Tue, 26 Aug 2003

Sinking Dok Kodja calls for govt bailout

Evi Mariani, The Jakarta Post, Jakarta

Hundreds of workers of sinking state-owned shipyard company PT Dok Kodja Bahari are demanding that the government swap the company's huge debts with the Indonesian Bank Restructuring Agency (IBRA) and the Ministry of Finance into equity participation in the company.

They made the demand during a rally outside the Office of the State Minister of State Enterprises in Jakarta on Monday. About a dozen delegates were invited in to meet top ministry officials.

Dok Kodja's workers union stated that the company was saddled with some Rp 2.14 trillion (US$251 million) debts, of which Rp 1.2 trillion was owed to IBRA, Rp 300 billion to the Ministry of Finance and the remainder to a number of suppliers and other creditors.

They have urged IBRA and the Ministry of Finance to agree to a debt-to-equity swap mechanism instead of selling the debts to private investors. Workers fear that the entry of a new private owner would result in a massive dismissal.

Many state-owned companies are considered inefficient partly due to the huge number of people with low productivity that they employ.

Responding to the union's demands, deputy for commercial service affairs at the Office of State Minister of State Enterprises Suhendro said the workers should have approached IBRA and the Ministry of Finance to settle the matter, instead of going to his office.

However, he promised to discuss the matter with ministries relevant to the shipyard.

The union said the company was facing difficulties in acquiring new contracts.

"Because of our company's negative balance sheet, clients are looking elsewhere. They prefer other shipbuilders," a worker read from a statement prepared by the union.

The union also said the shipyard's bad debts had prompted suppliers and subcontractors to ask for higher prices, leading to high-cost production.

Since the late 1990s economic crisis, Dok Kodja has faced a number of bankruptcy petitions filed by creditors because of its failure to repay maturing debts.

In 2000, the Hongkong Chinese Bank, Ltd. filed a bankruptcy suit against Kodja for US$3.5 million in promissory notes that matured in early 1998.

The company reportedly survived three bankruptcy suits previously on a mere technicality.

The core business of the company, whose major assets are its shipyards, are building various kind of ships.

In 1996, Kodja made a large vessel worth $55 million, ordered by Swedish company Raderi AB Gotland. Reportedly, the vessel could transport 200 trailer trucks and 200 passengers.