State firms' performance poor in 1997, says Tanri<\/p>\n
JAKARTA (JP): State Minister for the Empowerment of State
\nEnterprises Tanri Abeng said yesterday that 160 state-owned
\ncompanies booked a combined net profit of Rp 11.83 trillion
\n(US$1.03 billion) last year, compared to Rp 12.70 trillion in
\n1996.<\/p>\n
He told members of the House of Representatives (DPR) at a
\nhearing yesterday that the profitability of state companies was
\nvery low when compared to their combined assets of Rp 461.643
\ntrillion and total equity of Rp 123.42 trillion.<\/p>\n
\"Although total assets grew by 2.7 percent (in 1997), the
\nincrease wasn't accompanied by an improved ability to make a
\nprofit,\" he told House Commission VIII for trade, finance, and
\nstate budgets.<\/p>\n
He also said that 53.8 percent of the 160 companies were
\nconsidered to be unhealthy.<\/p>\n
Indonesia has 176 state-owned companies, but only 160 come
\nunder the control of Tanri's office. The ministry, established in
\nApril this year, was created to improve the efficiency and
\nprofitability of state enterprises.<\/p>\n
During the 32 years of Soeharto's government, state-owned
\ncompanies were put under the supervision of the relevant
\ntechnical ministries. Analysts have said that government
\ndepartments then turned the state-companies into their own
\npersonal cash-cows.<\/p>\n
Restructuring<\/p>\n
Tanri appointed U.S.-based consultancy firm Booz, Allen &
\nHamilton to lead the process of restructuring the ailing state-
\nowned companies.<\/p>\n
The company, together with the World Bank, Asian Development
\nBank and several of the country's leading management
\ninstitutions, will submit a restructuring blueprint in September,
\nincluding a future privatization agenda.<\/p>\n
The government plans to privatize 12 state-owned companies in
\nthe 1998\/1999 fiscal year, and hopes to raise a total of Rp 15
\ntrillion to support the strained state budget from the sale.<\/p>\n
Nine foreign investment banks were appointed to assist with
\nthe privatization process last week. They have been charged with
\narranging a competitive bidding system for the sell-off which
\nwill be coordinated by Lehman Brothers and Goldman Sachs,<\/p>\n
However, Tanri came in for strong criticism last week over
\nattempts to privatize steel maker PT Krakatau Steel. He was
\naccused of making a deal with Netherlands-based Ispat
\nInternational without inviting competitive bids for the company.<\/p>\n
Tanri was bombarded with more critical questions relating to
\nhis deal with the Dutch company during the hearing yesterday.<\/p>\n
He denied the allegations and said the deal was far from
\nfinal. He also said the move had been made on business
\nconsiderations and was part of the privatization process approved
\nby the International Monetary Fund (IMF) and the World Bank.<\/p>\n
He latter told commission members that selling PT Krakatau
\nSteel would not be easy due to bearish sentiment in the stock
\nmarket and the low profitability of the company.<\/p>\n
\"Although Krakatau Steel makes a profit, its return on equity
\nis very low compared to its international peers,\" he said.<\/p>\n
Tanri explained that because of bleak market sentiment, the
\nprivatization program would be pushed toward private placements,
\nand especially toward strategic investors seeking long-term
\nopportunities.<\/p>\n
PT Krakatau's return on equity was 4.4 percent in 1997,
\nagainst 2.1 percent in 1996 and 5.7 percent in 1995. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/state-firms-performance-poor-in-1997-says-tanri-1447893297",
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