Finance Minister agrees to dissolve PT BPIS

JAKARTA (JP): Finance Minister Prijadi Praptosuhardjo agreed with calls from legislators to dissolve the once powerful but controversial state-owned holding company PT Bahana Prakarya Industri Strategis (BPIS).

Prijadi said that the measure was needed to improve the financial performance and the flexibility of the 10 subsidiaries of BPIS.

"I personally agree with the calls for the dissolution of BPIS," he said during a hearing with the House of Representatives' Commission IX on budgetary and finance affairs on Wednesday.

Prijadi made the statement after legislators expressed dissatisfaction with the response given by the director general of state-owned companies, I Nyoman Tjager, to the growing demands to dissolve the BPIS.

Tjager said that the government would have to appoint an independent consultant first to conduct a study, which could take between three and four months, before deciding whether to dissolve the holding company.

"There's no need for costly consultants. We can make the decision just by looking at its financial performance... What we want now is political will from the government," said one legislator, adding that the plan to dissolve the BPIS had been made public early last year but to date there had been no progress made.

But Prijadi said that the process of dissolving the holding company could take time because of the complex administrative procedures and legal constraints.

The BPIS is linked to former president B.J. Habibie, the hand- picked successor of former authoritarian president Soeharto.

The holding company controls 10 subsidiaries including a couple of controversial high-tech companies established by Habibie when he was still minister for research and technology.

The 10 companies include aircraft maker PT IPTN, ship builder PT PAL, steel maker PT Krakatau Steel, weapons and ammunition producer PT Pindad, explosives maker PT Dahana, railroad car manufacturer PT Inka, heavy engineering company PT Barata Indonesia, infrastructure developer PT Boma Bisma Indra, telecommunications manufacturer PT Telekomunikasi Indonesia (Inti), and electronics component producer PT Len.

Several of the companies have suffered financial losses since their establishment.

The most controversial one is the loss-making IPTN, which has often been criticized by many economists as an unrealistic project that only served to deplete the state's resources.

BPIS, established in 1989, was initially an agency for the development of strategic industries. But its status was converted into that of a holding company in 1998 during Habibie's administration.

Habibie's government said at the time that putting the 10 companies under a holding company was needed to create more added value, but critics said that it was merely a measure to force the profitable operations to subsidize their loss-making affiliates.(rei)