When SOE Minister Wants a 'BUMN Tower'

Minister for State Enterprise Mustafa Abubakar encourages Wijaya Karya, state-run construction company and other state-owned companies (SOEs) to develop the so-called ‘BUMN Tower’. He hopes the tower could be similar to that of Petronas tower in Malaysia.

The minister made the statement when delivering a speeching marking the 50th anniversary of PT Wijaya Karya (perserso) Tbk.

One would wonder what comes into the mind of the minister when he made such statement. Do we really need this? Isn’t that mean the state-run companies are just following Malaysia? Aren’t there any other ways that make the state-owned companies to be proud of than just a tower? Why don’t focus on, improving performance so that the company or SOEs can pay bigger dividend and tax every year and create a lot of jobs? Well, it is up to the SOEs.

Meanwhile, the SOE minister said the anniversary is a right moment for the company to retreat and move forward and faces future challenges. “Now is the right time for Wika to continue to show its masterpiece both on national and global scale,” Mustafa said, as quoted by Bisnis.com.

Among the well-known projects of Wijaya Karya are coal-fired power plants (PLTU) of Labuan and Indramayu, Suramadu bridge and BI building. (Roffie Kurniawan)

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PP kicks off stock trading

State-owned construction firm PT Pembangunan Perumahan (PTPP) Tbk has kicked off the trading of its stocks on Indonesia Stock Exchange (IDX). The stock gained Rp10 to Rp570 in the opening session this morning. At that price, PTPP has market capitalization of US$293 million.

PTPP lists 4.842 billion issued shares, consisted of government shares of 2.469 billion, workers (1.333 billion), and public (1.038 billion). PTPP raised Rp581 billion from the IPO, of which 59% will be utilized for new investments and 41% for working capital.

The underwriters (Mandiri, Danareksa, and DBS Vickers) claimed an oversubscription of 1.7 x on total offer of Rp900 billion. Fidelity is reportedly one of the buyers of IPO.

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Privatization & rightsizing

Privatization and rightsizing are two magic words for Indonesia's state-owned enterprises minister, including the newly appointed Mustafa Abubakar. 

Abubakar said he would continue the programs started by his predecessors. So, there will be no substantial change in the issue of interest of investors. As to whether he could deliver the plans, we may have to see what happened in the past five years. 

His predecessors, especially Sofyan Djalil and Sugiharto, pledged in their early days in office to privatize tens of SOEs. Sugiharto, for example, once said he would bring 40 SOEs to stock market through IPO. Djalil, who replaced Sugiharto, also pledged similar plan. Both also talked about consolidation of SOEs through merger of companies in the same sector or the establishment of holding companies.

Garuda Indonesia and Krakatau Steel are companies repeatedly tipped for privatization, either through direct placement or initial public offering (IPO) in the past five years. Both have "survived" direct placement to strategic investors, as the cabinet was split on such privatization scheme. IPO was considered the "safest" way to privatize. Looks like these companies are scheduled for IPO next year. Let's see whether Abubakar could make it happen.

As for Garuda Indonesia the main concern is restructuring of its loan from state-bank Mandiri. While for Krakatau, it is not clear whether the steel giant itself will be offloaded or subsidiaries like PT KHI Pipe and PT Latinusa.

Talks about holding companies for mining (Antam, Bukit Asam, and Timah) or banks (Mandiri, BRI, BNI, BTN, and BEI) or plantations, fertilizers, have filled media reports in the past five years. None has been established.

We know that only significant privatization in the past five years is Jasa Marga. The other is second offering of state-bank BNI. (fh/ya)

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PTPN III profit drops 60%

State-owned plantation company PT Perkebunan Nusantara III reported net profit of Rp210 billion in the first half 2009, dropped 60% from the same period last year on lower sales and margin.

According to the company's financial report published this morning, PTPN III reported net sales revenue of Rp2.01 trillion, declined 19% from the same period last year, while cost of goods sold increased 10%. As a result, PTPN recorded operating profit of Rp208 billion, slashed 73% from Rp779.5 billion in H1 2008.

PTPN III is one of the largest state-owned plantations with total asset of Rp5.13 trillion as of June 30, 2009. The company has total liabilities of Rp2.68 trillion. Government has repeatedly announced initial public offering (IPO) plan for this company, along with other state-owned plantations. It is not clear when the IPO will finally be materialized. (ya)

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State fertilizer cos booked US$210 M profit

PT Pupuk Sriwijaya, parent company of state-owned fertilizer producers, reported net profit of Rp2.112 trillion last year, surged 32% from 2007 on higher sales and operating margin.

According to Pusri's financial report published this morning, the company recorded net sales revenue of Rp36 trillion or about US$3.6 billion (at Rp10000/USD) last year, jumped 63% from 2007 at Rp22.2 trillion.

Pusri is the parent company of PT Petrokimia Gresik, PT Pupuk Kujang, PT Pupuk Kaltim, PT Pupuk Iskandar Muda, and PT Rekayasa Industri (engineering firm). Pupuk Kaltim is in the process to raise funds from the capital market.

Pusri booked operating profit of Rp4.78 trillion last year, increased 73% from 2007 and then net profit of Rp2.12 trillion (against Rp1.58 trillion in 2007).

Pusri had a consolidated asset of Rp31 trillion as of December 31, 2008, increased 36% from December 2007. The fertilizer companies normally produce ammonia, urea, and compound fertilizers.

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Two Danareksa directors resigned

Two directors of state-owned investment bank Danareksa---Harry Wiguna and Wazhary Wardaya---have been asked to resign.

