Salim Group upset about constraints<\/p>\n
JAKARTA (JP): Sudwikatmono, a key executive of the Salim
\nGroup, the country's most influential business conglomerate,
\nexpressed concern yesterday over increased government control of
\nthe expansion of large businesses.<\/p>\n
He said that the government's policy of seeking to slow the
\nexpansion of companies with a market share of more than 50
\npercent was counterproductive.<\/p>\n
"The move will not only cause losses to the state but will
\nalso discourage foreign investments," he said in his response to
\nState Minister for Investment and Chairman of the Investment
\nCoordinating Board (BKPM) Sanyoto Sastrowardoyo's recent
\nstatement on the government's new policy of seeking to restrict
\nthe growth of Indonesia's widely-criticized business monopolies
\nand cartel operations.<\/p>\n
In a hearing with the House of Representatives, Sanyoto said
\nthis week that the government will no longer issue expansion
\nlicenses for companies which have hold a market share of above 50
\npercent. He said the new policy was intended to limit
\nmonopolistic activities.<\/p>\n
"The policy should be exclusively enforced to those selling
\nall their products on the domestic market," Sudwikatmono said
\nfollowing an annual shareholder meeting of PT Indocement Tunggal
\nPrakarsa and PT Indofood Sukses Makmur, the prime members of the
\nSalim Group.<\/p>\n
Sudwikatmono, who is the president of the two companies, said
\nthat if the policy was applied to companies which export part of
\ntheir products it would be counterproductive because, he said, it
\nwould significantly hurt the competitive edge of those companies
\nin relation to overseas markets.<\/p>\n
The Salim Group, through Indocement and Indofood, respectively
\ncontrols about 50 percent of the cement market and 90 percent of
\nmarket for noodle products.<\/p>\n
Sudwikatmono acknowledged that the government had recently
\nturned down the Salim Group's proposal to build four new instant
\nnoodle factories.<\/p>\n
"We could say nothing about the government's rejection except
\nthat the move would hurt domestic investment activity," he said,
\nadding that local investors whose applications to do business at
\nhome would invest overseas in countries such as Vietnam and China
\nwhich, he said, also offer promising investment opportunities.<\/p>\n
Acquisitions<\/p>\n
Independent shareholders of Indofood unanimously approved
\nduring yesterday's annual meeting the management's proposal to
\ntake over the Bogasari Flour Mills, the country's largest flour
\nproducer, from Indocement, its own principal company.<\/p>\n
In a separate meeting yesterday, the independent shareholders
\nof Indocement, which owns 51 percent of Indofood, also endorsed
\nthe internal acquisition worth about Rp 1.7 trillion (US$772
\nmillion).<\/p>\n
The business move will allow Indofood to operate not only in
\nthe manufacturing of processed food but also in the production of
\nits raw materials.<\/p>\n
The approval of the independent shareholders on the takeover,
\nwhich will allow Indofood to control all the production lines of
\ninstant noodles in the country, was needed to comply with the
\ncapital market regulation in which the international acquisition
\nis subject to an approval of at least 50 percent of independent
\nshareholders.<\/p>\n
Bogasari, acquired by Indocement from another member of the
\nSalim Group for only Rp 780 billion ($354 million) in July 1992,
\nis to be sold to Indofood for Rp 1.7 trillion ($772 million).<\/p>\n
Eva Riyanti Hutapea, a director of Indofood, said that about
\nRp 1.2 trillion of the acquisition cost would be financed by
\nloans to be arranged by Bank Central Asia (BCA), also a member of
\nthe Salim Group.<\/p>\n
"Rp 450 billion will be exchanged with Bogasari's liabilities
\nand another Rp 150 billion in the form of promissory notes," she
\nsaid, adding that the fairness of the transaction had been
\nassessed by Central Investment and Business Advisory and several
\nother local and overseas financial agencies.<\/p>\n
Eva said that Bogasari, which operates two integrated plants
\nin Jakarta and Surabaya with a combined annual capacity of 2.3
\nmillion tons of flour, booked operational revenues of Rp 96
\nbillion in 1994, rising from Rp 85 billion in 1993.<\/p>\n
The shareholders of Indofood, which booked a 60 percent
\nincrease in its consolidated after-tax profit to Rp 220 billion
\nlast year, approved the management's proposal to pay cash
\ndividends of Rp 58 (2.6 U.S. cents) per share for its 1994
\noperation.<\/p>\n
The annual meeting of Indocement's shareholders also agreed to
\nthe distribution of dividends of Rp 120 (5.2 U.S. cents) per
\nshare, about half what was paid in the previous year.<\/p>\n
Indocement's consolidated after-tax profit rose 17.7 percent
\nto Rp 367.8 billion last year from Rp 312.4 billion in 1993.
\n(hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/salim-group-upset-about-constraints-1447893297",
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