Government calls off plan to merge SI and Sucofindo

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)