'Govt should liquidate state trading firms'

'Govt should liquidate state trading firms'

JAKARTA (JP): A member of the House of Representatives
yesterday suggested that the government liquidate money-loosing
state-owned trading companies because they will never survive in
competition with private and foreign corporations.

"State-owned trading enterprises that have suffered losses for
several years should be abolished, because they will continue
increasing the financial burdens of the government. In addition,
their businesses do not concern the basic interests of the
public," Iskandar Mandji of the House's Commission VI told a
hearing with Director General of Domestic Trading Djoko Moeljono
here yesterday.

The country's constitution stipulates that all production and
business activities which pertain to the basic interests of the
public must be controlled by the state.

The government currently supervises four state trading firms
-- PT Cipta Niaga, PT Kerta Niaga, PT Dharma Niaga and PT Pantja
Niaga -- which run export-import and domestic distribution
businesses.

"They are competing with each other in the same businesses,"
Moeljono said.

He told the hearing that Cipta Niaga is the worst among the
four, with significant losses in the last seven years.

He said Cipta Niaga suffered before-tax losses of Rp 608
million in 1989 (US$258,000 at current rate), Rp 4.9 billion in
1990, Rp 6.4 billion in 1991, Rp 5.3 billion in 1992, Rp 6.9
billion in 1993, Rp 4.8 billion in 1994 and Rp 2.5 billion in
1995.

He added that Dharma Niaga is the best among the four, which
improved its performance after suffering losses of Rp 2.8 billion
in 1989 to gain a profit of Rp 5.3 billion in 1995.

The chief executive of Cipta Niaga, Eddi Gunadi, told the
commission -- which supervises industry, mining, manpower and
investment -- that his company's businesses are highly risky and
frequently mismatched in terms of supply and demand.

For example, he added, Cipta Niaga obtains credits from its
suppliers for only two weeks, while consumers usually pay four
weeks later.

"So ... Cipta Niaga must pay bank interest rates to cover the
transactions," said Gunadi.

Moeljono told the commission that an interministerial
discussion on the fate of the trading firms is underway.

"Consolidation or selling the trading firms to private parties
are among the alternatives," said Moeljono.

He expected his superior -- Minister of Industry and Trade
Tunky Ariwibowo -- to inform the commission on the matter in a
hearing later this month. (kod)