Tue, 13 Jun 2000

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)