Hero gets Rp 70b in May riot insurance claims

JAKARTA (JP): Publicly listed PT Hero Supermarket has received about Rp 70 billion (US$8.14 million), or 90 percent of its total insurance claims for damage caused by the May 1998 riots, its director said on Wednesday.

Anton Lukmanto said he expected the remainder would be paid this week.

"We expect the remaining 10 percent to be paid this month," he told reporters on the sidelines of the launching of the country's first Internet-based on-line shopping service.

He said the 10-month period for the payments was taxing on the company's operations.

"We lost some 10 months, and for a retailer this means a lot," he said.

Many insurance companies have been reluctant to pay claims for damage resulting from the May riots due to several reasons, including the argument that the riot was political in nature, which was not covered under some policies, and because of insurance firms' financial difficulties resulting from the economic crisis.

Hero was among the retail chains worst hit by the looting and arson that hit the capital in May last year shortly before the resignation of president Soeharto.

Anton said Hero reopened 20 of the 26 looted and damaged stores reopened. The other six were destroyed by fire.

Anton hoped riots would not unfold from the June general election.

"We suffered the worst in May, and I don't expect the same thing to happen again," he said.

But he expected the government to provide a security guarantee for retailers.

"There are increasing uncertainties in the run-up to the election. The government must make the necessary preparations."

He declined to comment if Hero would shut its stores temporarily in the event of heightened tension in the capital.

Analysts have forecast that the country's retailers will continue to endure a gloomy year in 1999 due to prevailing security concerns and the economic crisis.

Anton estimate Hero's net sales rose 30 percent in the first quarter of this year from Rp 342.72 billion in the same period in 1998.

He declined to venture an estimate of Hero's net profit for the first quarter of the year.

The company's net sales increased 36 percent for 1998 to Rp 1.38 trillion, but it suffered a net loss of Rp 69 billion due to the steep depreciation of the rupiah against the dollar.

Despite the increasing political and economic uncertainties, many foreign players are making preparations to enter the country's retail sector, Anton said.

He pointed out that retailers from Belgium, Sweden, Japan, and Australia were among those expressing strong interest.

The government has fully opened the retail industry to foreign players. (rei)