Two state banks take over management of Kanindo

Two state banks take over management of Kanindo

JAKARTA (JP): A consortium of two state banks, Bank Bumi Daya
and Bank Pembangunan Indonesia (Bapindo), has taken over the
management of the debt-ridden PT Kanindo Success Textile until it
is ready for acquisition by a third party.

"An agreement on the takeover was actually signed by Minister
of Finance Mar'ie Muhammad last month," an informed official, who
insisted on anonymity, told reporters yesterday.

The official said that under the agreement, BBD's president,
Iwan Prawiranata, will coordinate the management takeover.

He declined to elaborate on details of the consortium's plans
for settling Kanindo's financial fiasco, which reportedly reached
over Rp 500 billion (US$245 million), but said the consortium is
now seeking reliable investors to help finance and even take over
Kanindo's textile business.

The source added that any investors seriously interested in
taking over Kanindo should be consulting with the consortium in
order to increase their chances for later approval from the
Minister of Finance.

He said that the consortium together with Minister of Industry
Tunky Ariwibowo, finance minister Mar'ie, the senior director of
Bank Indonesia (the central bank), Hendrobudiyanto, director
general of financial institutions of the Ministry of Finance,
Bambang Subianto, and director general for development of state
companies Martiono Harianto, was considering Gabungan Koperasi
Batik Indonesia, Texmaco Group, Johannes Kotjo and Kim Johannes
Mulia as possible investors.

Tunky was quoted by Antara as saying after meeting with the
consortium and the Minister of Finance on Wednesday that the
consortium has thus far not decided which investors are eligible
for taking over Kanindo.

"Let us wait and see," Tunky said.

Director General of Tax Fuad Bawazier, who is also a
commissioner of BBD, had little to say about the Kanindo case.

"One comment I can make is that investors who will be in a
position to take over the textile business will not have to pay a
capital gains tax," he said yesterday.

"Even Robby Tjahyadi will not be taxed on the transaction
gains," he added.

Criticism

Responding to the Kanindo case, prominent economic analysts
recently criticized state banks, from which the chairman of the
Kanindo Group Robby Tjahyadi tapped credits for financing his
textile project, due to their lack of supervision on the funds
provided to Kanindo.

Anwar Nasution, an economics lecturer at the University of
Indonesia, earlier blamed the state banks, BBD and Bapindo,
because they did not have enough power to force their debtors to
honestly report the banks' investment in the Kanindo project.

He said that Kanindo's bad debt showed hidden collusion
between officials of the banks and Kanindo.

Rizal Ramli, managing director of the Advisory Group in
Economics, Industry and Trade (Econit) told The Jakarta Post that
he was convinced that Kanindo's chairman has shifted his credits
for financing Kanindo Success Textile's expansion into the
property business.

"By doing so, Kanindo has caused irregularities to the banking
fund. He should be responsible for the resulting bad debt in the
textile business," he added.

Antara reported yesterday that the government has thus far
given Gabungan Koperasi Batik Indonesia the green light to become
one of the new investors for dealing with the takeover of
Kanindo.

"But all things related to the takeover by investors will be
officially announced later by the Minister of Finance," the
source said.

The legislator BN Marbun meanwhile expressed his pessimism
over the possible takeover by the Batik cooperatives association,
saying that the association had no experience with exports.

"If the association will finally be allowed to become involved
in Kanindo, the financial management including export activities
should have been anyway given to other professionals in managing
export activities," he reminded.

"I would say that the BBD-Bapindo consortium can take the
initiative in hiring professionals to help it manage Kanindo," he
said. (fhp/rid)