IPTN will survive state funding cuts

JAKARTA (JP): State aircraft manufacturer PT IPTN says it will survive a government decision to cut its funding as part of an economic reform package.

PT IPTN President B.J. Habibie said the company's activities would be unaffected because it was already self-sufficient.

"It's no problem really," Habibie, who is also State Minister of Research and Technology, was quoted by Antara as saying Saturday.

He maintained that the company was self-sufficient through the sale of and orders for one of its main products, the 40-seat CN- 235 commuter aircraft.

The Bandung-based company is also testing a 70-seat N-250 turboprop and has plans to spend US$2 billion to develop a 130- seat N-2130 passenger jet.

As part of a newly negotiated economic reform package, to be implemented under the supervision of the International Monetary Fund -- which has mobilized an about $40 billion rescue package for Indonesia --, the government has not only cut IPTN funding but also decided that IPTN can no longer raise loans domestically.

This means that the firm's N-2130 jet project would have to be entirely foreign funded.

Habibie said the lower rupiah exchange rate against the dollar, quoted in New York at 8,300/8,800 Saturday, would help aircraft sales which have recently been arranged through small counter-trade deals.

"The (CN-235) aircraft began selling when the rupiah rate of exchange against the U.S. dollar was about 2,500 rupiah. Now the value of the dollar is much higher, that will be a source of funds, won't it?.

"The proceeds from the sales of CN-235 are enough to pay for the operations of IPTN," he said.

Habibie said the government's budget allocation to IPTN was smaller than that to the National Institute of Sciences or Agency for the Assessment and Application of Technology, two official research institutes.

According to IPTN spokesman M.T. Satoto who spoke to reporters in Bandung on Friday, IPTN has sold more than 400 of its products since it was established in 1975, including 150 CN-235s.

Satoto said the company planned to "restructure" its personnel. This would include reducing the number of foreign technical assistants on some programs.

Last year, the company planned to transfer 4,000 employees to divisions that will be established as subsidiaries.

"We are still looking at how many employees we actually need," Satoto said. (43/aan)