Cement deal necessary: Soeharto

JAKARTA (JP): President Soeharto denied yesterday that he had ever colluded with businessmen or extended monopoly rights over certain products to particular parties.

Soeharto was speaking before some 200 members of the Association of Small and Medium Businesses at his Tapos ranch in Bogor, West Java, on the subject of his relationship with the country's wealthiest tycoon, Sudono Salim, also known as Liem Sioe Liong.

Touching upon the assignment he gave to Sudono two decades ago to build a cement factory -- which was later criticized as amounting to a cement monopoly -- Soeharto said: "It wasn't based on collusion between me and Liem. No. It was for the sake of the country and the nation."

Soeharto said it was started when an American investor promised to build cement plants with a production capacity of two million tons per annum.

The American investor promised to build the first phase plant with an annual capacity of 500,000 tons, he said.

However, Soeharto said, the investor asked the government not to extend any new licenses to other investors for other cement plants before the American investor could accomplish his promise of building the two cement plants.

"It meant that his cement plants abroad could export their products to Indonesia. Therefore, we would never be independent (in the cement industry)," Soeharto said.

"Then I summoned Liem and asked him: 'Are you capable of building cement plants?' and he answered: 'Yes, I'm'."

Liem started his cement venture in 1973 by establishing PT Indocement Tunggal Prakarsa. With a current annual production capacity of 9.7 million tons, Indocement controls 40 percent of the country's total annual output of some 24 million tons.

"Many have accused us of collusion. The truth is that it is for the sake of the independence of domestic industries," he added.

Soeharto denied that PT Bogasari Flour Mill, which is owned by Liem, had a monopoly over wheat milling in the country.

"Bogasari is just like a tailor. This company gets fees from milling wheat into flour... Anything else out of the milling, including flour trading, subsidies and so forth are managed by the National Logistics Agency (Bulog)," Soeharto said.

Under wheat trade regulations, Bogasari was appointed by the government, together with state-owned PT Berdikari Sari Flour Mill in Ujungpandang, South Sulawesi, to process wheat grain into flour.

Critics have said that Bogasari practically holds a monopoly over domestic wheat milling, since it also controls the management of Berdikari's flour milling plant.

Bogasari gets wheat from Bulog, which monopolizes the importation and distribution of wheat and other agricultural products in Indonesia, and pays the agency after its products are marketed.

"They think that Bogasari holds wheat monopoly rights. The people think so because they actually don't understand the problem. Some might understand it but have turned the case into a political issue," Soeharto said.

At yesterday's gathering, Soeharto was accompanied by Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya and Chairman of the Indonesian Chamber of Commerce and Industry Aburizal Bakrie.

Soeharto also called on the people to nurture a positive image of big business. "The people have rudely accused large entities of being greedy. This notion should be eliminated," he said.

He said large businesses are necessary to help the small ones to become larger through a partnership framework.

"Don't confront each other and don't curse each other. Instead, establish partnerships."

He said the initiative of the country's most influential business tycoons to help small businesses, which was announced in Bali last month, should be welcomed.

"Those big businessmen feel a responsibility to help eradicate poverty in this country," Soeharto said, adding that September's cabinet meeting had discussed possible follow-ups of tycoons' announcement. (rid)