Sunday, February 05, 2006

Army foundation keeps control over Mandala Airlines

Government-sanctioned team to restructure Indonesia's military business decided to let Yayasan Dharma Putra Kostrad, a foundation established by army's strategic reserve command (Kostrad), to own and manage the ailing Mandala Airlines.
Kostrad owns 90 percent shares in Mandala, a regional carrier with 15 Boeing 737/400 and 737/200 in its fleet. In 1994, Soeharto regime bought 10 Boeing 737 from German carrier Lufthansa for US$90 million.
It is not clear though whether Kostrad would move on with its plan to sell the airline.
Last year Kostrad Commander Lieutnant General Hadi Waluyo announced the plan to sell all Kostrad shares in Mandala. Newspapers reported that six businessmen, including Kim Johannes, Hilmi Kalla (younger brother of VP Jusuf Kalla), and Azwar Anas (former minister under Soeharto regime) were interested in acquiring Mandala.
Mandala is one of 213 business units linked to Indonesian military. Last year, the House of Representatives passed a law ordering the military to divest of all its businesses by 2009. While some of the businesses would be transferred to government, private business groups are also competing to control them.
The divestment of Bank Arta Graha (a joint venture between Army's foundation and property tycoon Tommy Winata) to undisclosed group last year, for example, raised people's eyebrows due to lack of transparency about the process.
Kostrad recently admitted that it only has three business units left. Others, like the logging concession in Kalimantan and toll road operator in East Java, have been divested to undisclosed parties.

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