Soeharto warns of foreign takeovers
JAKARTA (JP): President Soeharto warned yesterday of a possible wholesale takeover of Indonesian companies by foreign investors if the nation failed to resolve the economic crisis.
In off-the-cuff remarks during a dialog with small-scale entrepreneurs and cooperative leaders, Soeharto said the government and the people should work hard to hasten the recovery.
"Do you know what will happen if these (upheavals) continue? Domestic industries will be paralyzed and foreign capital will come in and take them over," he said during the dialog in Sukabumi, West Java, where he inaugurated a new industrial center.
Many large Indonesian companies, saddled with massive unpaid foreign debts, are on the verge of bankruptcy and may become easy prey for takeovers by foreign companies.
The government is currently redrafting the bankruptcy law which would pave the way for the forced liquidation of these companies.
Indonesia is steadily opening up its economy to foreign investors as part of the conditions demanded by the International Monetary Fund in return for a US$43-billion bailout.
In spite of his warning, Soeharto expressed confidence that the country would be able to pull itself out of the present crisis and resume the national development program.
He underscored the abundance of national resources, including natural gas and oil, tin, nickel and gold, and the potential of the agribusiness sector to generate foreign exchange revenue.
The government owns and manages 160 companies, 100 of which are financially sound, he said.
The government, he said, could generate funds anytime it wanted by selling part or all of the shares of these companies. "If we don't get assistance from other countries, we could fall back on these assets to substitute the foreign loans," he said.
Ministers are currently in the process of privatizing 12 of these state enterprises by floating their shares on the Jakarta Stock Exchange. Other state companies in sound condition are expected to be listed eventually.
At the inauguration of the Sukabumi Industrial Center, Soeharto was accompanied by nine ministers including Minister/State Secretary Saadilah Mursjid and Minister of Trade and Industry Mohamad "Bob" Hasan.
The Rp 4 billion (US$5,000,000) center, developed by PT Astra Mitra Ventura of the diversified Astra business group, will chiefly house small enterprises and cooperatives producing agriculture implements, handicrafts and machinery.
Soeharto said small enterprises were in a better position to weather the crisis compared to the conglomerates and those that concentrated on exports had even managed to take advantage of the falling rupiah's exchange rate.
The agriculture sector has particularly benefited from the weak rupiah, he said, citing the cases of coffee, cocoa and palm oil.
He said foreign investors were also vying for a stake in the highly profitable palm oil sector. "You only need $200 to produce one ton of palm oil, and you can sell it for $600," he said.
As part of the IMF-brokered reform package, the government opened in February the palm oil sector to foreign investors.
The government announced yesterday it is lifting an export ban on palm oil from today. (prb)