49% of Barito shares to go to government

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)