Government calls off plan to merge SI and Sucofindo

JAKARTA (JP): The government has canceled a plan to merge state-owned PT Surveyor Indonesia (SI) and another state-owned surveyor PT Sucofindo into one business entity.

SI president Toga M. Sitompul said on Tuesday that although the two companies would be placed under the same holding company, they would be allowed to operate independently.

He said the government was currently establishing 15 world- class holding companies to consolidate operations for the country's 155 state enterprises.

The merger was canceled because it would provide no advantages in the operational and financial performances of the two surveyors, he said.

"So we put off the plan and are focusing more on studying the possibility to operate under one holding company, because we think it is the best way to make the two firms more efficient."

Toga said merging PT SI with its sister company PT Sucofindo would be unhealthy because it would "encourage monopolistic practices".

Legislators have been among those calling on the government to merge the two state surveyors. They said such a move would improve the efficiency of the companies and would eliminate competing interests between the two firms.

SI has also been blasted for its poor financial management.

Toga denied the allegation, saying SI was a "very healthy company" and had made a profit every year of the past three years. He also claimed that SI received more orders than its sister company.

However, he refused to provide details on the company's latest financial performance to support his claim.

He said SI had no problem with the merger proposal and would be happy to facilitate the process if the government, as the company's majority shareholder, wanted to go ahead with the merger.

"But if the reason is just to create more efficiency I think it's not valid, because SI is very efficient and is performing well."

SI is 4 percent owned by Sucofindo, 20 percent by the Geneva- based Societe Generale de Surveillance (SGS) and the remaining 76 percent by the government.

Sucofindo, which is 95 percent government-owned and 5 percent by SGS, conducts preshipment inspections of the country's exports.

The company also operates as a quality management evaluator.

In 1985, SI was assigned to conduct preshipment inspections of imports at overseas ports. In 1997, SI's contract with the government expired. The preshipment system of imports was replaced by a postaudit system carried out directly by the Ministry of Finance's Directorate General of Customs and Excise.

Subsequently, SI became a competitor of Sucofindo, assessing quality management assurances in the country and awarding the ISO 9000 and ISO 14000 certifications.

It also entered other inspection businesses, including the Moslem halal certification of food, assessing the value and prices of aircraft, ships and other high-tech products.

The company also provides quality and environmental management services, technical inspection and testing, appraisals and industrial consultancies.

Toga said the two state surveyor firms did not duplicate each other's work, because they had their own areas of specialization.

He gave as an example the preshipment inspection of Indonesian imports, an area in which SI had an extensive international network in comparison to Sucofindo.

Toga said merging the two companies would be counterproductive because Indonesia would need more surveyor and quality certification companies to boost the country's exports in the free trade era.

"More and more Indonesian companies will seek to have their products accredited and certified because they can not sell their products overseas without quality certifications," he said. (gis)