Sale of Texmaco assets to go ahead as scheduled: Official

The Jakarta Post, Jakarta

The Finance Ministry said it will push ahead with its plan to divest assets of the Texmaco Group to private investors despite a proposal by the Defense Ministry that the company's engineering subsidiaries be turned into state firms.

The Defense Ministry said the subsidiaries have technological knowledge and manufacturing facilities useful to the military.

However, the Finance Ministry said it had doubts over the possibility and referred to an audit from state R&D agency BPPT showing the equipment -- which will be among the assets auctioned -- was too outdated for such a purpose.

"Most of the equipment would be difficult to get up and running again, so I think the (Defense Ministry's) proposal should be reconsidered," the Finance Ministry's Director General for State Assets Hadiyanto told Antara on Wednesday.

Hadiyanto said the state already had arms supply manufacturer PT Pindad and avionics firm PT Dirgantara Indonesia (DI) for the Defense Ministry's needs, adding the assets sale would go on as scheduled.

The Finance Ministry plans to offer the Texmaco assets for US$150 million, having secured approval for the sale from the House of Representatives in July last year.

The assets, which include the group's textile manufacturing machinery, were currently managed by the state-owned Asset Management Company (PT PPA).

In 2000, the government took over Texmaco after the group defaulted on loans from several state banks during the 1997 Asian financial crisis. The government controls some 70 percent of the group, with the remaining share held by previous owners.

PT Bina Prima Perdana was set up as a holding company for the group's textile-related subsidiaries, and PT Jaya Perkasa Engineering for its engineering business units.

The PPA held an auction for the Texmaco assets in February, but announced no winner when three bidders offered between $10 million and $45 million.

Another sale was planned for September, but was postponed until next year's first quarter, the PPA said.

The Defense Ministry in August sent a letter to President Susilo Bambang Yudhoyono, requesting PT Texmaco Perkasa Engineering be acquired and turned into a state firm.

The Defense's Ministry's Secretary General Sjafrie Sjamsoeddin said the group's subsidiary should be retained because it had worked with both Pindad and DI in projects relating to the military's weaponry system.