State firms face hard and long road to go international

JAKARTA (JP): The plans of several state-owned companies to list shares on the international stock exchanges must be carefully prepared due to extremely high standards set by international markets and tight competition for foreign capital, an American business analyst cautioned over the weekend.

Georges Enderle, a professor of international business ethics, from the University of Notre Dame, Indiana, U.S., said the Indonesian government and its companies must meet several tough requirements for share listing.

"First, a company must be transparent in its financial activities and reports if it is to be listed on an international market." Enderle told The Jakarta Post after a presentation at a seminar on international business ethics here on Saturday.

Then, the company must have had a good financial performance for the past few years since investors on the international markets prefer financially promising companies, he added.

PT Indosat, a state-owned company which specializes in international telecommunications services, is now preparing to list a portion of its shares on the New York Stock Exchange.

Enderle said investors will also ask for comprehensive information on Indonesia, about where its government policies are heading and about possible risks they would face if they invested their money here.

He conceded that although Indonesia's economic management and performance have often been commended by the World Bank, the country is not well-known on the international financial market.

Indonesia must promote itself to become internationally recognized, he added.

Another problem is that Indonesia is not the only country in the world preparing to privatize its state-owned companies.

Business ethics

Enderle said in the seminar, which was organized by the Kompas daily in cooperation with the Management Institute (LPPM), that international business ethics rose to prominence after the U.S. Congress revealed cases of international corruption such as the Lockheed affairs in 1975.

The affairs, which involved several countries' leaders, including Prince Bernhard of the Netherlands and Japan's former prime minister Kakuei Tanaka, were related to alleged briberies involving the American airplane manufacturer, Lockheed.

Enderle said business ethics are also influenced by economic thinking and acting, which penetrate and dominate more and more domains of life.

Enderle observed that individual or institutional investors in international markets will select companies which meet adequate standards regarding environment, health and safety, human rights and legal practices.(02)