Bogasari's wheat-milling monopoly to be kept: Bulog

JAKARTA (JP): The government will maintain the Salim Group's wheat-milling monopoly despite the group's plan to inject its assets in PT Indofood Sukses Makmur, which owns PT Bogasari Flour Mills, into its Singapore-based subsidiary, QAF.

Chief of the National Logistics Agency (Bulog), Beddu Amang, said yesterday the monopoly would be maintained because even though the group's majority shares would shift to Singapore, "basically the mode of their operation will not change".

PT Bogasari Flour Mills, a subsidiary of Indofood, has held the wheat-milling monopoly since the late 1960s.

PT Indocement Tunggal Prakarsa, 60 percent owned by the Salim Group, 25 percent by the government and 15 percent by the public, has proposed a spin-off and sale of its 50.1 percent share in Indofood.

The move would be followed by the sale of 50.1 percent of Indofood's shares to QAF, a listed company in Singapore.

The Singapore firm, which is expected to issue rights shares to finance the deal worth up to Rp 4.6 trillion (around US$1.9 billion) will become the holding company of Indofood, replacing Indocement.

Beddu said yesterday that although the majority shares would be held by QAF in Singapore if the plan went ahead, Bogasari would still be based in Indonesia.

"Bogasari's operations will carry on as usual, meaning that Bulog will still have control over the wheat imports as well as over Bogasari's production and supplies," he said at a hearing with members of the House of Representatives' commission VII on finance and food.

Beddu said it was for this reason that he had no objection of the Salim Group's plans.

"We have no problem with the plans, because Bulog's role will remain the same," he said.

The Econit Advisory Group last week asked the Salim Group to cancel their restructuring plans, saying it could harm Indonesia's investment climate.

Econit said the asset injection into the Singaporean company would give the impression that the business and political climate in Indonesia was no longer secure and would discourage investors.

The move would also make it impossible for the government to intervene in Indofood because the government -- with its 25 percent stake in Indocement -- indirectly currently owned 12.89 percent of Indofood.

Therefore if Indocement went ahead with its plans, the government would automatically lose its stake in Indofood.

Econit said the Salim Group's plan to inject Indofood's assets into the Singaporean firm was regrettable, given the government's strong support of the business group since its early years. (pwn)