Sat, 02 Dec 2000

City to create five holding companies

JAKARTA (JP): The city administration will establish five holding companies in a bid to restructure all of the 33 city- owned companies with the first one to be launched on Dec. 15, an official said on Friday.

City Secretary Fauzi Bowo said that the city administration had also conducted fit-and-proper tests for all 69 candidates, mostly executives of the existing firms plus several members of major political parties proposed by the city council, to be placed as directors of the holding firms.

"From the 69 officials, only nine or 10 of them are eligible and qualified for the posts," Fauzi told journalists, adding that the results of the tests could actually explain why the 33 firms experienced such poor performance for so many years.

Fauzi, however, did not explain whether those executives who failed the test would be fired from their current jobs or not.

He only said that the test results would be submitted to Governor Sutiyoso for further approval ahead of the preparation for the establishment of the first holding company, which would focus on property.

"The governor will decide those qualified to fill the position on the board of directors or commissioners of the (first) holding company," he remarked.

Fauzi explained that, based on the tests, only two of the nine or 10 candidates had the qualifications to lead such a property holding company.

"The holding firm will be a merger between developer firms PT Pembangunan Pluit Jaya, PT Pulo Mas Jaya and PT Pantura Jaya. A few months after that, PT Sarana Jaya and PT Pulo Gadung Area will join the company shortly after the completion of their due diligence," Fauzi said.

Poor performance

According to Fauzi, the purpose of the massive restructuring of the city firms and the establishment of the holding firms is to further improve their performance.

"Many have questioned the ability of the companies to make a profit for the city," he said.

The initiative has also been one of the commitments of Governor Sutiyoso in a bid to improve his performance as governor ahead of his accountability speech early next year, Fauzi added.

The five holding companies will focus their business activities on property, trading and manufacturing, finance and insurance, hotels and tourism, and general services.

"All of the five holding firms will be under the coordination of an institution to be called Jakarta Incorporated, and the governor will be the chief commissioner," Fauzi said.

The process to merge these companies into holding firms will take some time as each company will be appraised by an independent public accountant to check their assets, debts, human resources, profits and corporate culture.

"And the three companies that will be merged on Dec. 15, are the most eligible ones," Fauzi added.

Separately, City Economy Development Office chief Dameria Saragih said that under the new structure, city officials would no longer be allowed to be placed as a member of the board of commissioners in any of the companies.

"The governor will only be the chief commissioner of the group that covers the five holding companies," Dameria said. (dja)