Texmaco business should be protected, says President<\/p>\n
JAKARTA (JP): President Abddurrahman Wahid reiterated on
\nThursday that the business of the Texmaco group should be
\nprotected and further developed due to its promising future,
\ndespite the controversy over its debts to state banks.<\/p>\n
Abdurrahman said he had asked Coordinating Minister for
\nEconomy, Finance and Industry Kwik Kian Gie to discuss with the
\nIndonesian Bank Restructuring Agency (IBRA) an arrangement
\nwhereby the Texmaco group's debts to state banks would be
\nconverted to at least 52 percent equity for the government.<\/p>\n
\"This does not mean that I favor particular businesspeople. My
\nsole intention is to protect Texmaco as a viable business
\ninvestment,\" the President added on the sidelines of a political
\nseminar on direct election of the president.<\/p>\n
According to the President, Texmaco's debts to state banks are
\nworth at least 52 percent of the total shares of the group which
\nhas large stakes in synthetic fiber, textiles, garments, textile
\nmachinery, machine tools, as well as truck and tractor
\nindustries.<\/p>\n
IBRA is now seeking to restructure Rp 14.9 trillion (US$1.75
\nbillion) of Texmaco's debt, which was transferred from state Bank
\nBNI and other banks to the agency.<\/p>\n
One possible avenue for restructuring the debt would be to
\nconvert it into equity, which would leave IBRA with majority
\nstakes in the Texmaco companies.<\/p>\n
Texmaco has been embroiled in controversy since late last year
\nafter allegations that the huge loans it borrowed from state
\nbanks in 1997 and 1998 had breached lending rules and were made
\nafter pressure from then president Soeharto.<\/p>\n
Last week, the Attorney General's Office dropped its
\ninvestigation into the issue, saying there was no evidence the
\nstate had suffered losses because of the loans.<\/p>\n
The deputy attorney general for special criminal cases,
\nRamelan, told reporters last Friday they discovered that the
\ngovernment didn't suffer financial losses from the issuance of
\nexport credits to Texmaco in 1998.<\/p>\n
There wasn't enough evidence for further investigations,
\naccording to expert witnesses from Bank Indonesia and the
\nGovernment Finance Controller (audit agency), Ramelan added.<\/p>\n
The witnesses also said there was no evidence to suggest that
\nIndonesia's ex-president Soeharto had influenced the granting of
\nthe export credits, he said.<\/p>\n
The allegations were first raised in public late last year by
\nthen minister of investment and state enterprises Laksamana
\nSukardi who last month was sacked from the Cabinet by
\nAbdurrahman.<\/p>\n
Many House members, lawyers and anti-corruption organizations
\nhave criticized the stoppage of the Texmaco investigation as an
\nact of favoritism.<\/p>\n
Starting its business in textile trade in 1962, Texmaco has
\nnow been transformed into a big group of companies that
\nmanufactures synthetic fiber, textiles, garments, textile
\nmachinery, machine tools, trucks, small tractors and a wide range
\nof other engineering goods<\/p>\n
Texmaco factories, including a 360,000-ton capacity purified
\nterephtalic acid factory in Karawang, West Java, are now spread
\nwidely in several towns across Java.<\/p>\n
Texmaco's engineering goods such as textile machinery, machine
\ntools, automobile components, fabric and garments have entered
\nthe market in South Africa, Southeast Asia, the Middle East,
\nEurope and the United States.<\/p>\n
The company said its fabric had widely been used by well-known
\nbranded apparel makers such as Marks & Spencer, Polo Ralph
\nLaurent, Tommy Hilfiger, Levi's and Nike.<\/p>\n
Three Texmaco subsidiaries, PT Texmaco Jaya (textile and
\ngarments), PT Texmaco Perkasa Engineering (metal, machinery and
\ntrucks) and PT Polysindo Eka Perkasa (synthetic fiber and fabric)
\nhave been listed on the Jakarta Stock Exchange.<\/p>\n
The group directly employs a total of 50,000 workers and had a
\ncumulative export value of US$900 million in 1997-1999. It also
\nsupplies basic materials to 270 other companies with 150,000
\nworkers.<\/p>\n
On the occasion, the President also talked about efforts to
\npromote industrial exports in cooperation with neighboring
\ncountries.<\/p>\n
Citing an example, he recounted his recent talks with
\nSingapore Prime Minister Goh Chok Tong whereby he suggested that
\nSingapore allocate to Indonesia 20 percent of its textile and
\ngarment export quotas, which the island republic does not use.<\/p>\n
Referring to the economic vision of his eight-month old
\ngovernment, Abdurrahman said the economic principle it was
\npursuing was based on a competitive, efficient and open market
\nsystem.<\/p>\n
But the national economic policy focuses on the development of
\nagriculture and small and medium-scale enterprises, Abdurrahman
\nadded. (prb)<\/p>",
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