State-owned Inhutani I posts $13.86m in pretax profits

JAKARTA (JP): State-owned forestry firm PT Inhutani I reaped a pretax profit of Rp 31.88 billion (US$13.86 million) last year, more than double its pretax profit for 1995, company president Abdoel Fattah said yesterday.

Fattah said Inhutani I's 1996 pretax profit had exceeded the company's budget target by 148 percent, and was 104 percent higher than the its pretax profit for 1995.

But the company only gained Rp 174.58 billion in total revenue, or 71 percent of its target and 54 percent above its total revenue for 1995.

From its core forestry business, the firm sold 579,949 cubic meters of logs to local wood-based industries. This was only 72 percent of its target for last year and 99 percent of its 1995 sales volume.

"The sale of logs was short of the target because of unfavorable economic conditions," Fattah said.

Inhutani I produced 798,782 cubic meters of logs last year, or 84 percent of its target and 94 percent of its production in 1995. The logs were harvested over 26,551 hectares.

Fattah said Inhutani expected to reap a pretax profit of Rp 28.05 billion this year, 12 percent lower than last year's pretax profit.

The profit projection was based on the assumption that economic conditions this year would be similar to those last year, he said.

Fattah said Inhutani I's low profit target for this year was "realistic" because sales of timber and timber products would be more restricted by "green movements" of environmentally-aware consumers.

He said Inhutani I, one of six state forestry enterprises, did not earn much in its product-diversification and wood-processing businesses such as door and window production.

Minister of Forestry Djamaludin Suryohadikusumo has repeatedly called on plywood companies to restructure their industrial facilities because large-diameter logs, which are used by plywood firms, are becoming scarcer.

Most wood-based firms in Indonesia produce plywood.

Djamaludin said wood-based firms should move into industries that used small-diameter logs such as medium density fiberboard and pulp and paper industries.

Fattah, who was accompanied yesterday by Director of Production Sri Soediharto and Director of Finance Soewarni, said the government should give more independence to state firms.

He said that, although state firms had a big moral responsibility to the state and the people, they should be allowed to operate like private enterprises in business.

"On one hand, state firms have an extensive role, but on the other, they are limited by rules and bureaucratic regulations which make it hard for them to move dynamically," he said.

Fattah said it was time the government deregulated these rules and gave state firms a bigger say, particularly in profit-seeking activities.

Soediharto said Inhutani I, for example, was required by law to make bids for procurements of large quantities of goods and services. And the firm was not allowed to make its own annual logging plans.

"This is very time-consuming because everything must be done in many stages," he said.

Soewarni said state firms had to be audited by at least three different government offices.

"It is very frustrating because if we had a choice, we would rather pay a public auditor and save a lot of time. We have our own money, so we should be able to use it as we like," she said. (pwn)