Govt mulling over whether to liquidate PPD

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)