House agrees SOE merger plan

House agrees SOE merger plan

The Jakarta Post, Jakarta

The House of Representatives has approved the government's plan
to merge three state-owned firms in the trade sector as part of
efforts to turn them into a more efficient and competitive
business entity.

The approval was given on Thursday following a hearing between
the companies and House Commission V on trade and industry
affairs.

The three firms -- namely PT Pantja Niaga, PT Dharma Niaga and
PT Cipta Niaga -- would form a new company called PT Perdagangan
Niaga with combined assets of around Rp 5.6 trillion (about
US$640 million).

Cipta Niaga president Doris S. Herlambang told the hearing
that as all produced the same products and used the same
distribution chains, the plan should be helpful in focusing the
company and enabling it "to improve its bargaining position with
suppliers."

She said a government ruling had been issued to serve as the
legal basis for the merger.

Aside from the three, Indonesia currently has another two
firms also covering the trade sector. They are PT Sarinah and PT
Bandha Graha Reksa.

Of the three firms to be merged, only Cipta Niaga managed to
record a pre-tax profit in 2002, amounting to Rp 49.6 billion.
Dharma Niaga and Pantja Niaga posted Rp 335 million and Rp 7
billion in losses respectively.

In the hearing, some lawmakers voiced the need for the company
not to use the decision as an excuse for massive lay-offs, which
would have the potential to create negative side-effects.