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The
Jakarta Post, Jakarta
State-owned
telecommunications firm PT Telkom and flagship
carrier PT Garuda Indonesia said on Monday that
the condition of their operations were much
different now compared to the gloomy picture
painted by the release of independent audit
results last week. The companies said that they
had taken measures since last year to improve
efficiency and minimize losses. Independent
audits were conducted between 1995 and 1999
on Telkom, Garuda and three other state enterprises
as part of an agreement between the government
and the International Monetary Fund. The audit
results were made public last week. The audit
of Telkom, conducted by Amir Abadi Jusuf & Aryanto,
a member of RSM International, found efficiency
losses amounting to Rp 3.7 trillion (about US$352.4
million), potential losses of Rp 1.8 trillion,
and savings or profit losses of Rp 740.9 billion.
Meanwhile, the audit on Garuda by Hadi Sutanto
& Partners, of PriceWaterhouseCoopers, found
efficiency losses amounting to $1.62 billion,
$698 million in potential losses and $147 million
in lost opportunities for savings or gains.
Telkom director of operations and marketing
Komarudin Sastrakoesoemah said on Monday that
the results of the audit had failed to take
into consideration the economic situation at
the time, especially the impact of the 1997
economic crisis on the company. "Particularly
regarding losses incurred from the joint operation
scheme (KSO), there was nothing else we could
do at the time. The economic crisis had forced
us to revise down our targets," he told a media
conference here, explaining that efficiency
losses from the KSO were reported at Rp 1.1
trillion, and Rp 1.3 trillion in potential loss.
Komarudin also said that the audit had failed
to consider the preferences of the Indonesian
market and had instead taken the benchmark from
a market that could be vastly different to here.
As an example, he referred to the audit's claim
that Telkom had failed to optimize marketing
for voice mail and call waiting features, causing
efficiency losses of Rp 46.9 billion and savings
or profit losses of Rp 8.7 billion. "In advanced
countries the two features are in high demand,
which is not true here where they're not so
popular," Komarudin said. In a similar media
conference late last week, Garuda president
Abdulgani said that, while the audit was a review
of four years of operations, the company had
begun restructuring in the second half of 1998.
"Since then, we have made advances toward corrective
actions and our operations have now improved
significantly," he said. Abdulgani also pointed
out that from potential losses valued at $698
million, some $578 million in taxes and excise
was currently being rectified with the Ministry
of Finance. Garuda's corrective measures include
the closure of 17 flight routes in 1998, staff
cuts in 1998 and the return of uneconomical
leased planes in 1999. The other three companies
audited were PT Pelabuhan Indonesia II, PT Jasa
Marga and PT Perkebunan Nusantara IV. Jasa Marga
will publicly reveal its corrective measures
on Wednesday. The auditors found efficiency
losses totaling Rp 8.5 trillion and $1.62 billion,
potential losses of Rp 7.35 trillion and $698
million, and savings or profit losses of Rp
776.02 billion, Rp 64.7 billion a year and $147
million.
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The
Jakarta Post, Jakarta The current plunge in
oil prices could spell serious trouble for the
country's 2002 state budget due to a significant
revenue shortfall, analysts warned on Monday.
Economist Hendri Saparini of private think-tank
Econit said that if oil prices continued hovering
at the current level of around US$17 per barrel,
the state budget deficit could swell to 3 percent
of gross domestic product from the projected
2.5 percent of GDP. She said that there would
be a potential loss of around Rp 5 trillion
(US$471 million) per year if oil prices fell
by only $1 from the 2002 budget assumption of
$22 per barrel. A greater budget deficit would
trigger fiscal instability, which in turn creates
new risks to economic growth, which has been
projected by the government at 4 percent next
year. "I'm not optimistic that oil prices can
reach the targeted $22 per barrel," Hendri told
The Jakarta Post. Brent crude prices plunged
to a 29-month low of $17.02 per barrel on Monday
amid concerns of an oversupply at a time of
weak demand due to the global economic recession.
The price was still at more than $31 per barrel
before the Sept. 11 terrorist attacks on the
U.S. which exacerbated the current global economic
slump. There are fears that oil prices will
continue to fall as major non-OPEC countries
have resisted demands by the Organization of
Petroleum Exporting Countries (OPEC) to cut
output by 500,000 barrels per day (bpd). The
oil cartel recently agreed to cut production
by 1.5 million bpd only if the non-OPEC players
make a significant output cut as well. Indonesia,
which is the only OPEC member in Southeast Asia,
relies heavily on oil revenues to finance the
state budget. The government has budgeted for
an expected Rp 66.1 trillion from oil and gas
revenues in the 2002 state budget. An expert
from the ministry of energy and mineral resources
previously told the Post that one alternative
for the government to cushion the impact of
the oil price plunge was to consider protectionist
measures for the country's oil sales price at
$22 per barrel through a hedging mechanism.
But economist Bustanul Arifin of Indef (Institute
for Development of Economics and Finance) said
that at the current price of oil, it would be
nearly impossible to achieve the expected target.
"Who would dare purchase the hedging contract...it's
too late. The government should have done it
previously when the prices were quite high,"
Bustanul said. He also stated that despite the
very real possibility that the 2002 oil price
assumption would not be achieved, for political
reasons, the government would not revise its
budget assumption. He said that the government
would prefer to carry over the loss to the 2003
state budget. Some analysts believe the slump
in oil prices will help accelerate the economic
recovery of developed nations such as the U.S.,
which in turn should bode well for the exports
of developing economies like Indonesia. But
Bustanul said that the costs associated with
an oil price plunge outweighed the possible
benefits to the Indonesian economy, adding that
the country's export performance would not necessarily
increase due to a host of domestic problems
including security and labor issues.
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