Postpone PTPN firms' privatization plan, House says

Postpone PTPN firms' privatization plan, House says

JAKARTA (JP): The House of Representatives (DPR) has asked the
government to delay the privatization of state-owned plantation
companies PT Perkebunan Nusantara III (PTPN III) and PT
Perkebunan Nusantara IV (PTPN IV).

Speaking on Monday at a hearing with executives from the two
companies, House Commission V said that selling government stakes
in the current unfavorable market conditions would not make for
good results.

"It is not the right time ... The market is still sluggish,
investors are worried about the political situation. We will only
get paltry bids if we sell them now," commission member Ade
Komaruddin of the Golkar Party said.

Irmadi Lubis of the Indonesian Democratic Party for Struggle
(PDI-Perjuangan) said that PTPN IV in particular should not be
privatized until the company clarified alleged irregularities in
its finances.

He said that the irregularities found by the Supreme Audit
Agency (BPK) included overspending of more than Rp 138 billion
(US$17.2 million) in the money PTPN IV had allocated in 1998 for
bonus payments for workers and directors.

As an example, he said that the company had paid its president
over Rp 1 billion in a special bonus, which exceeds the standard
set by the government of around Rp 35 million.

The office of State Minister of Investment and State
Enterprises Development recently put PTPN III and PTPN IV along
with eight other state-controlled firms on the list of firms up
for immediate privatization this year.

The privatization of the 10 state companies is expected to
raise about Rp 6.5 trillion to help fill the deficit in the state
budget.

PTPN III currently operates a total 189,910 hectares of palm
oil, rubber and cocoa bean plantations in North Sumatra. It also
has factories processing palm oil, rubber products and cacao.

The company's revenues fell slightly to Rp 1.07 trillion in
1999 from Rp 1.12 trillion in 1998, while after-tax profits
dropped to Rp 128 billion last year from Rp 338 billion in 1998.

PTPN IV controls 137,163 hectares of palm oil, cacao bean and
tea plantations and operates three crude palm oil and palm oil
refining plants, also in North Sumatra.

The company's total sales dropped last year to Rp 1.27
trillion from Rp 1.49 trillion in 1998, while after-tax profits
plunged to Rp 110 billion in 1999 from Rp 581 billion in 1998.

Management of PTPN III and PTPN IV said they were ready for
the privatization despite their declining financial performance
over the last two years.

"The decline in our recent sales is due to the plunge of the
commodities' price on the international market," said Megananda,
marketing director of PTPN III.

He said PTPN III expected the privatization would help it
raise investment funds of between Rp 300 billion and Rp 400
billion to support its expansion plan for the next four years.

"We hope the privatization will be done through an exclusive
offering to strategic partners because we also need good
international business partners to improve our performance,"
Megananda said.

President of PTPN IV Zaini Tasbin said the firm was ready for
the privatization and was currently undergoing preparations with
the help of PT Dana Reksa and Jardine Flemming.

"We don't know whether the government will offer the stakes
through the market or to strategic partners. Either way, we would
prefer the government not to sell more than 35 percent of the
company stakes so that it would remain the majority stakeholder,"
he said.

Zaini has strongly denied allegations of a mark-up in the
financial report, saying that the company had to spend more on
bonuses in order to meet demands from workers through protests
and demonstrations.

"There's no mark-up in our financial reports. We have also
never found any corruption or collusion cases in the company's
operations," he said. (cst)