Texmaco business should be protected, says President

Texmaco business should be protected, says President

JAKARTA (JP): President Abddurrahman Wahid reiterated on
Thursday that the business of the Texmaco group should be
protected and further developed due to its promising future,
despite the controversy over its debts to state banks.

Abdurrahman said he had asked Coordinating Minister for
Economy, Finance and Industry Kwik Kian Gie to discuss with the
Indonesian Bank Restructuring Agency (IBRA) an arrangement
whereby the Texmaco group's debts to state banks would be
converted to at least 52 percent equity for the government.

"This does not mean that I favor particular businesspeople. My
sole intention is to protect Texmaco as a viable business
investment," the President added on the sidelines of a political
seminar on direct election of the president.

According to the President, Texmaco's debts to state banks are
worth at least 52 percent of the total shares of the group which
has large stakes in synthetic fiber, textiles, garments, textile
machinery, machine tools, as well as truck and tractor
industries.

IBRA is now seeking to restructure Rp 14.9 trillion (US$1.75
billion) of Texmaco's debt, which was transferred from state Bank
BNI and other banks to the agency.

One possible avenue for restructuring the debt would be to
convert it into equity, which would leave IBRA with majority
stakes in the Texmaco companies.

Texmaco has been embroiled in controversy since late last year
after allegations that the huge loans it borrowed from state
banks in 1997 and 1998 had breached lending rules and were made
after pressure from then president Soeharto.

Last week, the Attorney General's Office dropped its
investigation into the issue, saying there was no evidence the
state had suffered losses because of the loans.

The deputy attorney general for special criminal cases,
Ramelan, told reporters last Friday they discovered that the
government didn't suffer financial losses from the issuance of
export credits to Texmaco in 1998.

There wasn't enough evidence for further investigations,
according to expert witnesses from Bank Indonesia and the
Government Finance Controller (audit agency), Ramelan added.

The witnesses also said there was no evidence to suggest that
Indonesia's ex-president Soeharto had influenced the granting of
the export credits, he said.

The allegations were first raised in public late last year by
then minister of investment and state enterprises Laksamana
Sukardi who last month was sacked from the Cabinet by
Abdurrahman.

Many House members, lawyers and anti-corruption organizations
have criticized the stoppage of the Texmaco investigation as an
act of favoritism.

Starting its business in textile trade in 1962, Texmaco has
now been transformed into a big group of companies that
manufactures synthetic fiber, textiles, garments, textile
machinery, machine tools, trucks, small tractors and a wide range
of other engineering goods

Texmaco factories, including a 360,000-ton capacity purified
terephtalic acid factory in Karawang, West Java, are now spread
widely in several towns across Java.

Texmaco's engineering goods such as textile machinery, machine
tools, automobile components, fabric and garments have entered
the market in South Africa, Southeast Asia, the Middle East,
Europe and the United States.

The company said its fabric had widely been used by well-known
branded apparel makers such as Marks & Spencer, Polo Ralph
Laurent, Tommy Hilfiger, Levi's and Nike.

Three Texmaco subsidiaries, PT Texmaco Jaya (textile and
garments), PT Texmaco Perkasa Engineering (metal, machinery and
trucks) and PT Polysindo Eka Perkasa (synthetic fiber and fabric)
have been listed on the Jakarta Stock Exchange.

The group directly employs a total of 50,000 workers and had a
cumulative export value of US$900 million in 1997-1999. It also
supplies basic materials to 270 other companies with 150,000
workers.

On the occasion, the President also talked about efforts to
promote industrial exports in cooperation with neighboring
countries.

Citing an example, he recounted his recent talks with
Singapore Prime Minister Goh Chok Tong whereby he suggested that
Singapore allocate to Indonesia 20 percent of its textile and
garment export quotas, which the island republic does not use.

Referring to the economic vision of his eight-month old
government, Abdurrahman said the economic principle it was
pursuing was based on a competitive, efficient and open market
system.

But the national economic policy focuses on the development of
agriculture and small and medium-scale enterprises, Abdurrahman
added. (prb)