Funding national pride<\/p>\n
It would indeed be great for national pride if Indonesia, with
\na per capita income of less than US$1,000, was capable of
\nmanufacturing a jetliner, a feat that until now has virtually
\nbeen the monopoly of developed nations. As President Soeharto
\nrightly noted last week, a country needs national pride.<\/p>\n
This could be achieved through the development of the N-2130
\njet project by the state-owned IPTN aerospace company in Bandung
\nin cooperation with PT Dua Satu Tiga Puluh, a private company set
\nup to finance the project.<\/p>\n
The problem lies in the designing, engineering, manufacturing
\nand marketing of a high-tech product such as a jetliner, which is
\nnot only capital- and technology-intensive but highly risky. That
\nis why, we think, not many nations base their national pride on a
\njet manufacturing project.<\/p>\n
Because the project is meant to be a symbol of national pride,
\nits implementation understandably cannot be based entirely on
\neconomic rationale. However, the success of the jet project will
\nbe determined by market forces.<\/p>\n
Therefore, we wonder why the fund-raising drive for the $2-
\nbillion N-2130 jet project is being carried out through a
\nnationwide political campaign. That is quite different from, say,
\na national fund-raising campaign to help natural disaster victims
\nor to raise funds for poverty alleviation.<\/p>\n
The merit of offering the general public shares in a company
\n(PT Dua Satu Tiga Puluh) which has yet to begin operating is
\nhighly questionable. IPTN has not proven its ability to make and
\nmarket turboprop airplanes, let alone a jetliner, nor has it
\nbroken even on its small CN-235 airplane launched in the early
\n1980s. Even its turboprop N-250 commuter aircraft, currently
\nunder development, has yet to obtain an airworthiness
\ncertificate.<\/p>\n
The current campaign to raise funds through a public share
\noffering is therefore raising many eyebrows, especially because
\nhigh-ranking officials, including regents and mayors, are
\ninvolved, practically as share brokers.<\/p>\n
We are not worried about accountability for the funds. After
\nall, Soeharto and two former vice presidents sit on the board of
\ncommissioners (supervisors) and several other high-ranking
\nofficials lead the management, all in a personal capacity.<\/p>\n
Instead, we are worried about the unusual procedure by which
\nthe shares are being offered. The share offering is not subject
\nto stock exchange regulations, nor is it supported by a business
\nprospectus explaining the prospects and risks of the assets or
\nbusinesses on which the shares are based and priced. As a
\nconsequence, the regents and mayors are likely to be selling an
\nasset they do not know much about.<\/p>\n
Since the shares are being promoted based on a request from
\nPresident Soeharto, the regents and mayors may overzealously prod
\npeople to buy the shares. We fully agree with those House members
\nwho have warned that the people should not be forced to buy the
\nshares. But we also know from experience that lower-echelon
\nofficials often take a leader's appeal or request as an order.<\/p>\n
We are realistic enough to concede that the national share
\noffering will be pushed at whatever cost. The biggest challenge
\nis how to minimize the risk of hurting the general public or
\nmisleading the people into buying an asset that may turn out to
\nbe worthless. That, we think, could be done by issuing and
\ndisseminating nationwide a simple booklet explaining the
\ncorporate statutes of PT Dua Satu Tiga Puluh, the importance and
\npotential benefits of the jet project as well as the risks
\ninvolved in the highly-competitive jetliner market.<\/p>\n
The shareholders should be prepared for the risk of not
\ngetting any dividends, not making any capital gains for several
\nyears and even for the possibility of losing their money. Such
\npreconditioning would protect the government from allegations of
\nhaving misled the people into buying worthless shares if the jet
\nproject is not successful.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/funding-national-pride-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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