IPTN to remain in the red in 1998: Ilham Habibie
JAKARTA (JP): The state-owned aircraft maker PT Industri Pesawat Terbang Nusantara (IPTN) would continue to be in the red in 1998 due to the current economic crisis, director Ilham Habibie said on Friday.
Ilham said that the crisis had dealt a big blow to the industry as its market contracted considerably particularly due to the plunging purchasing power of both the government and the business sector.
"Some of our foreign customers in Malaysia, Thailand and South Korea have also been affected," he told press on the sidelines of a seminar on infrastructure.
He also conceded that IPTN suffered a financial loss in 1997, but declined to disclose the figure.
"It's still being audited, and besides I have to get shareholders' permission to announce it," said the eldest son of President B.J. Habibie.
IPTN, which was established by the senior 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. In a January agreement with the IMF the government had ceased budgetary support for the company.
IPTN reported a 1996 loss of Rp 153.83 billion.
Muhammad Faisal, a director of PT Pakarya Industri, a holding company established in August this year for 10 strategic state- owned industries including IPTN, said during a press conference that it would take more than five years to turn around the ailing IPTN and this would be done particularly by boosting the company's profit centers such as the aircraft engine maintenance unit.
Ilham is counting on the company's restructuring program, which will start in the first quarter of next year, to turn around the ailing industry.
"This will include business reorientation, capital restructuring, and employee restructuring," he said.
He declined to provide details as the plans had yet to be finalized.
He explained, however, that through the restructuring measures, IPTN's business units would be given more flexibility in getting private partners.
Many foreign investors were very keen to enter into certain business units of the company, Ilham claimed.
He said, however, that securing new investment partners was difficult in the current sluggish business environment.
"The investment mood in the world is currently a bit negative. People are being careful... there is recession everywhere... in Russia, Latin America, and Asia," he pointed out.
He admitted that in the case of Indonesia, the investment climate was affected by political uncertainty.
"It's clear that there is uncertainty. But it's only temporary.... And the reward is far greater than the risk," he said, pointing out the huge market potential offered by the vast archipelago populated by more than 200 million people.
Ilham explained that there would be a place for the aerospace industry in the future of Indonesia because it would be difficult to imagine the vast archipelago without airplanes.
"I think foreign investors are still interested because they see the huge potential here," he said.
Ilham also said that the company was in the process of contract finalization with buyers from the United Arab Emirates who want to acquire four IPTN aircraft. (rei)