Officials have mixed reactions to Salim's plan

JAKARTA (JP): Officials gave mixed reactions yesterday to the Salim Group's plan to sell giant PT Indofood Sukses Makmur to tiny QAF Ltd incorporated in Singapore.

The Investment Coordinating Board's deputy chairman, Sugihono Kadarisman, said Salim's internal acquisition plan was legal and could even improve its international reputation.

"That's legal, just like state-owned firms selling their shares overseas," Sugihono announced after attending a workshop for provincial coordinating investment board officials.

"In this globalization era, Indonesian companies should improve their competitiveness. If there is an Indonesian firm selling its shares abroad, ... we must see it from our national interests," he added.

He contended that a company selling shares overseas would have more standing in the eyes of its business partners.

Sharing Sugihono's position, Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya said he saw no problem with the planned internal acquisition.

He said Indofood should still maintain its partnership with local small firms and cooperatives.

"The case will not change Indofood's partnership program, especially with village cooperative units which supply it with agricultural commodities, even though its holding company may move to Singapore," Subiakto said.

But Coordinating Minister for Production and Distribution Hartarto declined to comment on Salim's planned restructuring.

"I will comment on it at the right time because it is a sensitive issue ... we need a coordination (meeting) to decide what is best," Hartarto said.

Salim group's PT Indocement Tunggal Prakarsa has proposed a spin-off and sale of its 50.1 percent share in Indofood.

Under the proposed spin-off, Indocement would give most of its Indofood shares to existing shareholders as a special dividend and sell the remaining shares to the Sampoerna family, which currently has a 5.63 percent stake in the food giant.

After that, QAF would buy the Salim Group's 45 percent stake in Indofood through PT Marga, in addition to the Indofood stake it would buy directly from the Sampoerna family.

This would give the Singaporean company a 50.1 percent stake in Indofood. QAF, 70 percent owned by the Salim Group, would issue right shares to fund the complicated acquisition.

Indocement president Sudwikatmono said yesterday that the planned sale of Indofood to QAF did not represent capital flight but capital flow.

"The funds will be 'parked' only temporary there. That's normal in business," Sudwikatmono said after attending a Children's Day celebration here.

He said Indofood would benefit from the planned restructuring as it would easily market its products to Singapore and other Asian countries.

Both Indocement and Indofood are listed on Jakarta and Surabaya stock markets, while QAF is listed on the Singapore Stock Exchange. (08/rid)