
According to one Australian banker: \"We do recognize that
\nAntam's reporting and transparency has improved over the six
\nyears of our relations. This level of reporting gives us, as the
\nlender, a greater confidence in our understanding of Antam's
\nbusiness\".<\/p>\n
At the end of 2001, Ernst & Young completed a three-month
\nevaluation and assessment of Antam's governance efforts. The
\nevaluation considered 12 key elements to evaluate the pillars of
\ngood corporate governance. The majority of Antam's elements were
\nrated as \"needs improvement\" but none were seen as \"poor\".<\/p>\n
Antam's external reporting was rated \"good\" and in terms of
\ncontinuous disclosure, on par with other international mining
\nfirms.<\/p>\n
Antam's President Director D. Aditya Sumanagara says, \"Antam
\nis fully committed to becoming not only a company run according
\nto the highest standards of corporate governance, but also
\nrecognized as such by the capital market and our shareholders\".<\/p>\n
\"The clear picture of the level of corporate governance
\nprovided by an independent professional will allow Antam's
\nmanagement to take the necessary steps to improve corporate
\ngovernance and ultimately achieve our vision for 2010 to become a
\nworld class company,\" he says.<\/p>\n
According to Aditya, the improvement of corporate governance
\nis needed not only to ensure long-term benefits for the company
\nand shareholders but also to ensure that Antam is not only
\nprofitable but also transparent and responsible.<\/p>\n
Antam's Corporate Secretary, Dohar Siregar, says, \"The results
\nof the evaluation should be viewed as an indicator of how far
\nAntam has come on its path to good governance since its listing
\non the JSX in 1997.\"<\/p>\n
And Antam's governance work will continue. In May this year,
\nAntam became the only Indonesian-owned and incorporated company
\nto be fully listed on a western stock exchange when its
\napplication was accepted to convert from a Foreign Exempt Listing
\nto an ASX Listing. With the full listing, Antam must comply with
\nall ASX listing rules and the company's governance should
\ncontinue to improve.<\/p>\n
The JORC code, which was developed on the ASX, is the
\ninternational standard used for the disclosures of mining
\ncompanies.<\/p>\n
A well-known mining equity analyst says, \"The need to meet ASX
\nstandards in reserves reporting under the JORC code means that
\nAntam's reporting is consistent with international standards and
\nthus its numbers are comparable with other international mining
\ncompanies.\"<\/p>\n
The fact that Antam's reporting meets the requirements of the
\nASX adds credibility to the information for third parties, he
\nadds.<\/p>\n
Antam's effort to improve corporate governance has shown
\nbenefits. To date in 2002, the JSX is the world's second best
\nperforming exchange, having increased 20% in Rupiah terms and 55%
\nin US dollar terms. This year Antam has outperformed the JSX, by
\n13%. This is in line with the above mentioned McKinsey survey
\nwhich states, \"surveys suggest that institutional investors will
\npay as much as 28 percent more for the shares of well-governed
\ncompanies in emerging markets\".<\/p>\n
Antam is one of only eight listed Indonesian companies to meet
\nstandards of \"Acceptable Corporate Governance\" from a joint Asian
\nDevelopment Bank and Jakarta Stock Exchange governance project.
\nOther governance recognition includes an award from the
\nIndonesian Institute for Corporate Governance and a FinanceAsia
\nsurvey of Indonesia, published in April 2002, which rated Antam
\nthird for management and commitment to corporate governance and
\nfourth for investor relations and commitment to enhancing
\nshareholder value.<\/p>\n
The next step for Antam will be the implementation of a
\ncorporate policy manual with emphasis on the audit, remuneration
\nand nomination committees and the Code of Conduct.Improving
\ngovernance will remain an ongoing priority to help improve
\nperformance and create sustainable profitability. Shareholders,
\nemployees, customers, suppliers, communities, governments, and
\nespecially now investors, demand it.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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