Advertorial: PT Aneka Tambang

Advertorial: PT Aneka Tambang
Publication: July 26 - Friday

Antam committed to good corporate governance

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.

Market valuations are plummeting as investors direct funds
away from equity rather than risk buying stock in corrupt and
dishonest companies. Investors are wary of the next corporate
scandal brought on by poor governance, and currently no amount of
positive news of economic recovery will entice them back.

This negative sentiment towards the stock market has spilled
over to Asia, although the fallout has been far less pronounced
as most investors already discount the risk of corruption, false
reporting, and non-conducive factors such as a poor judicial
system.

In Asia, finding a company which is run using effective
decision-making in consideration of the best interests of the
company and its stakeholders can be difficult. This is also true
of Indonesian companies, particularly state-owned enterprises.

Most people see them as corrupt and lacking transparency.
However, for state-held diversified mining company PT Antam Tbk
(Antam), good governance is a top priority and in terms of
transparency, the company meets international standards.

As would-be equity investors intensify the search for high
standards of governance, and begin to look more towards Asia,
those companies with strong fundamentals and good governance have
an opportunity to see their market valuation increase.

This is supported by a survey in the most recent McKinsey
Quarterly, which states, "In emerging as in developed markets,
companies that adopt strict corporate-governance practices are
being rewarded by institutional investors."

Antam made improving corporate governance a priority when it
listed on the Jakarta Stock Exchange (JSX) in 1997 and then dual-
listed on the Australian Stock Exchange (ASX) in 1999. The
challenges included implementing a more stringent regime of
disclosure and transparency.

According to one Australian banker: "We do recognize that
Antam'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 Antam's
business".

At the end of 2001, Ernst & Young completed a three-month
evaluation and assessment of Antam's governance efforts. The
evaluation considered 12 key elements to evaluate the pillars of
good corporate governance. The majority of Antam's elements were
rated as "needs improvement" but none were seen as "poor".

Antam's external reporting was rated "good" and in terms of
continuous disclosure, on 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 standards of corporate governance, but also
recognized as such by the capital market and our shareholders".

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 the 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."

And Antam's governance work will continue. In May this year,
Antam became the only Indonesian-owned and incorporated company
to be fully listed on a western stock exchange when its
application was accepted to convert from a Foreign Exempt Listing
to an ASX Listing. With the full listing, Antam must comply with
all ASX listing rules and the company's governance should
continue to improve.

The JORC code, which was developed on the ASX, is the
international standard used for the disclosures of mining
companies.

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 effort to improve corporate governance has shown
benefits. To date in 2002, the JSX is the world's second best
performing exchange, having increased 20% in Rupiah terms and 55%
in US dollar terms. This year Antam has outperformed the JSX, by
13%. This is in line with the above mentioned McKinsey report
which states, "surveys suggest that institutional investors will
pay as much as 28 percent more for the shares of well-governed
companies in emerging markets".

The next step for Antam will be the implementation of a
corporate policy manual with emphasis on the audit, remuneration
and nomination committees and the code of conduct. Improving
governance will remain an ongoing priority to help improve
performance and create sustainable profitability. Shareholders,
employees, customers, suppliers, communities, governments, and
especially now investors, demand it.