REPUBLIKA.CO.ID, JAKARTA -- The establishment of state owned companies holding will increase business development. According to state owned enterprise (SOE) observer Sunarsip, a SOE company will have the opportunity to gain more revenue. They will be easier to reach domestic and foreign market.

"There is a corporate term, size is matter. If you have a lot of companies with small productivity, it will be unprofitable and inefficient," Sunarsip said on Friday.

Holding company establishment has been conducted before by fertilizer companies and also cement companies. Five fertilizer companies joined under a banner of PT Pupuk Indonesia, while cement companies merged into PT Semen Indonesia. According to Sunarsip, several state owned forestry and plantation companies could merge into one holding as long as government committed on this regard.

Government through SOE Ministry will establish a holding company composed of plantation companies (PT Perkebunan Nusantara I-XIV) and forestry companies (PT Inhutani I-V). PT PN III will lead the holding company for state owned plantations.

Ministry of Agriculture agreed with merger process between plantation and forestry companies. It is considered improving efficiency and reducing the competition.

"Yes, it will improve efficiency because the core business will be the same," Deputy Minister of Agriculture, Rusman Heriawan said.

According to Heriawan, the merger will increase company's efficiency. For example, profit of Pupuk Indonesia after merger process increased from 2 trillion IDR to 5 trillion IDR.

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