23 Mei 2008
Krakatau Steel is efficient, profitable

Commenting on The Jakarta Posts article titled "The politicking behind Krakatau Steels planned sale", published on May 14, 2008, we need to clarify the following matters

PT Krakatau Steel (KS) is indeed a national strategic industry, not only from economic, interest, but more and most importantly for national defense. Our products are used to support the vital development of Indonesias military, defense, transportation, in addition to infrastructure development. Therefore it is imperative such an industry has to be protected and should not be viewed simply from a business perspective.

Managing an area of 3,500 hectares, KS is one of the most efficient and profitable state enterprises. We are undergoing a transformation, program in all our business units. The efforts have by far proven successful, with financial results during the first four months of 2008 alone booking a profit of Rp 411 billion, compared to the forecasted profit for the whole year of Rp 430 billion. With this profit we are increasing our projected profit to Rp 800 billion. Furthermore, KSs pension funds have grown to a Rp 1.6 trillion fund.

BHP Steel Australia (now called Bluescope) and KS have successfully cooperated to build a new plant to process cold-rolled steel produced by KS. PT Latinusa, a KS subsidiary, will also invite Nippon Steel as a strategic partner in expanding its production capacity. KS subsidiary, PT Krakatau Wajatama, also has signed an MOU with a large Chinese steel producer to build a one million-ton capacity steel mill in Cilegon. It is therefore groundless to identify KS as being xenophobic.

These facilities enabled KS to build a stronger industry to meet domestic needs. In terms of technology, there are many options around the world which have been implemented at KS. We also have signed an MOU with a German metallurgic and machinery company to revitalize our steel plant.

KS strongly upholds good corporate governance (GCG) which is part of the transformation program being implemented and is strongly endorsed by our stakeholders, especially our chief commissioner, Taufiqurahman Ruki, former head of the Corruption Eradication Commission (KPK). KS got an GCG award as a trusted company from the Indonesian Institute for Corporate Governance (IICG).

An initial public offering on the stock market can further strengthen GCG through transparency. The bearish sentiment in the stock exchange is not occurring in all lines of industries. Value investors are focusing more on the fundamentals of the industri,. Many analysts see such industries as steel, food and oil having strong fundamentals.

KS is also conserving a 22,000-hectare water reservoir, operates Indonesias biggest bulk port and a 400 MW-captive power unit.

Wawan Hernawan

Head of Corporate Communication

PT Krakatau Steel

Jakarta

Source : The Jakarta Post, Page : 11

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