Soeharto warns of foreign takeovers
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)