49% of Barito shares to go to government

JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo threatened yesterday to deny PT Barito Pacific Timber extensions to its forest concessions unless the largest company listed on the Jakarta Stock Exchange handed over 49 percent of its shares to a state-owned company.

"Reckless logging has damaged Barito's forest concessions and the government wants to have its own man in the company's management to ensure sustainable management of its forest concessions," Djamaludin told reporters yesterday.

He did not, however, specify which of Barito's 27 forest concessions had been severely damaged.

But the minister asserted that existing regulations empower the government to take over 49 percent of the equity of forest concessionaires who do not sustainably manage their concessions.

"If Barito wants to have its foreign concessions extended it must give 49 percent of its shares to a state company," Djamaludin told reporters before the monthly limited cabinet meeting on economic affairs at the Bina Graha office.

However, Barito explained in a press release yesterday evening that the forest concession areas alleged to have been damaged were owned by PT Yayang Indonesia and PT Aya Timber, both in South Kalimantan.

"The two forest concessions, totaling 121,500 hectares, are not among the concessions owned by Barito," the press statement said.

Yayang's concession expired in July, and Aya's last month.

Contracts

Barito acknowledged, however, that it has log-supply contracts with the two companies, as explained in the prospectus of its share offering in August 1993.

Djamaludin did not specify yesterday whether the 49 percent equity the government was demanding from Barito would be purchased through the stock market.

He said, instead, that the government is authorized by existing regulations to take over 49 percent of the shares of companies which fail to harvest their forest concessions under a sustainable management system as set by the government.

Djamaludin said if the government owned 49 percent of Barito it could then appoint its own man as the company's president to ensure sustainable management of its forest concessions.

Barito claimed yesterday that it had always strictly enforced the government's policy of selective cutting and replanting in its 27 concession areas covering more than 2.2 million hectares.

Djamaludin said Barito's Chairman Prajogo Pangestu had not yet fulfilled the government's demand and instead asked for special preferential treatment for his company.

"But I turned down his request and persisted on the demand for the transfer of 49 percent of Barito's shares to the government or its concessions will not be extended," the forestry minister added.

Early this week, a press statement issued by informed sources who demanded anonymity revealed that Barito was in deep trouble because more than 10 of its forest concessions would not likely be extended unless the company transferred 49 percent of its equity to the government.

Djamaludin was contacted to verify the press statement but declined to give any comments until yesterday.

Illegal

A corporate lawyer contacted by The Jakarta Post said that confiscating a listed company's assets are illegal according to Indonesia's stock market regulations.

The lawyer, who requested anonymity, said that in the cases of timber industry, the estates are considered to be state property which are given to the private sector within a limited time and subject to strict rules.

"Maybe the minister's equity demand is meant to be a compromise," she said.

According to the company's 1993 annual report given in an extraordinary shareholders meeting in June, Prajogo controls the majority stake at Barito with 7.98 percent personal shares and 30.66 percent through PT Barito Pacific Lumber Company. The state-pension fund (PT Taspen) controls 17.86 percent while the public controls 12.14 percent. The rest of the ownership is divided between PT Tunggal Setia Pratama and PT Multi Lestari Kencana.

In the meantime, Djamaludin's demand had already won support from a non-governmental organization called the Indonesian Working Secretariat of Forest Protection (Skephi).

"I think this is a good move from the government because our studies last year proved that Prajogo is the worst forest destructor in Indonesia," said Saleh Abdullah, an executive of Skephi.

"They cut down about 1.2 million cubic meters of logs annually," he said referring to Barito.(hdj/vin)