C&C move strengthens bilateral ties

INDONESIA’s biggest asset sale over the last two years – in which Singapore car distributor Cycle & Carriage (C&C) bought control of the giant automobile firm PT Astra International – will strengthen bilateral economic cooperation.

The Jakarta Post said yesterday that the US$506 million (S$865.3 million) deal would provide the “momentum for further enhancing” economic links between Jakarta and the Republic.

“The deal realises the Singapore Government’s stated commitment to aid Indonesia’s economic recovery,” the English-language daily said in an editorial titled “Singapore group wins Astra”.

This commitment, it added, was made when Prime Minister Goh Chok Tong visited Indonesia in January this year.

Mr Goh, who was accompanied by a powerful business delegation, announced a US$400 million loan-financing scheme to encourage Singapore companies to invest in Indonesia, helping Indonesia indirectly to kick-start its economy, which had been crippled by the financial crisis two years ago.

It said economic ties between the two countries would only increase as the Government of Singapore Investment Corp was a major partner in the C&C-led consortium that also includes France-based Lazard Freres, Bhakti Investama and Batavia Investment Management.

The takeover of nearly 40 per cent of PT Astra’s shares by one of Singapore’s top listed companies will also raise foreign-investor confidence in Indonesia, aside from providing a new source of financing for Astra.

“The new investor is best placed to act as a strategic investor,

“A strategic investor, unlike a portfolio investor, will bring significant changes to a company’s business strategy, and consequently will have a huge impact on its future valuation,” said the paper.

It said that the C&C consortium was also the “best-placed partner” to remedy any cash flow pressures Astra might face.

“Surely, the group is not a short-term speculative investor, intending to make a killing within the next few months,” it said. “An investment of US$506 million in one company is dramatic, which means the group is betting on Astra’s future.”

Besides the editorial, The Jakarta Post carried a front page story of the Astra deal yesterday.

Nearly all the major dailies reported on C&C’s successful bid.

Several newspapers displayed on their front pages a picture of C&C group managing director Philip Eng joining hands with Indonesian Bank Restructuring Agency chairman Cacuk Sudarijanto and Astra president Theodore Rachmat after the deal was sealed on Friday.