Govt considers dissolving BPIS
Govt considers dissolving BPIS
JAKARTA (JP): The government is considering to dissolve the
operation of state owned holding company PT Bahana Prakarya
Industri Strategis (BPIS) in a bid to give more independence and
flexibility to its 10 subsidiaries.
The office of the State Minister of Investment and State
Enterprises Development said that the 10 companies, which are now
under direct control and supervision of BPIS, would be allowed to
operate independently.
"The holding company does not bring any added value to its
subsidiaries," according to a written statement of the office
issued at a hearing with the House of Representatives' Commission
IX.
The 10 state companies are aircraft manufacturer PT Industri
Pesawat Terbang Nusantara (IPTN), ship manufacturer PT Pal, steel
producer PT Krakatau Steel, and weapons and ammunition producer
PT Pindad, producer of explosives PT Dahana, train manufacturer
PT Inka, heavy industry company PT Barata Indonesia,
infrastructure developer PT Boma Bisma Indra (BBI),
telecommunication manufacturer PT Telekomunikasi Indonesia (Inti)
and electronic component producer PT Len.
BPIS, which was established in 1989 as an agency for the
development of strategic industries, changed its status into a
holding company in 1998.
According to the office, some of BPIS' subsidiaries expressed
support for dissolving the holding company, saying that the
expected synergy among them could not be realized.
"Putting the companies under the same holding company places a
greater burden on well performing ones because they have to cross
subsidize their money losing affiliates," the statement said.
It added that abolishing BPIS would also help the debt
restructuring process of several BPIS' subsidiaries as an
independent company, they would have more flexibility to change
policies needed to support the proposed debt restructuring deals.
Three of BPIS subsidiaries have been placed under the
Indonesian Debt Restructuring Agency (IBRA) since March and
December of last year due to their inability to pay debts.
IPTN along with Inti and Barata Indonesia owe debts of Rp 1.25
trillion (US$145 million) in principal and another Rp 1.24
trillion in interest payments.
IBRA has said it was facing difficulties in restructuring
IPTN's debt and suggested the government find the state company a
strategic partner.
However, earlier this week, BPIS warned the government about
selling the companies to foreign "vultures" at rock bottom
prices.
The state holding company instead urged IBRA to convert the
three companies' debts into equity participation to keep them in
Indonesian hands.
It further suggested the three companies go public, which
however, could only take place after the restructuring process
has been finalized.(bkm)