'IPTN's loans converted to equity'

'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)