Locals to cut Japanese dominance in Chandra Asri

The Indonesian Bank Restructuring Agency and other local shareholders are likely to seek the reduction of the Japanese dominance in the operation of petrochemical giant PT Chandra Asri Petrochemical Center during the upcoming shareholders meeting.

Sources told Bisnis Indonesia daily that the shareholders meeting, which would be held in June this year following the completion of the company?s debts worth over US$1,24 billion to the Indonesian Bank Restructuring Agency (BPPN) and the Japanese companies including Marubeni, would among others change the composition the company?s executive and supervisory boards.

At present the Japanese investors, which only owned 23.81 percent of Chandra Asri, almost take control of every aspects of the company?s activities such as in the procurement of raw materials, production and marketing.

"In the purchase of raw materials, the company arranges such a mechanism so that that it could be imported through Marubeni," the source said, adding that in order to reduce operating costs, the local shareholders hoped the company could procure its raw materials from local sources.

The source estimates the annual purchases of the raw materials would cost the company more than US$ 300 million. Although the company?s total sales reached about $600 million a year, its combined financial loss has reached over $700 million.

The debt restructuring agreement has changed the composition of share ownership of PT Chandra Asri. Majority shareholder Prajogo Pengestu?s share ownership declined to 49.55 percent from 76.19 percent, while those of Japanese consortium (Marubeni, Showa Denko and others) rose to 24.59 percent from 23.81 percent. BPPN obtained 25.86 percent share in the company following the conversion of its loan to equity. (*)