State firms must buy JSX shares

State firms must buy JSX shares

By Kornelius Purba

CAPE TOWN, South Africa (JP): President Soeharto has
instructed monetary authorities to disburse the US$5 billion
standby loan from Singapore and ordered state firms to use one
percent of their net profits to buy shares on the Jakarta stock
exchange, an Indonesian business leader said here yesterday.

Aburizal Bakrie, chairman of the Indonesian Chamber of
Commerce and Industry (Kadin), said the President instructed that
the $5 billion standby loan from Singapore be lent to national
companies through state banks.

"State companies were ordered to use up to one percent of
their profits to buy shares or mutual funds in a bid to
strengthen the capital market," Aburizal added.

Aburizal told journalists after accompanying the President to
visit an Indonesian trade exhibition here that big and middle-
scale enterprises could borrow money from the standby loan with a
17 percent interest rate per year.

Aburizal and 10 other Kadin leaders met with Soeharto Thursday
evening at the President's suite at Mount Nelson Hotel to report
the plan on concerted efforts to bolster exports to South Africa.

Aburizal said the new measures were designed to help increase
exports and to revive the domestic stock market which had been
battered since the July outbreak of the rupiah turmoil.

The Jakarta Stock Exchange composite index has been falling
steadily since July and further plunged yesterday to 391.25 to
hit a 50-month low. The index touched an all-time high of 742.95
in early July.

Singapore pledged last month a $5 billion standby loan to
supplement the International Monetary Fund (IMF)-led aid package
of $23 billion to support Indonesia's economic stabilization
programs.

Singapore Finance Minister Richard Hu told his parliament in
Singapore Wednesday that the standby loan was a back-up facility
which would be drawn upon only if other loans from various
international institutions had been exhausted.

Hu told Singapore's parliament that the five-year standby
commercial loan would be drawn in tranches of $1 billion at the
request of the Indonesian government.

Aburizal told Indonesian journalists who joined the
President's entourage that the use of the Singaporean loan would
be patterned on the disbursement of the Rp 2 trillion fund from
PT Jamsostek, the state-owned social security company.

"The President assured us that we do not need to worry because
with our (good) economic growth we will be able to repay all of
our debts as we are only facing a short-term problem and not a
long-term one," Aburizal remarked.

The chairman of the Bakrie Brothers Group praised Soeharto's
decision as "a fresh wind and a breakthrough for national
enterprises" and hoped the instruction could be implemented
quickly.

Soeharto recently instructed PT Jamsostek to allocate Rp 2
trillion of its investment fund to export-oriented small firms
and another Rp 1 trillion to low-cost housing developers.

"Jamsostek will receive 14 percent in interest per year from
their funds placed in state banks, which would then channel the
funds to small firms at 17 percent," Minister of Manpower Abdul
Latief said Monday.

President Soeharto opened an Indonesian Exhibition at the
civic center here yesterday. The five day exhibition features 30
companies, including the state-owned aircraft manufacturer PT
IPTN, the Texmaco group and cosmetic producer PT Mustika Ratu.

"For this year alone we can export textile products and
machinery worth up to $30 million to South Africa," Texmco
Chairman Marimutu Sinivasan said.

President Soeharto arrived here Thursday for a three day-state
visit where he held bilateral talks with President Nelson Mandela
Thursday.

Soeharto also visited yesterday the cemetery of Indonesian
national hero Sheikh Yusuf. The legendary ulema was expelled by
Dutch colonial authorities in the 17th century. He was declared a
national hero in 1995.

Soeharto and his entourage will leave for Vancouver, Canada,
this morning. Before arriving in Vancouver, he will stop over for
one night in Cancun, Mexico, for acclimatization purposes.

Share prices -- Page 12