BPIS views govt plans to dissolve it as normal

BPIS views govt plans to dissolve it as normal

JAKARTA (JP): State-owned holding company PT Bahana Prakarya
Industri Strategis (BPIS) said on Monday it did not object to the
government's plan to dissolve it, but added its subsidiaries
still required coordination.

BPIS president Surasno Paramajuda said he would not refute
the government's allegation it was unable to manage the 10 state
companies, all in strategic industries, under its control.

"We're a tool of the government, we simply do what they tell
us to do," Surasno said on the sideline of a hearing with House
of Representatives Commission IX for the state budget and
financial affairs.

Surasno was commenting on the government's plan to dissolve
the holding company on the grounds that it brought no added value
to its 10 subsidiaries.

BPIS, which was established in 1989 as an agency for the
development of strategic industries, became a holding company in
1998 and currently supervises 10 state companies.

The 10 state companies are aircraft manufacturer PT Industri
Pesawat Terbang Nusantara (IPTN); ship manufacturer PT Pal; steel
producer PT Krakatau Steel; weapons and ammunition producer PT
Pindad; explosives producer PT Dahana; train manufacturer PT
Industri Keretaapi (Inka); heavy industry company PT Barata
Indonesia; industrial equipment manufacturer PT Boma Bisma Indra
(BBI); telecommunications manufacturer PT Industri Telekomunikasi
(Inti); and electronic component producer PT Len.

Surasno said BPIS had already appointed a foreign consultant
to audit its role and function, adding that it made the
appointment of its own initiative, not in response to the
government's announcement the company would be closed.

A number of the subsidiaries have reportedly expressed
supports for dissolving BPIS, saying it failed to realize the
expected synergy among them.

However, Surasno said the state companies under BPIS had
showed improvement, with only IPTN suffering losses in 1999. The
aircraft manufacturer lost Rp 1.7 trillion (US$197 million) for
the year.

"We believe that the improved performance was due to the
synergy that BPIS created," he told journalists, adding that
excluding IPTN, the nine companies recorded a consolidated profit
of Rp 394 billion last year.

Surasno warned that if the government allowed the 10
subsidiaries to compete independently, they would become more
vulnerable to global competition.

"I am not claiming BPIS is the only one capable of
coordination, but whoever it is we must consolidate our
resources," he said.

He said the 10 subsidiaries had different strengths and
weaknesses, which required coordination to create a synergy
within the strategic industries.

Surasno further refuted claims the better performing companies
objected to being grouped under BPIS because they did not want
the agency use their funds to subsidize flagging companies.

He said such cross-subsidizing had never been practiced among
BPIS' affiliates.

He also said BPIS estimated IPTN to earn a profit of Rp 100
billion this year, if the government was able to complete the
company's debt restructuring process.

Revenue for the company is expected to come from the recent
construction of six CN 235 aircraft for Malaysia, he said without
citing the value of the contract.

Furthermore, he said, ITPN was working on eight CN-235
aircraft for South Korea, with delivery starting in 2001.

At present, IPTN, along with Inti and Barata Indonesia, owe Rp
1.25 trillion in debt principal and another Rp 1.24 trillion in
interest.

The government placed the three companies under the control of
Indonesian Debt Restructuring Agency in March and December last
year due to their inability to pay their debts. (bkm)