"They agreed to resign as of August," one executive at the state-owned enterprises ministry said.

Harry Wiguna, former director of Indonesia Stock Exchange (IDX), will be replaced, reportedly, by Stephanus Turangan who has just resigned from Deutsche Bank. Turangan was managing director of PT Mandiri Sekuritas, a subsidiary of Bank Mandiri. 

Meanwhile, Wazhary Wardaya will, reportedly, be replaced by Heru Adiningrat, former director of PT Mandiri Sekuritas, who is currently vice president director of PT Semen Gresik (SMGR) Tbk. 

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Bukit Asam H1, below target

State-owned coal producer PT Tambang Batubara Bukit Asam (PTBA) Tbk reported lower sales than its projection in the first half 2009 on weak demand. 

Bisnis Indonesia reported today that while the company recorded higher sales than the same period last year, it is below the projected 10%-15% growth. But the company was optimistic it could reach its whole year target. Bukit Asam reportedly sold 5.85 million tons of coal in H1 2009, of which 63% to domestic and 37% to export markets.

Bukit Asam planned to boost its sales to 15.5 million tons this year, increased 19% from last year's 13 million tons. The company and Rajawali Corp are partners in PT International Prima Coal (IPC). Bukit Asam spent US$17.85 million to acquire IPC shares last year.

According to the newspaper, Bukit Asam also plans to acquire greenfield coal mines this year, reportedly bigger than IPC.

Bukit Asam stock price surged from Rp4150 in October 2008 to Rp13,600 in June 10, 2009. Since then the stock retreated to as low as Rp10300 late last month, but recovered to close at Rp11400 last Friday.

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PLN director detained

Haryadi Sadono, non-active director for Java Bali Area at PT Perusahaan Listrik Negara (PLN), has been detained by Corruption Eradication Commission (KPK) for his role in an alleged corruption in the customer management system (CMS) project.

Sadono, former general manager for East Java area of PLN, is accused of corruption in the project. Alamsyah Hanafiah, Sadono's lawyer, dismissed the allegation saying "Sadono only continued the policy from previous officer in charge."

The CMS contract, according to Hanafiah, was a product of the previous director, Fahmi Mochtar, who is currently CEO of PLN. "It is true that Sadono signed the bills. But the direct appointment is regulated by board decree signed by Edi Widiono (former PLN CEO)."

KPK investigates corruption in the direct appointment (without competitive bidding) of CMS supplier. The State loss is predicted at Rp80 billion or US$8 million. 

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Iglas and Sandang had little choice than to liquidate

Government had little choice than to liquidate two state-owned companies PT Industri Sandang Nusantara (textile) and PT Industri Gelas (glass manufacturer) on years of losses.

SOEs minister Sofyan Djalil said both companies have no prospect to continue their operations, Kompas reported this morning. 

Government has 63.82% shares in Industri Gelas and 100% at PT Industri Sandang. Last year, Industri Gelas booked net loss of Rp81.3 billion, while Industri Sandang posted Rp71.9 billion losses. But government decided to help three troubled SOEs: PT Merpati Nusantara Airlines, PT PAL Indonesia (shipbuilding), and PT Djakarta Lloyd (shipping).

Industri Sandang operates nine factories, of which five has been closed down and leaving 2,000 workers without job. Four units remained in operation with about 4,300 workers. Government initially planned to inject Rp50 billion to revive the company, but failed. Last February, about 500 workers went on strike to demand explanation about the clarity of their status.

Meanwhile, PT Industri Gelas (Iglas) is one of the oldest bottle manufacturers in Indonesia with installed capacity of around 128,000 tons per year. The company once controlled 35% market share. 

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Krakatau Steel profits surged 46%

Against all odds, state-owned steel manufacturer PT Krakatau Steel reported net profit of Rp459.6 billion last year, jumped 46% from 2007 on stronger sales. 

Krakatau recorded net sales revenue of Rp20.6 trillion or about US$2 billion last year, increased 39% from the previous year. As cost of goods sold also surged 37%, the company reported gross profit of Rp2.7 trillion. Operating expenses also increased significantly last year, but Krakatau managed to record operating profit of Rp1.36 trillion, jumped 71% from the previous year.

Krakatau is the largest steel player in Indonesia with total asset of around US$1.5 billion. Government has repeatedly announced the plan to privatize this company, but delayed significantly due to various issues. Some wanted private placement, while others insisted on privatization through stock market. World's giant steel player Mittal has repeatedly launched initiatives to acquire significant portion of the shares.

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PLN loss surged 24%

PT Perusahaan Listrik Negara (PLN) booked net loss of Rp1.66 trillion in the first quarter 2009, surged 24% from the same period last year due to 36% drop in government subsidies.

PLN, the state-owned electricity provider, reported 4% growth in electricity sales revenue to Rp20.9 trillion even though revenue from industries dropped 9%. Government subsidy declined 36% in the period to Rp9.5 trillion. Fuel cost actually slashed significantly by 28%, mainly due to lower fuel oil prices, while cost for coal skyrocketed by 102%. Other than that, cost of electricity purchase from IPPs also increased 29%. 

PLN reported operating profit of Rp1.3 trillion, but with interest expenses on loans at Rp1.47 trillion and loss in foreign exchange translation of Rp1.3 trillion, PLN then reported net loss of Rp1.2 trillion. But net loss for the computation of basic loss per share amounted to Rp1.66 trillion, increased 24% from Rp1.34 trillion in the same period last year.

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