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)