Hero gets Rp 70b in May riot insurance claims

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)