Japan's trade head denies report on aid to Indonesian venture
Japan's trade head denies report on aid to Indonesian venture
TOKYO (Kyodo): Japan's trade minister Eijiro Hata denied
yesterday a newspaper report that the Indonesian government has
asked the trade ministry to salvage an ailing aluminum-smelting
joint venture between Japan and Indonesia.
But an official of the Tokyo-based investing firm for PT
Indonesia Asahan Aluminum (Inalum) acknowledged that the
participants in the joint venture agreed that some kind of
bailout is necessary for survival of the Jakarta-based
partnership.
Speaking at a news conference held after the regular cabinet
meeting, Hata, minister of international trade and industry, said
such a request was not made when he met with a high-ranking
Indonesian economic official Thursday.
The Nihon Keizai Shimbun, Japan's leading financial daily,
reported in its Friday morning edition that the Indonesian
government has asked the Japanese side to shoulder a major part
of a capital increase that the joint venture plans and to lower
the interest rate on Japan's loans to the alliance.
The newspaper quoted a ministry official as saying that the
ministry is examining a possible capital injection into Inalum as
part of a much broader rescue package, including a possible
easing of loan interest charges by Export-Import Bank of Japan,
the official said. The loan totals about 190 billion yen (US$1.8
billion).
The ministry expects the rescue package for Inalum to be
finalized by June following the termination of the most recent
rescue plan, under which Japanese partners injected 56 billion
yen of extra capital and Japan's Ex-Im Bank cut loan interest
rates to five percent from 6.75 percent, the official said.
Serious
An executive with Nippon Asahan Aluminum Co., the investing
firm for the joint venture, admitted that the aluminum smelter
has been in a serious financial state for years due chiefly to
softening market prices of aluminum and needs some aid.
The official said the concerned parties are indeed discussing
the kinds of support the financial daily reported but its
details, such as the sum of additional funding, have yet to be
worked out and no official request from Indonesia has been made.
He said Asahan Aluminum's accumulative losses amount to as
much as US$230 million and another $90 million in losses are
expected to be incurred for the 1993 business year ended March
31.
The joint venture, established in 1976, is 60 percent owned by
Nippon Asahan Aluminum Co. Ltd. and 40 percent by the Indonesian
government. The Overseas Economic Cooperation Fund (OECF) in turn
owns 50 percent of Nippon Asahan and the remaining 50 percent
held by 12 Japanese private firms including Sumitomo Chemical Co.
Ltd., Showa Denko KK and Nippon Light Metal Co. Ltd.
The firm started manufacturing in 1982 and is one of the
largest overseas aluminum-making footholds for Japan, with an
annual output capacity of 200,000 tons, half of which is exported
to Japan.
The company was bailed out once before in 1987 in a similar
deal, featuring the injection of Japanese funds and reduced debt
burdens on Japanese lending.