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Govt takeover of Inalum worries employees
The final shipment: Stacks of aluminum ingots, approximately weighing 11,500 tons, are held at the Kuala Tanjung Port in North Sumatra on Oct
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The final shipment: Stacks of aluminum ingots, approximately weighing 11,500 tons, are held at the Kuala Tanjung Port in North Sumatra on Oct. 28 before they are exported to Japan. The government will officially take over aluminum producer PT Inalum from the Japanese consortium on Nov. 1. (JP/Apriadi Gunawan) (JP/Apriadi Gunawan)
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span class="inline inline-none">The final shipment: Stacks of aluminum ingots, approximately weighing 11,500 tons, are held at the Kuala Tanjung Port in North Sumatra on Oct. 28 before they are exported to Japan. The government will officially take over aluminum producer PT Inalum from the Japanese consortium on Nov. 1. (JP/Apriadi Gunawan)
The government finally secured approval from the House of Representatives on Wednesday to take over PT Indonesia Asahan Aluminium (Inalum) from Japanese consortium Nippon Asahan Alumunium (NAA) after a pompous political drama. The Jakarta Post's North Sumatra correspondent Apriadi Gunawan reported on the concerns of local people and Inalum employees in regard to the takeover plan, which will take place on Friday.
Employees of the North Sumatra-based aluminum producer PT Indonesia Asahan Aluminium (Inalum) are reducing their activities ahead of the government's takeover of the company from the Japanese consortium Nippon.
Most of the 1,340 homes in a housing complex for the company's employees ' located approximately 15 kilometers from the company's smelting plant in Kuala Tanjung, Batubara regency, on 200 hectares of land ' have also been left deserted.
Some Inalum employees said that recently the company's activities had slowed aside from its factory, which had continued its 24-hour operation.
Inalum chief security guard Arifin Hutasuhut said that until the end of this month, the company did not have any business activities apart from shipping its aluminum to Japan for the last time.
'Based on the company's schedule, it will ship its aluminum to Japan for the last time on Oct. 28. That will be the company's final responsibility before being taken over by the government,' he told The Jakarta Post during a recent interview, adding that the company would ship approximately 11,500 tons of aluminum from its Kuala Tanjung pier using a rented ship owned by PT Kuala Jaya Samudera.
Inalum exported aluminum to Japan for the first time on Oct. 14, 1982, after former president Soeharto administrated its factory in 1979. In the company's first export activity, which established Indonesia's reputation among other aluminum exporters, it shipped 4,800 tons of aluminum to Japan.
According to Inalum data, 60 percent of the company's 225,000 tons of annual ingot production was exported to Japan. The remaining 40 percent was used as local commodities for industrial raw materials like electric cables and aluminum plates.
According to data from the State Owned Enterprises Ministry, the company booked net profits of about US$57 million in the 2011/2012 fiscal year which ended in March. In 2012/2013 fiscal year, net profit declined to $24 million.
In the 2013/2014 fiscal year, Inalum is expected to book total revenues of about $555 million, and net profit of $96 million.
Total assets of the company which employs about 1,900 people, reached $999 million as of September, this year.
Inalum employees said their personal welfare improved along with the company's profit.
Hutasuhut said he had enjoyed numerous benefits during his 30-year tenure at Inalum.
'I am very grateful because my salary helped me finance my three children's higher education. One of my children has graduated from university while two of them are still studying at North Sumatera University in Medan, North Sumatra,' said Hutasuhut, who recently received an award from Inalum after more than 25 years of service to the company.
Another employee, Suryono, said he was very happy during his 12-year tenure at Inalum because the company guaranteed his welfare.
He said that when he first joined the company to work as a security guard in 2001, it gave him a base monthly salary of Rp 2.4 million ($215.03). He said that currently he received a base monthly salary of Rp 3.8 million for his work as a machine operator.
'If I calculate my base salary, allowances and overtime, right now I take home more than Rp 6 million a month,' he said, adding that he was fortunate as the total salary was quite generous for a high school graduate like him.
He said that company staffers could receive a monthly salary ranging from Rp 7 million to Rp 12 million. Suryono said that he and other Inalum employees were happy with the Japanese managers who applied strict discipline in their management style.
'Although members of the Japanese management board are very strict, they do value our good performance with a proportionate salary,' he said.
He said he appreciated the Japanese management board who managed Inalum's money transparently so the company could enjoy an annual profit despite the fact that it had to buy its raw materials from Australia.
'We have to allocate our capital to buy the raw materials from Australia. Then we sell the processed aluminum. Those are the only two things that Inalum has been doing all these years, yet we continue to reap annual profit,' he said.
Because of this, he said, he worried about Inalum's financial condition once the Japanese management board left the company on Nov. 1.
Inalum, established in 1976, is 41.12 percent owned by the government and 58.88 percent owned by NAA, a consortium of 12 Japanese companies, including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Mitsui Aluminium Co. Ltd. and Mitsubishi Corporation.
The government has decided to take over the Japanese consortium's shares and firms when the cooperation agreement is scheduled to expire by the end of this month.
The company will then be turned into a state-owned enterprise (SOE) under the supervision of State-Owned Enterprises Ministry. But local governments from several regencies near Kuala Tanjung have also expressed their willingness to take over part of the company's shares so that the local people would have a say in the operation of the company.
Suryono said he was afraid that Inalum would not be able to generate profit if it was run as a state company.
He mentioned some State-Owned Enterprises (SOEs) in Indonesia that suffered from losses and thereby required subsidies from the government despite obtaining its raw materials domestically.
'We have apprehensions about that. Personally, I'm proud and thankful that the government took over Inalum from Japan, but I don't know how it will affect the company's financial performance, which affects the employee's welfare, in the future,' the father of two said.
Some Inalum managerial board staffers said that they were also anxious about the company's future after being managed as an SOE. They said they did not know whether the new management would continue to apply the Japanese management's reward system.
'Honestly, I'm very worried because I know Inalum will be run as an SOE. I don't know what kind of reward system it will apply,' an Inalum junior manager, who refused to be identified, told the Post.
Inalum corporate secretary Deddy P. Tampubolon said the company employed 1,932 permanent staffers and more than 1,000 outsourced workers. Deddy assured the employees that they would not face turmoil in the days leading up to Inalum's acquisition.
'Everything is business as usual here. We face no activity disturbance ahead of Inalum's acquisition,' he said, adding that he did not organize any ceremonies related to the company's takeover in its Kuala Tanjung factory.
He refused to comment on the government's decision to change Inalum's management structure into that of an SOE and said the decision was the shareholders' prerogative.
'That's the shareholders' business. We are just employees here; our duty is to work for Inalum,' he said.
