Govt should reconsider plan to sell Krakatau shares to foreign firm
Jakarta (ANTARA News) - Defense Minister Juwono Sudarsono said the government should reconsider a plan to sell state-owned steel maker PT Krakatau Steel`s shares to world-class steel producer ArcelorMittal under a strategic parternship scheme.
“We must be wary of the relevant partner`s wish (to buy Krakatau shares) because its track record is not so good. It has laid off many of its workers,” he said at the Presidential Palace here on Thursday.
Juwono said the government had better support any proposal for the privatization of the company through an initial public offering (IPO).
Earlier, Juwono met with PT Krakatau Steel President Director Fazwar Bujang and Chief Commissioner Zaky Anwar Makararim at his office. The three agreed to ask the government to reconsider the plan.
Fazwar said the company was ready to float 20 percent of its shares to the public if the government agreed to the IPO.
He said PT Krakatau Steel was a sound state firm so that the government did not need to sell it to a foreign investor under a strategic partnership scheme.
Last year, the company posted a net profit of around Rp370 billion. In the first quarter of 2008 alone, the figure already reached Rp400 billion, he said.
“The figure suggests that this year PT Krakatau Steel will be able to book a net profit of around Rp1 trillion, which is higher than our projected Rp800 billion,” he said.
The company currently produced 2.5 million tons of steel per annum. Nearly 20 percent of it was exported and the rest sold at home, he said.
Earlier, Head of the Public Relations Service at the Defense Ministry Brig Gen Slamet said PT Krakatau Steel was a national strategic industry that must be preserved.
Not only did it meet national demand for steel but it also operated power plants which supply 400 megawatts to the domestic energy needs. In fact, the company planned to raise the figure to 700 megawatts, he said.
“If it is owned by a foreign company, what will happen next?” he said.
If realized, the plan to sell PT Krakatau Steel shares to a foreign firm would have an impact on the procurement of military armaments because part of their raw materials were supplied by the company, he said.
“This year alone, the government has planned to produce 150 units of armored vehicles and SS-2 assault rifles,” he said.(*)
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