No decision on planned merger of Telkom, Indosat

No decision on planned merger of Telkom, Indosat

JAKARTA (JP): State Minister of the Empowerment of State
Enterprises Tanri Abeng said Thursday that the government had not
yet made up its mind on the proposal to merge state domestic
telecommunications operator PT Telkom and state international
telecommunications provider PT Indosat into one business entity.

Tanri said that Telkom would make a presentation to the
government on Monday on its merger proposal.

"But the government hasn't made any decision yet," he told
reporters on the sidelines of a seminar on corporate leadership,
which was organized by the Indonesian Corporate Leadership
Development Institute.

Telkom operational director John Welly recently proposed a
merger between Telkom and Indosat in a bid to increase the
country's telecommunications assets and to fully integrate
services prior to the opening of the telecommunications sector to
foreign operators.

But Minister of Communications Giri Suseno dismissed Tuesday
the merger possibility.

He said that the move was not in accordance with the country's
long-term plans for the telecommunications sector.

"A merger (between the two firms) is definitely not mentioned
in the government's blueprint. The blueprint clearly regulates
that Telkom and Indosat will exist as separate entities until
2001," he said.

Giri said that Telkom and Indosat could become more
competitive and efficient without a merger.

"Let them exist as they are now. We're going to assist Telkom
to expand its international line services and Indosat to tee off
in the local fixed line network, so that both will have
equivalent products and services to compete in the future with
each other or with foreign players," he said.

He added that since Telkom and Indosat had different business
plans and cultures, merging the two would take too much energy
and time.

Giri said that according to the blueprint, the government
would allow Indosat and new operators to enter the protected
fixed line and wireline telecommunications network and services
in 2010, and domestic long distance call services in 2005.

Indonesia's telecommunications authorities have been proposing
ways of helping state telecommunications operators to face
inevitable competition from foreign operators.

Merging Telkom and Indosat or inviting foreign strategic
partners are among the options.

Human resources

Meanwhile, secretary of the supervisory board of the newly-
formed Indonesian Corporate Leadership Development Institute Toga
Sitompul said that boosting the capability of human resources of
state companies was key to surviving the globalization era.

He said at the opening of the seminar that the main mission of
the institute was to develop corporate leaders of state companies
to enable them to compete globally.

He said that some 95 of the 159 state companies have committed
themselves to the institute by providing at least 10 percent of
their education expenses.

"It will be transparent. We have appointed the Hans
Tuanakotta accounting firm to audit our finances," said Toga, who
is also president of state-owned PT Surveyor Indonesia.

He added that each state company would only be allowed to
provide a maximum contribution of Rp 1 billion.

He pointed out as an example that the education budget of
state Bank Rakyat Indonesia was Rp 40 billion, which means that a
10 percent contribution would be Rp 4 billion.

He explained that the institute was the first of its kind in
the country.

Toga said that sending managers and chief executive officers
(CEOs) of state companies to the institute to upgrade their
knowledge and skills rather than sending them overseas would help
save the country's foreign exchange revenues.

"We think it's better to invite foreign experts here," he
said, adding that many officials of state companies might be
unhappy about the idea of entering class rooms again and studying
at home rather than overseas.

The corporate leadership seminar was the institute's second
CEO briefing and heard from experts on corporate leadership
including CEO of U.S.-based GE Corporation, Jack Welch. (rei)