Pos Indonesia braces for Rp100b in losses

Pos Indonesia braces for Rp100b in losses

The Jakarta Post, Jakarta

State postal service, PT Pos Indonesia, will likely close its
books in the red this year, as rising operational costs -- and a
recent trend of more people turning to electronic means for their
communication needs -- are taking their toll on business.

Pos Indonesia president director Hana Suryana was quoted by
state news agency Antara as saying on Friday that the company may
suffer losses of up to Rp 100 billion (9.91 million), due to the
Oct. 1 fuel price hike, which has increased its transportation
costs and its procurement expenses for postal supplies.

"We are still assessing the situation. Due to the unfavorable
circumstances, it is unlikely that we can make a profit this
year," he said.

This year's outlook of losses may become another financial
turning point for Pos Indonesia, albeit in an unfavorable way, as
the company had actually managed to book an after-tax profit of
Rp 1 billion in 2004, from a loss of Rp 20.38 billion the
previous year.

Ironically, Hana had previously mentioned how Pos Indonesia
managed to reap a slight profit of some 10 percent from the Rp
15.5 billion in total funding allocated for the government's
direct cash scheme to offset the fuel price increases for low-
income families.

The government had assigned Pos Indonesia to disburse the cash
aid of Rp 100,000 per month for each family through its 3,914
post offices throughout the country.

Besides rising transportation and procurement costs, Hana also
pointed to the company's increasing costs of paying its workers.

"Our main problem is our huge fixed cost in the form of
salaries," he said. "We have to set aside some Rp 1.3 trillion
alone for employee salaries, and that does not include their
yearly bonuses."

Pos Indonesia currently employs some 26,000 workers and has
some 15,000 retirees receiving pensions.

Hana also mentioned that the losses might come from the fact
that Pos Indonesia's revenues from postal delivery have lately
been in decline.

"Individual postal delivery has decreased by almost 30
percent," he said. "The ratio between postal delivery of
corporations and individuals is now 75:25, from 60:40
previously."

Postal services worldwide have taken a severe blow due largely
to the rise in electronic communications -- particularly,
cellular phones and the Internet.

Even the ongoing celebration of Idul Fitri in Indonesia has
failed to help the post office. More people now prefer to send
holiday greetings, including Christmas and New Year's cards, via
SMS and e-mail, rather than the traditional method of sending
cards.

Pos Indonesia's postal service, meanwhile, has also been
laboring amid fierce competition from both local and foreign
private package delivery firms, with more and more opening
businesses in the country.

Hana, however, remained upbeat that his firm would be able to
keep this year's losses down, through cost-cutting and
efficiency-improving measures, which include management
restructuring, renewing the company's postal equipment and
venturing into new business areas.

One possibility is the lucrative business of salary payment
services, citing the company's competitive edge of being present
in nearly every corner of the country.

"One of our focuses in the future is the logistical delivery
business, particularly nationwide salary payment services," he
said.