JSX suspends trading of Indorayon
JAKARTA (JP): The Jakarta Stock Exchange suspended on Monday trading of shares of rayon and pulp producer PT Inti Indorayon Utama as bewilderment greeted President B.J. Habibie's order to halt the company's operations.
The bourse's trading division announced the move was made to prevent price fluctuations in the stock due to unclear information about the closure of Indorayon's facility in North Sumatra.
"Trading on Indorayon has been suspended since 9:30 a.m., March 22, 1999, until further clarification," it said.
"The Jakarta Stock Exchange is seeking further information from the company."
Indorayon was last traded at Rp 200 (2 U.S. cents) a share.
Habibie ordered on Friday the suspension of the operation of Indorayon's plant near Lake Toba, North Sumatra, in an attempt to calm tension with locals and allow an evaluation team to conduct an assessment of its environmental and social impact.
North Sumatra Governor T. Rizal Nurdin said the President also ordered a private foundation and an independent audit team comprising environmental and health experts to evaluate the impact of Indorayon's operations on the local environment.
The team is expected to issue a recommendation before Habibie makes his decision.
Word in Jakarta, however, is that Indorayon has not received official notification of the suspension.
Analysts said a closure order on Indorayon's mill could backfire on Indonesia's efforts to sort out its economic problems.
"The issue has dragged on for too long without any clear conclusion. We've heard this since the middle of last year," said David Chang, head of research at PT Trimegah Securindolestari.
"It's bad for Indonesia's reputation. The government does not need to close a factory just to have an audit report."
He explained that many Indonesian firms, including Indorayon, were hard-pressed to repay overseas debt, and that closing down their operations would only make things worse.
Indorayon's finance director David Pile was reported earlier to have said the company might default on the interest and principal payments of its US$150 million in Eurobonds due in 2001.
Chang said many people dependent on Indorayon for jobs would be hurt by its closure and uncertainty concerning its status.
"People are deeply puzzled about this," he said.
The pulp and rayon producer has been dogged by persistent troubles since last July.
Its mills stopped operation in January last year because of civil disorder and disruption of deliveries of materials and supplies.
The company was asked by the provincial government to reopen in November to allow an official audit of its environmental impact.
The mills were closed again in January this year before the audit was begun. (rei)