Govt plans to create 15 holding companies

JAKARTA (JP): President B.J. Habibie announced on Wednesday eight new basic plans for the country's state enterprises which will lead to a consolidation of 155 state enterprises into some 15 world-class holding companies and the elimination of "old bad habits".

State Minister of the Empowerment of State Enterprises Tanri Abeng said the final framework for establishing between 12 and 15 holding companies was expected to be completed in three months time.

"The concept can be completed in three months time. I'll use the first month to discuss the plans with related technical ministers," Tanri said at a briefing also attended by president of state-owned surveyor PT Surveyor Indonesia Toga Sitompoel.

Tanri said state enterprises in agriculture, communications, and transportation were best prepared for consolidation.

He said the government would appoint independent consultants to help prepare the consolidation framework.

"I want to leave something good behind after I end my office term."

The eight new corporate plans are designed to boost the performance of state corporations. They include a master plan, a management system, a planning and control system, a corporate leadership plan, good corporate governance and information systems.

Tanri said the basic plans were important to guide the state enterprises to compete with other world class operators in the 21st century under a free market system.

He said cleaning up the state-owned companies and increasing their profitability was not enough, and the government must assist the enterprises to compete in the globalization era.

Tanri said his vision was to create mid-sized state holding companies with a clear business focus and efficient operations.

"We've already cleaned up the house, but it's not enough because the environment is now changing."

Tanri recalled his first priority on taking up his position had been to increase the profitability of state companies and privatize some.

He said total revenue generated by the 155 state companies had increased by 55 percent to Rp 81.7 trillion in 1998 from Rp 52.6 trillion in 1997.

Operating profit had jumped by 104 percent to Rp 17.7 trillion.

"With this kind of profitability, it means we've achieved efficiency. This is quite an achievement amid the current crisis."

Tanri said the number of healthy state enterprises had also increased from 59.8 percent to 68 percent, while ailing companies had dropped to 32 percent from 40.2 percent.

Most of the state companies have been treated as cash cows of politicians and well-connected businessmen. Opening up the state enterprises should curtail this tendency.

The government aims to privatize some 14 companies in the current 1999/2000 fiscal year in a bid to raise US$1.5 billion to help finance the state budget.

Meanwhile, Tanri denied reports the government had reached on Wednesday afternoon a deal to sell a quota of government shares in publicly listed domestic telecommunications firm PT Telkom.

However, he confirmed the government plans to divest some 8 percent of its Telkom stake.

Reports said the government was planning to sell 500 million shares at Rp 3,650 to an institutional investor to raise some $225 million. The sale is being managed by Merrill Lynch and Lehman Brothers.

Telkom is one of the companies to be privatized in the current fiscal year. (rei/prb)