Forex losses a 'time bomb' for listed firms<\/p>\n
JAKARTA (JP): At least 166 of the country's 289 listed
\ncompanies toppled into the red last year due to massive foreign
\nexchange losses, the Indonesian Business Data Center (PDBI)
\nreported yesterday.<\/p>\n
They suffered total foreign exchange losses of Rp 18.6
\ntrillion (US$4 billion in December last year), PDBI said.<\/p>\n
Chief research officer Beni Sindhunata said in a statement the
\ncompanies incurred total losses of Rp 9.7 trillion in 1997
\ndespite the more than 23 percent increase in combined turnover of
\nRp 108.3 trillion.<\/p>\n
Total assets of the 166 companies were Rp 248 trillion, or
\nequivalent to 40 percent of the country's 1997 gross domestic
\nproduct.<\/p>\n
He said there were seven companies with individual forex
\nlosses of more than Rp 500 billion; 35 companies each suffering
\nbetween Rp 100 billion and Rp 500 billion; and 124 companies
\nunder Rp 100 billion.<\/p>\n
Data was based on PDBI's latest evaluation on the impact of
\nthe currency crisis on 215 publicly listed companies, excluding
\nbanks and financial institutions.<\/p>\n
PDBI said 25 of the companies booked profits of Rp 545 billion
\ndespite the crisis, while data on 23 companies was either
\nunavailable or their relatively small forex losses had been
\ncapitalized into fixed assets.<\/p>\n
Companies which benefited from the sharp drop in the rupiah
\nagainst the U.S. dollar included PT Pindo Deli Pulp and Paper, PT
\nIndosat, PT Petrosea, PT Citra Marga Nusaphala Persada, PT Rig
\nTender Utama, PT Intan Wijaya Chemical Industry, PT Citra
\nTubindo, PT Panasia Filament Inti and PT Pabrik Kertas Tjiwi
\nKimia.<\/p>\n
PDBI said that although the total turnover of the 215 listed
\ncompanies reached Rp 340 trillion -- equivalent to 54 percent of
\nGDP -- total debts were Rp 240 trillion, 43 percent of which was
\nshort term.<\/p>\n
\"This means an average debt to equity ratio of 2.6 times,
\nwhich practically has sent the companies into bankruptcy,\" Beni
\nsaid. He added that 14 companies already had a negative equity
\nlevel of between Rp 14 billion and Rp 306 billion.<\/p>\n
Forex losses would be even larger if overseas debts were
\ncalculated at the June exchange rate level of about Rp 15,000 to
\nthe dollar.<\/p>\n
\"This is a time bomb and bad news for stock investors,\" he
\nsaid.<\/p>\n
Announcement of 1998 results would reveal the full scope of
\nthe problem, he added.<\/p>\n
But he stressed that companies could still recover through
\nprudent steps.<\/p>\n
\"This depends on the strategy of the CEO and chief finance
\nofficer to deal with their foreign currency debts,\" he said.<\/p>\n
PDBI concluded that the sharp depreciation of the rupiah had
\nrendered the country's listed companies cheap because the total
\nequity of Rp 91 trillion was only valued at $6 billion.<\/p>\n
\"This is an opportunity for foreign investors to acquire
\nIndonesian companies at bargain levels.\"<\/p>\n
He recommended that local companies could form partnerships
\nwith foreign strategic partners to survive the crisis.<\/p>\n
He also suggested that companies should look for ways to
\nconvert foreign currency debts into rupiah-denominated one.<\/p>\n
The rupiah, which was around 2,450 to the dollar in July last
\nyear, has since lost about 80 percent of its value. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/forex-losses-a-time-bomb-for-listed-firms-1447893297",
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