Advertorial: PT Aneka Tambang

Advertorial: PT Aneka Tambang Publication: July 26 - Friday

Aneka goes out of its way to boost investor confidence

The recent string of financial scandals in the United States has clearly taught a valuable lesson to every company throughout the world on the importance of good corporate governance.

The scandal has been a big surprise to many people as it has occurred in a country that has a long tradition of transparency and honesty, as far as corporate management is concerned.

In Asia, the fallout has been unnoticed simply because investors have mostly discounted the risk of companies that are not transparent rather than due to the good level of their transparency and disclosure.

According to a recent report published by McKinsey, the number of Asian companies that have adopted good corporate governance principles can be counted on one's fingers because when it comes to implementation, there are great challenges facing companies, especially when their boards of directors remain corrupt and lack transparency.

The same thing happens to most Indonesian companies, particularly state-owned enterprises (BUMNs). Most people still see BUMNs as corrupt and lacking transparency. But for state- owned general mining company PT Aneka Tambang (Antam), this is an opportunity to create competitive advantage and to show how transparent it can be.

Antam has made the utmost efforts to improve its corporate governance, which emphasizes the need for disclosure and transparency in all aspects of business activities.

The company's listings on the Jakarta Stock Exchange (JSX) in 1997 and then on the Australian Stock Exchanges (ASX) in 1999 have required it to implement a system of disclosure and transparency on a par with international standards.

According to one Australian banker: "We do recognize that Aneka Tambang's reporting and transparency has improved over the six years of our relations. This level of reporting gives us, as the lender, a greater confidence in our understanding of Aneka Tambang's business".

To improve its governance, at the end of 2001, Antam assigned Ernst & Young to conduct a three-month evaluation and assessment of its efforts. The evaluation considered 12 key elements to evaluate the pillars of good corporate governance. The majority of Antam's elements were given a "need improvement rating" but none were seen to be poor.

Antam's external reporting was rated "good" and in terms of continuous disclosure, on a par with other international mining firms.

Antam's President Director D. Aditya Sumanagara says: "Antam is fully committed to becoming not only a company run according to the highest standard of corporate governance, but also recognized as such by the capital market and our shareholders".

"The clear picture of the level of corporate governance provided by Ernst & Young will allow Antam's management to take the necessary steps to improve corporate governance and ultimately achieve our vision for 2010 to become a world class company," he says.

According to Aditya, the improvement of corporate governance is needed not only to ensure long-term benefits for the company and shareholders but also to ensure that Antam is not only profitable but also transparent and responsible.

Antam's Corporate Secretary, Dohar Siregar, says: "The results of Ernst & Young's evaluation should be viewed as an indicator of how far Antam has come on its path to good governance since its listing on the JSX in 1997".

In May this year, Antam became the only Indonesian-owned and incorporated company to be fully listed on the ASX. With the full listing, Antam must abide by all ASX listing rules and meet international standards of disclosure and transparency.

The JORC code, which is the international standard used for the disclosure of mining companies, is strictly applied in the ASX.

A well-known mining equity analyst says: "The need to meet ASX standards in reserves reporting under the JORC code means that Antam's reporting is consistent with international standards and thus its numbers are comparable with other international mining companies".

The fact that Antam's reporting meets the requirements of the ASX adds credibility to the information for third parties, he adds.

Antam's serious efforts in improving its corporate governance has gained fruitful results not only in improving investor confidence and its financial performance but also in its public recognition.

Antam has received several awards for its success in adopting corporate governance. They include the "Achievement on Corporate Governance" award from the Indonesian Institute for Corporate Governance, September 20, 2001 and "One of the Best Public Companies Based on the EVA Concept" from MarksPlus & Co on October 26, 2001. Antam also became one of only eight listed Indonesian companies to receive "Acceptable Corporate Governance" award from a joint Asian Development Bank and the Jakarta Stock Exchange governance project on October 25, 2001. Antam was also ranked by Finance Asia as one of Indonesia's best managed companies and Asia's best managed companies in 2001.

Currently, Antam is taking steps to protect minority shareholders' interests through the establishment of an independent commissioner.