Analyst calls for more state firms consolidations

JAKARTA (JP): State-owned companies should carry out huge consolidation measures in order to survive in an increasingly global free trade, an analyst said yesterday.

The director of the Indonesian Business Data Center, Christianto Wibisono, said consolidation measures were necessary to create a strong synergy between state-owned companies.

"Consolidation could be in the form of mergers between companies in the same sector or mergers of upstream and downstream companies," he said.

He cited companies operating in shipping, cement, plantations, and paper businesses that could merge to strengthen their businesses, including state forestry company Inhutani I-IV with paper manufacturer and bank note maker, Peruri, and printing companies.

"Some companies have started to merge, but the process is so slow, that it will be hard to catch up with the private sector," he said.

He said state-owned toll road operator Jasa Marga should merge with an asphalt maker.

Christianto said privatization was another option but warned that the privatization process must be transparent to stop it benefiting only certain people or businesses.

Indonesia has 165 state-owned firms with 400 subsidiaries operating in 72 sectors.

Their total assets in 1995 were about Rp 312 trillion (US$129.46 billion) against Rp 343 trillion for the country's top 300 private companies, he said.

The private companies have rapidly developed since 1990, exceeding the growth of state-owned firms.

The businesses of many state firms, especially trading companies, were suffering from a rapidly changing market, he said.

In 1995, the sales of the 165 state firms were only Rp 100 trillion against those of the 300 top private firms which exceeded Rp 200 trillion.

He said deregulation had encouraged private firms.

Christianto urged the government to prepare more state companies to list on the stock market.

He said the government's privatization program aimed to float only two or three state firms a year.

"If we keep going at this rate, it will take about 55 years before all the companies become publicly listed," he said.

He urged the government to facilitate the initial public offering process for state firms.

The Indonesian Business Data Center is an independent organization that has monitored the performance of state enterprises since 1985. (02)