Prasidha winding down its coffee trading

Prasidha winding down its coffee trading

SINGAPORE (Dow Jones): Indonesian coffee exporter PT Prasidha Aneka Niaga said on Wednesday that it's winding down its coffee operations, and it isn't clear at this stage if it will resume full-scale trading.

A company official at its Jakarta head office said Prasidha's coffee operations in Palembang, the capital city of South Sumatra, has been closed since two months ago, but the company has kept some operations in its Lampung office.

The provinces of Lampung, Bengkulu and South Sumatra account for 75 percent of Indonesia's coffee production.

"There are still some outstanding contracts that need to be fulfilled," the official said.

He said it is uncertain if the company will resume full-scale trading, as it is "still negotiating with the banks."

The company, one of Indonesia's largest coffee traders until two years ago, has wound down its coffee business since the start of the year because of financial problems, trade sources said.

"They have slowed down a lot since the economic crisis. It got worse when their bank was shut down... Perhaps people aren't selling coffee to them anymore," said a trader in Medan, North Sumatra.

Prasidha owes a total of Rp 1.4 trillion (US$118.6 million) to the Indonesian Bank Restructuring Agency, according to figures from Antara, Indonesia's state-owned news agency.

Last October, Indonesia's central bank had ordered the closure of Bank Prasidha Utama, whose owners are the Prasidha group, in a bid to consolidate the banking sector in the aftermath of Indonesia's crippling recession.

Since 1997, Indonesia has closed 68 banks and nationalized a further 12, issuing around Rp 650 trillion in recapitalization bonds.