Govt to merge trading firms for efficiency, Tanri says

Govt to merge trading firms for efficiency, Tanri says

JAKARTA (JP): State Minister of the Empowerment of State
Enterprises Tanri Abeng said on Monday that state trading
companies PT Dharma Niaga and PT Kerta Niaga would be merged in a
bid to boost their efficiency and profitability.

He said that the two companies would not be offered to foreign
strategic partners as was the case with many other state
companies.

"Dharma Niaga will acquire Kerta Niaga," he told reporters
after installing new management at several state enterprises.

Tanri did not provide further details.

According to a government privatization document, the
restructuring process of the trading companies might be followed
either with a management buy-out or an offer to foreign strategic
investors.

But Tanri has dropped the second option.

The document also said that Dharma Niaga may further acquire
two other state trading companies PT Tjipta Niaga and PT Panca
Niaga.

A management buy-out applies to a company which has modest
assets or where the management themselves constitute the main
asset.

If the fixed assets exceed the needs of the business, the
property can be sold separately, proceeds going to the
government, and leased back if required.

"A well-prepared management team can purchase an enterprise
with a relatively modest cash outlay," the privatization document
says.

Dharma Niaga, the largest state-owned trading company, had
total assets of Rp 340.89 billion in 1997, a modest size compared
to the nearly Rp 4 trillion in assets owned by port operator PT
Pelindo II which is being offered to four foreign strategic
investors.

Dharma Niaga is mired in cash-flow and large debt problems.

The government is targeting the privatization of seven state
companies in the current fiscal year ending in March in order to
raise some US$1 billion for the state budget.

But the government has so far managed only to further
privatize cement maker PT Semen Gresik, raising $121.5 million.

Tanri earlier said that the government has accepted final bids
from four foreign investors for a 51 stake in PT Jakarta
International Container Terminal, a unit of state port company PT
Pelindo II, which operates Tanjung Priok, Indonesia's busiest
port.

Tanri was supposed to have announced the winner of the bid
last week.

Tanri's deputy Herwidayatmo said on Monday that, "there are
several matters that have yet to be settled with the foreign
investors."

"But we'll announce the results soon," he told "The Jakarta
Post. (rei)