Astra reshuffles management, halts cars production

JAKARTA (JP): The country's largest automaker, Astra International, reshuffled its management yesterday and announced a temporary halt in production due to lack of orders.

Somalia Wiria, a former top executive of Bank Negara Indonesia, was named the company's chief commissioner, replacing former minister of trade and industry Mohammad "Bob" Hasan.

Rini M. Soewandi, formerly finance director, was promoted to president, replacing Theodore Permadi Rachmat.

Rachmat was named a member of the supervisory board.

Astra spokesman Aminuddin said yesterday that Hasan, a timber baron and longtime ally of former president Soeharto, resigned from the chief commissioner's post when he was appointed minister in March.

President B.J. Habibie assigned Rahardi Ramelan to take over Hasan's ministerial post last month after Soeharto resigned.

Hasan chaired the publicly listed Astra International last year as the representative of Nusamba, which owns a 10 percent stake in the company.

Diversified Nusamba is owned by foundations affiliated with Soeharto.

Rachmat said yesterday he resigned to allow fresh input from younger and more qualified people to lead the company.

"After 14 years at the helm of Astra, it is now time for younger people like Rini Soewandi who is more competent than I am to lead Astra.

"Besides, Astra is facing a difficult time in the years ahead."

Rini said yesterday that the company had halted its production activities since early this month due to a decline in sales in the automotive division.

"It is really a difficult time for us and this is a challenging job for us,' she said after the company's shareholders meeting.

Reports said previously that the company's automotive division, which produces Toyota, Daihatsu, Isuze, BMW, Peugeot and Nissan automobiles, sold only 15,134 vehicles in the first three months of this year, down 63 percent from 41,602 in the same period of 1997.

Sales of motorcycles dropped 49.7 percent to 96,396 vehicles in the first three months, from 191,626 in the same period last year.

Rini said the company would have to introduce cost-cutting measures, halt production activities and seek new export opportunities to offset the decline in domestic sales.

"We will boost exports of engines, car components and the new Kijang model to neighboring countries like Malaysia and the Philippines."

Rini said the company's total consolidated foreign debt was US$2 billion as of March this year, 70 percent of which was hedged.

The company was committed to servicing its interest payments, she added.

Further losses

But if the rupiah remained weak against the U.S. dollar in the months ahead, Rini warned the company might face further losses on the unhedged portion of its dollar-denominated debts.

"The first quarter loss was a translation loss of the rupiah's weakness from the end of December to March. If at the end of June the exchange rate is bad, then the translation loss will be higher."

Astra recorded a net loss of Rp 2.26 trillion in first quarter of this year, reflecting the rupiah's depreciation from Rp 2,419 against the U.S. dollar in March 1997 to Rp 8,325 at the end of March of this year.

Currently, the rupiah is hovering at about Rp 12,900.

Rini said the company was expected to post further losses this year due to the deteriorating economic situation.

But she said that although Astra had a large foreign debt, it would not join the newly established Indonesian Debt Restructuring Agency (INDRA) to reschedule its debts because the company was still engaged in serious discussions with foreign creditors to reschedule its debts, mostly with Japanese banks.

"Our creditors have understood our position. We have a very long relationship with most of our creditors," she said.

The government set up INDRA last week after deciding upon a framework to handle up to $60 billion of the country's mounting private overseas debt.

Yesterday meeting also approved the retention of Abdul Rachman Ramly, the former president of state oil and gas company Pertamina, as vice chief commissioner, Anthony Salim, Usman Admadjaja, Torstein Stephansen, Benjamin Arman Suriadjaya and Mikio Nomura as commissioners. It appointed Benny Subianto as a new commissioner to replace Prajogo Pangestu.

The meeting also approved Budi Setiadharma as the new vice president and appointed Rudyanto Hardjanto, Himawan Surya, Michael Dharmawan Ruslim, Danny Bonifasius Walla, Hagianto Kumala and Dorys Setiawati Herlambang as directors.

Astra's share price shed Rp 50 to Rp 975 yesterday. (aly)