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)