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)