Aluminum manufacturer PT Indonesia Asahan Aluminium (Inalum) in Asahan, North Sumatra, has been registering better performance than it did when it was operated by a Japanese joint venture firm.
It had been operated by Japan, as the majority shareholder, since 1976 through Nippon Asahan Aluminium (NAA) with 12 private Japanese firms as part of the joint venture.
The Indonesian government took over Inalum after its contract with the Japanese side expired on October 31, 2013.
Hj Meilizar Latif, a member of North Sumatra`s Legislative Assembly (DPRD), said in 2012, that Inalum, with an annual production capacity of 230 thousand-240 thousand tons, reported a profit of US$12 million in 2010, while its debt burden reached US$70 million.
After it was taken over by Indonesia, the company seems to have increased its production. During the April-December 2014 period, it was able to double its profits as compared to the corresponding period in the previous fiscal year.
"The company booked a net profit of US$128.7 million, up significantly by 201 percent from US$64 million in the fiscal year 2013," Winardi, the president director of PT Inalum, noted in a written statement on Monday, last week.
He remarked that the increase in PT Inalum`s performance was supported by safe and controlled operations, with Lake Toba`s surface elevation at 904.36 meters above sea level. The company was able to operate about 501 of its 510 units of smelting furnaces.
In 2014, the company`s aluminum ingot production reached 199,692 tons, up 4.1 percent from that in 2013.
With regard to the sales of its aluminum ingots, PT Inalum sold 142,925 tons (71.5 percent), up 171.1 percent as compared to 83,362 tons recorded in the same period in 2013.
However, its ingot exports in the same period were recorded at 54 thousand tons (28 percent), down 47 percent from the previous year`s 107,001 tons when it was still a foreign capital investment firm.
The increase in the domestic sales indicated Inalum`s commitment to advance the downstream aluminum industries in Indonesia.
Based on its contribution to the state and according to the directives of the shareholders, PT Inalum has also added dividend worth US$10 million to the government`s portion in December 2014 and has added another interim dividend valued at US$90 million in the book year of 2014.
PT Inalum will continue to maintain its commitment shown in 2014, which is to increase its participation in empowering the people and the surrounding community. It will provide scholarships worth more than Rp8 billion to students in North Sumatra for various levels of education starting from elementary school (SD) to the graduate level (S1) in universities.
The scholarships will be provided to students in the districts/municipalities of Toba Samosir, Samosir, Dairi, Karo, Simalungun, Humbang Hasundutan, Tapanuli Utara, and Tanjung Balai Municipality.
The scholarships for the SD, lower secondary school (SMP), and upper secondary school (SMA) students will be provided from June to August 2015, and those for university students will be handed over from August to October 2015.
The company registering a better performance under an Indonesian management has been lauded by observers, including the non-governmental organization, Indonesian Resources Studies (IRESS).
The IRESS has praised the performance of PT Inalum during the April-December 2014 period, as the company was able to double its profits as compared to that in the previous fiscal year.
"The increase in net profit of PT Inalum indicates that Indonesians in the company improved its management," Executive Director of IRESS Marwan Batubara said in a written statement on Tuesday.
The improvement in Inalum`s performance is reflected in its production of tin ingot, which reached 199,692 tons, recording a 4.1 percent increase from 190,363 tons produced in the corresponding period in 2013, he pointed out.
Batubara affirmed that Inalum`s success was no easy feat, considering the performance of the managers of the company. This means that Inalum made a series of fundamental improvements that enabled the company to earn a significant net profit.
"Of course, it is expected that it will be able to increase it further in the future," Batubara remarked.
He also hopes that the firm does not become complacent with this achievement.
In future, Inalum should implement the improvements and developments that it has been planning. It must raise the capacity of its generators and improve its aging smelters.
"It should improve and renovate infrastructure and equipment to support the company`s performance ahead," Batubara emphasized.
Moreover, he admitted that he did not earlier believe whether the company would be able to make improvements, as it was difficult to earn high profits when it was still managed by Japan.
"I believe that the government should reevaluate the last management to identify reasons for why the profits in the past did reach this level," he noted.
The House of Representatives (DPR) agreed in October last year to hand over PT Inalum`s management to the State-Owned Enterprises (SOE) Ministry following the government`s decision to acquire it after three years of negotiations with the Japanese government.
The House made the decision in its joint meeting with all parties, as the government decided not to extend the expired contract of PT Inalum, an aluminum joint venture between Indonesia and Japan in which Indonesia held 41.13 percent of the company`s shares and Japan owned 58.87 percent.
The project began operating on January 6, 1976, based on an agreement signed on July 7, 1975, that expired on October 31, 2013.
Japan, with 12 private Japanese firms in the joint venture, is the majority shareholder through NAA. Fifty percent of NAA`s shares are controlled by the Japan Bank for International Cooperation (JBIC), which represents the Japanese government, while the remaining 50 percent are owned by private Japanese firms such as Sumitomo Chemical Company Ltd, Sumitomo Shoi Kaisha Ltd, and Nippon Light Metal Co. Ltd.
