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.

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