IPTN needs more than five years to turn around

JAKARTA (JP): It will take more than five years to turn around ailing state-owned aircraft maker PT Industri Pesawat Terbang Nusantara (IPTN), a government official said yesterday.

Muhammad Faisal, a director of the newly established PT Pakarya Industri, a holding company for 10 strategic industries including IPTN, said that by boosting IPTN's profit centers such as the airplane engine maintenance unit, the company could start making a profit in five to six years.

IPTN, which was established by President B.J. Habibie 23 years ago, has never made a profit. It has often been criticized by many economists as an unrealistic project that only depletes state resources.

IPTN reported a 1996 loss of Rp 153.83 billion.

In a January agreement with the IMF, the government committed to cease budgetary support for IPTN.

Faisal also said that two other strategic industries were considered not healthy, and each would need at least two years to make them healthy.

The two are military equipment maker PT Pindad and engineering firm PT Barata Indonesia.

"We will restructure them so that they can become profit centers rather than cost centers," he told the media yesterday.

He said the other seven strategic industries were considered healthy.

The seven other strategic industries are steel maker PT Krakatau Steel, ship builder PT PAL Indonesia, explosives maker PT Dahana, train equipment maker PT Inka, electronics manufacturer PT Len Industri, engineering firm PT Boma Bisma Indra and telecommunications equipment maker PT Inti.

But State Minister of the Empowerment of State Enterprises Tanri Abeng told the House of Representatives last month that Boma, Dahana and Len were also considered unhealthy.

The 10 strategic industries were previously under the management of the Strategic Industries Supervisory Agency (BPIS), a unit which was also headed by Habibie, who was then the state minister of research and technology.

Since the establishment of the State Ministry of the Empowerment of State Enterprises, the strategic industries and more than 140 state-owned companies have become the responsibility of Tanri.

Tanri's deputy Sofyan Djalil said the new holding company was not intended to force the healthy strategic industries to cover the losses of the ailing companies, pointing out that through the holding company the strategic industries could create better synergism.

Tanri is planning to raise US$1.5 billion from the sale of state-owned companies during the 1998/1999 fiscal year to help finance the state budget.

Sofyan said that although the government had managed to get $14 billion in international aid to help plug the wide gap in the 1998/1999 state budget, the privatization proceeds would still be needed because part of the aid was in the form of official debt principal moratorium.

He added that not all of the 12 state-owned companies prepared for privatization this fiscal year would be for sale, pointing out that if three companies could provide the targeted $1.5 billion the remainder would not have to be privatized immediately. (rei)