Govt mulling over whether to liquidate PPD
JAKARTA (JP): The government has agreed to provide state-owned bus company PPD with Rp 6.9 billion (US$690,000) in new subsidies to help it pay its workers' wages for the next three months pending a decision on whether or not to liquidate the ailing company, a minister said.
Minister of Transportation and Telecommunications Agum Gumelar said at a hearing with the House of Representatives' Commission IV for infrastructure and transportation on Wednesday that the financial state of the bus company, which operates in Jakarta and surrounding areas, was so poor that it could not even pay its workers.
He said that at a meeting on Monday, his ministry and the Ministry of Finance had agreed to provide PPD with Rp 2.3 billion per month as a subsidy to pay its workers' salaries starting this month.
He said that within three months, an independent team appointed by the Ministry of Finance would complete a study on whether to liquidate the firm or to allow it to continue in existence.
Director General of Land Transportation Susmono Soesilo said that a previous interdepartmental team had came up with two options; to liquidate PPD or to rehabilitate it.
"Both the options have pros and cons and these will be studied in greater depth by the new independent team," he said during a break in the hearing with the House.
Susmono said that if the decision taken was to liquidate the bus company, then the government would have to spend at least Rp 330 billion to pay, among other things, severance pay for the 5,500 laid-off workers.
However, if it was decided to rehabilitate the company, then in the short term it would cost the government about Rp 68 billion to refurbish some 300 buses, and to pay off outstanding debts and cover operating costs, he added.
The interdepartmental team had consisted of the Ministry of Transportation and Telecommunications, the National Development Planning Board (Bappenas), the Jakarta administration, as well as the Ministry of Finance.
Agum suggested that the bus company should not be liquidated because of its important role in providing cheap public transportation.
He said that on top of PPD's approximately 454 buses, Jakarta, ideally speaking, still needed around another 10,000 buses to cope with the transportation needs of its populace.
The company operates 265 regular and express buses and 189 air-conditioned buses on 67 routes across the capital. In addition, it has 486 unusable buses currently parked up in its 16 bus depots.
PPD has come under close scrutiny as the company has been suffering losses and been regularly unable to pay its employees' wages over the past 15 years.
In February, the company was short Rp 2.3 billion to pay its employees.
The company suffered losses of Rp 6.4 billion in 1985, Rp 28 billion in 1995 and Rp 20.7 billion in the first quarter of 1999.
It is unclear whether the losses are caused by the company's inefficiency or because of the low fares it is required to charge passengers.
PPD director of finance A. Muchlasin R. said the company's oversized workforce and growing number of aging vehicles have been undermining the company's financial performance, which has resulted in huge and seemingly endless debts.
"We have about 5,500 workers, while the existing 500 buses need only 2,500 men to operate them," he said during a break in the hearing.
Susmono said that one of the ways to help PPD get back on its feet would be for it to enter into cooperation with a private company.
Muchlasin said the company was expecting to sign a contract with local assembler PT Volgren Indonesia, which would allow the latter to provide and operate 100 buses on a revenue-sharing basis with PPD.
"We will only need to provide the designated routes, the PPD brand name, and 75 percent of the human resources," he said. (tnt)