State-owned PT Perusahaan Pengelola Aset (PPA) will establish a finance company in the first half of this year to support the government's restructuring program for ailing state firms.
PPA president director Boyke Mukijat told reporters Wednesday the company was waiting for permits to establish the company from the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK). The new entity would be named PPA Finance.
Boyke said the subsidiary would give financing to ailing state companies using starting capital of Rp 100 billion (US$10.8 million), which will come entirely from PPA.
"For instance, troubled state airline PT Merpati Nusantara Airlines can borrow funds to increase its financial capacity to lease airplanes," Boyke said.
PPA was set up in 2004 to replace the now-defunct Indonesian Bank Restructuring Agency (BPPN), which was tasked to restructure bad assets taken over from troubled banks following the aftermath of the Asian economic crisis in the late 1990s.
PPA can inject government bailout funds in return for restructuring requirements set out for each recipient company.
Besides establishing a new subsidiary to support its work, PPA also plans to sell assets from the BPPN, amounting Rp 4 trillion.
However, Boyke said that this year PPA would target to sell only Rp 1 trillion in SOE assets
Based on 2008 financial reports, PPA holds Rp 5.06 trillion in assets including assets in three banks and 26 non-banks, and 3,507 properties.
Boyke, PPA plans to divest stakes from Bank Maybank (3.17 percent), Bank Permata (0.002 percent), insurance company PT Tugu Pratama Indonesia (17.5 percent), and PT Asuransi Jiwa Tugu Pratama Mandiri (30 percent).
He said credit assets and stakes in Textile Company PT Texmaco group were the most likely assets to be divested. It was reported that PPA has 23 percent or US$ 1 billion of total debts in the Texmaco subsidiary, PT Polysindo.
"We can not sell all assets. The most possible is our assets in Texmaco. Perhaps in the first half of this year, pending the approval of the finance minister," he said.
Boyke revealed that in 2009 PPA gained Rp 112 billion in profits up from Rp 90 billion in 2008. The profits were mostly generated from PPA investments in deposits and equity.
For 2009, the government has set aside Rp 1 trillion for PPA.
