Only 22 listed companies remain healthy: Analyst
JAKARTA (JP): Only 22 of 282 firms listed on the Jakarta Stock Exchange (JSX) are operating with sufficient cash flow, according to Pentasena Securities.
The other 260 firms had serious cash-flow problems and were technically bankrupt, Pentasena head of research Mohammad Syahrial said.
"When we compare the current assets of all listed companies with their current liabilities, we find only 22 companies which will survive the current crisis," Syahrial told The Jakarta Post.
"The 22 firms will have sufficient liquidity to finance their operations, while the remainder have technically already gone bankrupt," he said.
He said the 22 surviving listed companies were involved in telecommunications, mining and food service sectors.
According to the JSX, mining and mining-related companies include Medco Energy Corp, state gold and nickel producer Aneka Tambang, International Nickel Corp (INCO), state tin producer Tambang Timah, Citatah Marmer and Alter Abadi.
Telecommunications firms include state-owned Telkom and Indosat.
Food and food-related firms include Davomas Abadi, Fiskaragung Perkasa, Indofood Sukses Makmur, Mayora Indah, Sekar Bumi, Sekar Laut, Miwon Indonesia and Sinatar Top.
Property analyst Panangian Simanungkalit confirmed that all 23 listed property firms on the exchange had technically gone bankrupt.
Panangian, chairman of the Center for Indonesian Property Studies, said the 23 listed property firms had a combined foreign debt of US$3.4 billion, while their combined assets were only worth Rp 17 trillion ($1.7 billion).
He said most of the property firms' foreign debt was unhedged, making them more vulnerable to the dollar-rupiah exchange rate volatility.
"So at the current rate of Rp 10,000 per U.S. dollar, all listed companies have technically and fundamentally gone bust," Panangian told The Post yesterday.
"Even if they sell all their assets, they will not be able to repay all their foreign debts, not to mention their domestic, rupiah-denominated debts," Panangian said.
Worse still, the 23 firms controlled 60 percent of all commercial property assets and 40 percent of residential assets, he said.
The 23 listed property firms include Bhuwanatala Indah, Ciputra Development, Dharmala Intiland, Duta Anggada Realty, Duta Pertiwi and Indonesia Prima Property.
Also included are Jakarta International Hotel & Development, Jaya Real Property, Kawasan Industri Jababeka, Lippo Cikarang, Lippo Karawaci, Lippo Land Development, Modernland Realty, Mulialand, Pakuwon Jati, Panca Wiratama, Pudjiadi Prestige, Putra Surya Perkasa, Ristia Bintang, Royal Sentul Highlands, Summarecon Agung, Suryamas Dutamakmur and Surya Semesta Internusa.
If the rupiah remained at 10,000, Panangian predicted that a serious property market crash would hit Indonesia in the second half of this year.
If the property market crashed, it would drag down the banking sector, since 20 percent of all bank loans have gone to this speculative sector so far.
Moreover, bad loans in the property sector tended to increase, from Rp 2.7 trillion in 1994 to Rp 3.9 trillion in 1995, Rp 5.25 trillion in 1996 and about Rp 5.6 trillion last year.
Panangian said all parties, especially the government, had to prevent the property market crash from happening as it could spread to other sectors, especially the banking sector, and undermine the rupiah.
Foreign buying
To prevent a possible crash in property, he suggested that the government allow foreign investors to purchase and entirely own property assets.
He said the current regulation which allowed foreign ownership in the property sector was still vague, and therefore not attractive to foreign investors.
"What they need is a clear, direct and nonprejudice regulation as well as a quick bureaucratic process," Panangian said.
Therefore, what the government needed to do now was to issue a presidential decree allowing foreign investors to purchase and own productive property assets here, he said.
"If the government does this, I guarantee it would be responded to positively by foreign investors, and the needed dollar would start flowing in again," he said.
He said attracting foreign investors to the property sector would be beneficial to the country as it constituted long-term investment.
If the government issued a ruling allowing foreign investors to buy property, foreign firms in Indonesia would be the first to buy productive property assets, mostly office buildings, he said.
"If that happens, dollars will come in and the rupiah will quickly go down to about 4,000 like that set by the government in the state budget," he said. (aly/rid)