IDB to help ailing Dirgantara Indonesia
Zakki P. Hakim The Jakarta Post/Jakarta
The Islamic Development Bank (IDB) has made a preliminary commitment to provide badly needed working capital for the ailing state-owned airplane maker PT Dirgantara Indonesia (PTDI).
The funds, to be raised through the issuance of Islamic bonds, is crucial to allow PTDI to fulfill a purchase order from British Aerospace and Boeing for aircraft components.
An IDB mission from Jeddah head office visited PTDI's factory in Bandung, West Java, on Saturday.
The plan to provide financial assistance for the aerospace company was made during a meeting late last month between Minister of Industry and Trade Rini MS Soewandi and IDB president Ahmad Mohamed Ali in Saudi Arabia.
IDB representative for Indonesia, Charmeida Tjokrosuwarno, told The Jakarta Post that the visit was part of a feasibility study to seek whether or not PTDI was bankable.
Charmeida said that the study and other administrative process would normally take at least six months, before the eventual disbursement. The study itself is expected to be finished in about four months, he added.
"IDB's funds has a nature of fast disbursement, which is perfect for refinancing," he said.
Should the IDB consider the project as feasible, the bank would issue Islamic bonds to the international market to raise the funds. The size of an Islamic bond issue normally ranges from US$15 million to $60 million, according to Charmeida.
"We have a triple A rating, therefore our bonds are very prospective," Charmeida said.
PTDI was set up by the government of former president Soeharto in the 1970s as part of an ambitious project of the then influential research and technology minister B.J. Habibie to develop a hi-tech aircraft industry in the country, despite strong opposition from many economists at the time.
The company, however, has found difficulties in selling its airplanes, forcing the government to use taxpayers money to help it stay afloat for around 27 years. But following the late 1990s financial crisis, the cash-strapped government could no longer support the ailing airline, and in 2003 the company's management proposed a layoff for thousands of its employees as part of a restructuring program to help the company from being totally bankrupt.
Some analysts have said that PTDI's component manufacturing unit could still be salvaged as it is considered commercially viable business as evident from the purchase order made by Boeing and British Aerospace.
IDB has also received proposals from the Jakarta administration to help finance a planned monorail project, and from state-owned toll road operator PT Jasa Marga, Charmeida said.
IDB has actually received numerous proposals from aspirants across the country, however, many of them were newly established firms owned by regional administrations.
"IDB applies a very high requirement in risk management. We are not commercial bank, but we are also not a social institution. Therefore, (investment) security really matters to us," he said.
The bank was established in 1973 by the member countries of the Organization of the Islamic Conference (OIC), which Indonesia is a member. It was set up to foster economic development and social progress in member countries and Muslim communities worldwide based on the principle of sharia.