Strategic firms plan to set up more subsidiaries

Strategic firms plan to set up more subsidiaries

JAKARTA (JP): State-owned companies supervised by the
government's Management Board of Strategic Industries (BPIS) plan
to set up more subsidiaries even though some of them suffered
losses last year.

State Minister of Research and Technology B.J. Habibie, who
also chairs BPIS, said in a hearing with House Commission X for
technology that five of the 10 enterprises supervised by the
board suffered financial losses in 1995.

BPIS groups aircraft manufacturer PT Industri Pesawat Terbang
Nusantara (IPTN), shipbuilder PT PAL Indonesia, steel producer PT
Krakatau Steel, telecommunications equipment manufacturer PT
Inti, train equipment producer PT Inka, electronics manufacturer
PT LEN Industri, engineering firms PT Barata Indonesia and PT
Boma Bisma Indra, military equipment manufacturer PT Pindad and
explosives manufacturer PT Dahana.

"Most of the BPIS enterprises, especially those applying high
technology, are not profitable because they focus more on the
development of knowledge and technology so that we have a chance
to learn," Habibie said Tuesday.

Among the companies suffering deficits in 1995 were PAL, IPTN,
Barata and Boma Bisma Indra.

Habibie refused to disclose the total financial losses
incurred by the firms.

Meanwhile, Inti, LEN and Krakatau Steel have showed
significant growth in the last few years. The government is
currently preparing the initial public offering of Krakatau Steel
shares to generate funds of around $700 million in the second
half of next year.

Subsidiaries

Habibie said that the firms planning to establish subsidiaries
are LEN, Krakatau Steel, Inti, PAL and Pindad.

LEN plans to set up a company to produce plant control systems
and provide power plant services, while PAL aims to have an
affiliate to produce offshore platforms, and Inti plans to set up
a cable manufacturing company, he said.

He said that Pindad will establish a new company producing
computers for aircraft manufacturing, while Krakatau Steel plans
to set up three subsidiaries to produce electrical steel,
stainless steel and tailored blanks.

He said that the establishment of the subsidiaries, mostly in
partnership with overseas firms, is planned for the 1997/1998
fiscal year.

Inti, which is licensed to operate cordless telecommunications
of the Personal Handy-phone System, currently has one subsidiary.
Inka also has one, Boma Bisma Indra one, Krakatau Steel seven,
IPTN six, PAL three, Pindad two and Barata has two.

Domestic jet

Meanwhile, State Minister/Cabinet Secretary Saadillah Mursjid
said on Tuesday that PT Dua Satu Tiga Puluh (DSTP), a company
newly established to finance the production of N-2130 jets by
IPTN development, has sold 400,000 of its two million shares.

Saadillah, who is also DSTP's president, was quoted by Kompas
daily as saying that the shares -- each worth Rp 2.3 million or
US$1,000 -- were acquired by 180 buyers.

DSTP was established last February to seek funds for producing
N-2130, the nation's first domestically-made jets.

When announcing the establishment of DSTP, President Soeharto,
who is DSTP's chief commissioner, said that the company will seek
US$2 billion for the designing, production, certification and
marketing of N-2130 jets.

DSTP and IPTN signed a deal in February to cooperate on the
designing and marketing of N-2130 aircraft, the first of which,
with a capacity of 130 seats, is scheduled to enter the market in
2006.

Soeharto has appealed to all Indonesians to contribute to the
jet project by buying DSTP shares, to be sold directly without
going through the stock market.

"This doesn't mean that the public are forced to buy the
shares," Saadillah said, admitting that the price is quite high.

He said that DSTP cannot enter the capital market yet as there
is a requirement that all companies present financial reports for
the past three years before being listed. (icn)