Rekayasa hopes to acquire foreign firm

Rekayasa hopes to acquire foreign firm

JAKARTA (JP): State-owned engineering and construction company
PT Rekayasa Industry is seeking to acquire a foreign engineering
technology licenser firm prior to its privatization.

Technology and marketing division manager Chandra Widodo said
the acquisition of a foreign technology licenser was necessary to
boost the company's value.

"We're currently in negotiations with four process licenser
companies from the U.S. and Europe. We can't disclose their names
right now because we have to maintain confidentiality," he told
The Jakarta Post on Monday.

A process licenser company is a high-tech firm which owns and
holds the patent for a particular engineering technology.

Rekayasa designs and constructs large plants and other
facilities for several industries, including the cement and
mineral, petrochemical, oil, gas and power, and agro industries.

Rekayasa is one of several state-owned companies set to be
offered by the government to foreign strategic partners as part
of the country's privatization program.

Chandra said the company had adequate cash reserves to finance
the acquisition of a process licenser firm, thanks to its U.S.
dollar-based contracts.

"We have been relatively unharmed by the economic crisis," he
said.

He said Rekayasa had secured several contracts during the
crisis, particularly in the oil and gas industry, which demanded
contractors with strong financial capabilities.

The country's largest and most financially secure engineering
and construction companies are PT Inti Karya Persada Teknik, PT
Tri Patra and Rekayasa. It is no coincidence these are also the
only companies in the sector which are still in business.

Chandra said Rekayasa had recorded positive net profits since
1996, adding that profits peaked in 1998 with a net profit of
more than Rp 80 billion (US$10.74 million).

He said the company's net profit in 1999 dropped to around Rp
40 billion due to a slowdown in investment.

Chandra expected net profit this year to be basically the same
as last year. "However, we believe that after 2001, the industry
should pick up."

Chandra does not expect an immediate return of foreign
investment into the country despite signs of economic recovery
and political stability, a result of questions over legal
certainty.

He said Rekayasa was also planning to expand its operation
overseas, citing the company's ongoing talks with a subsidiary of
Malaysia's Petronas.

"We already have an office in Malaysia. We're trying to enter
the overseas market," he said.

Rekayasa was established by the government in 1981 as part of
efforts to develop national capability in engineering,
procurement and construction, as well as to help prevent the
outflow of hard currency to foreign engineering and construction
companies.

Rekayasa now employs 829 people, including some 500 technical
experts.

The company is 82 percent owned by state-owned fertilizer firm
PT Pupuk Sriwijaya, with the remaining 18 percent divided among
the government and another state-owned fertilizer firm, PT Pupuk
Kaltim. (rei)