Diversifying, expanding and sharing

Diversifying, expanding and sharing

Debuting as an oil drilling contractor about two decades ago, Medco Group has since that time expanded its reach into different businesses in the land and water of Sumatra, Kalimantan, Java, Bali and Sulawesi.

When one discusses the Medco Group, one is talking about a pioneer among locally owned companies in the country's oil and gas industry.

Starting with one oil drilling rig in 1980, Medco Group has expanded into numerous oil and gas-related activities, such as exploration, production, onshore and offshore drilling, and pipeline construction, as well as other non-related businesses (see graph A).

"But our core business is still the oil and gas sector," said Yani Panigoro, a member of Medco Group's board of directors. And Yani promised the group would continue to focus on its core competence in the future.

In the oil and gas sector, the group has PT Medco Energi Internasional, which has been publicly listed since Oct. 12, 1994. This company supervises three other subsidiaries, namely PT Apexindo Pratama Duta (offshore and onshore drilling), PT Exspan Nusantara (oil and gas exploration and production) and PT Medco Methanol Bunyu (petrochemical industry).

Early in 1988, the Medco Group took its first steps into the pipeline manufacturing and construction business, founding PT Citra Panji Manunggal, which today is widely known as a leading underwater pipeline construction firm.

Five years earlier, PT Multifabrindo Gemilang was founded to support the core business activities of the group. The firm specializes in fabricating pressure vessels, which are very much needed by companies in the oil and power industries.

In 1992, Medco expanded into the banking sector by taking over the Bandung-based Bank Himpunan Saudara 1906, known as Bank HS 1906, which specializes in providing financing to small and medium-scale businesses (SMEs). Two years later, the group founded PT Sarana Jabar Ventura, also in Bandung, with the same goal of helping SMEs by providing venture capital.

In the food industry, Medco Group set up PT Sentrafood Indonusa in 1994, with its factory in Karawang, West Java, producing instant noodles under the brand names of Salam Mie and Cinta Mie, as well as Planet crackers. To fulfill the unexpected market demand, Sentrafood set up a subsidiary, PT Sentraboga Intiselera, which has a production plant in Pandaan, East Java.

In the agribusiness sector, the group established PT Medco Agro in 1993. The company manages a 50,000-hectare palm oil plantation in Central Kalimantan. At the end of this year, the subsidiary will complete work on a crude palm oil (CPO) plant in the area, which will allow it to meet the growing domestic and overseas demand for CPO.

The country's unique geographical situation, with its thousands of scattered islands, led the Medco Group to found PT Metrix Indonesia to distribute goods. Currently, Metrix owns some 70,000 outlets with a distribution network stretching from Greater Jakarta to other major towns in Java, Sumatra, Bali and Sulawesi.

Together with competent partners in the hotel industry, Medco founded PT Meta Archipelago Hotels, which currently oversees publicly listed PT Grahamas Citrawisata (which co-owns Novotel Bukittinggi in West Sumatra), PT Satria Balitama (Hotel Bali Imperial in Bali) and PT Bina Inti Dinamika (Hotel Preanger in Bandung).

In the construction and management industry, the group owns a share at PT Graha Niaga Tata Utama, which is developing the Graha Niaga tower on Jl. Sudirman in Jakarta.

Sharing the light

While busily diversifying and expanding its businesses, Medco Group remains highly committed to sharing a percentage of its revenues with the local communities and administrations near its areas of business operations.

Since its founding, owners and management of the group have been committed to making significant contributions to the improvement of the social welfare of local communities, and the development of facilities and infrastructure badly required by local administrations.

In general, the community development programs of Medco and all its subsidiaries are carried out in different ways, such as through recruitment, scholarships, medical aid, food aid and financial support, such as providing low-interest loans to local SMEs.

"So far this year we have spent Rp ..... for our community development programs," Yani explained. On average, she added, the group spends Rp ... per annum and plans to continue increasing this amount gradually.

"The public might not know very much about Medco's community development programs because we prefer to keep a low profile in the work we do with local communities," she said.

These community development programs, while numerous, are only a small portion of the grand and noble aspirations inherent in the establishment of Medco Group as "a bridge toward better national welfare".

And as for the group's strong management team, the journey of success for Medco will never have an end. Just like life, every day is a challenge. And Medco's strong workforce and management team dare to take on any and all challenges that lie ahead.