'IPTN's loans converted to equity'
JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo confirmed yesterday that loans to state aerospace company PT IPTN from interest on reforestation funds had been converted into government equity in that company.
Djamaludin said the decision to convert the funds had been made by virtue of a presidential decree last year.
"By converting the loans into government equity shares, we have helped improve IPTN's financial structure," Djamaludin told a hearing of House Commission IV on agriculture, transmigration and forestry.
He said that, after the decree, the finance minister had transferred the funds to the state treasury which transferred them to IPTN.
"This was the President's decision," he said when asked about the reason for the conversion.
But the Strategic Industry Management Board, which oversees IPTN, said last week the aerospace company had not received additional equity from the government since 1995.
Giri Suseno, an executive on the board, told another hearing that IPTN had received Rp 1.32 trillion in government equity by 1994.
Giri said that neither IPTN or the nine other companies under the board would ask for additional government equity in the next fiscal year.
In 1994, the forestry ministry transferred IPTN more than Rp 400 billion (US$174 million at current rates) in interest gained from reforestation funds. IPTN is based in Bandung and is chaired by State Minister of Research and Technology B.J. Habibie.
An earlier presidential decree had allowed the interest to be transferred as an interest-free loan to IPTN to develop its N-250 aircraft.
Reforestation funds, now in time deposits at state banks, are managed by the forestry ministry but are not accounted for in state budgets. Their utilization therefore escapes legislative supervision.
The funds, collected from mandatory levies on forest concessions, aim to guarantee that forests are managed in an environmentally sustainable manner.
Many observers and environmental organizations were surprised when the government ordered that some interest from the funds would go to IPTN.
Eleven environmental groups filed a lawsuit against President Soeharto at the State Administrative Court. The presiding judge threw the case out of court.
Djamaludin said that more than Rp 6 trillion in reforestation funds had accumulated since their introduction in the early 1980s.
In the first nine months of the 1996/1997 fiscal year, the government reaped Rp 523.7 billion in reforestation funds and Rp 174.5 billion in interest and fees.
"The use of reforestation funds and its interest for non- forestry purposes, such as IPTN, was the first case and will hopefully be the last," he told yesterday's hearing.
According to Presidential Decree No. 29/1990, reforestation funds must be used to develop forests and rehabilitate land. (pwn)