Suggestion on merger of city-owned firms welcomed

Suggestion on merger of city-owned firms welcomed

JAKARTA (JP): Governor Sutiyoso yesterday welcomed the city
council's suggestion to merge the management of city-owned
companies which operate similar core businesses in a bid to
improve their efficiency.

Sutiyoso said that the basic principle of the idea was good
because it would improve the health of the firms included in the
merger program.

"But we should consider the condition of each company. The
merger should not hamper sound companies.

"We should choose a mechanism which won't 'kill' the good
ones," he said.

The suggestion to merge city-owned companies was raised by
members of the Golkar faction during the council's plenary
session to endorse the 1998/1999 city budget, held last Monday.

The faction head, Fatommy Asaari, said that the mergers would
create more efficient enterprises.

Following merger, the companies would be expected to pay more
money in taxes because they would become more profitable, he
added.

Fatommy said that PD Wisata Niaga Jaya, PT Pulo Mas Jaya and
PD Pembangunan Sarana Jaya had similar core interests in the
hotel and property industries and were suitable for merger, as
did the management boards of Sunter and Pluit which oversee
housing, storage and licensing of development projects.

On Monday, the City Council endorsed an austerity budget of Rp
2.79 trillion (US$279 million) for the 1998/1999 financial year,
a 10 percent decrease of last year, due to the economic crisis.

Sutiyoso reiterated yesterday that the administration was
carefully considering the suggestion, as it would require certain
rearrangements to be made for management and the companies
assets.

According to city administration data, there are 40 city-owned
companies. The revenue raised from these companies is projected
to fall from Rp 55.52 billion in the 1998/1999 fiscal year, down
from Rp 61.39 billion last year.

Sutiyoso also said that the administration had yet to decide
whether to allow the city-owned Bank DKI to merge with banks
owned by provincial governments.

"There are provincial banks with poor performances. If Bank
DKI, which is healthy bank, has to support these banks it will be
too difficult for us," he said.

Deputy Governor for Economic and Financial Affairs Harun Al
Rasyid said earlier that Bank DKI's performance was sound
compared to provincial government-owned banks.

The plan to merge the bank with provincial banks was made in
order to meet the requirement that all banks have a minimum paid-
up capital of Rp 1 trillion by the end of this year.

However, councilors are strongly opposed to the plan, arguing
that the bank is needed to support the city's autonomy.

As of the 30th Sept. last year, Bank DKI had a paid-up capital
of Rp 172.5 billion and held assets worth Rp 4.37 trillion,
according to its latest financial report.

Bank DKI reported a net profit of Rp 35.5 billion for the
period Jan. to Sept. last year. (ind)