Finance Minister agrees to dissolve PT BPIS

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)