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Timber tycoon cuts 1,400 staff

Source
South China Morning Post - January 15, 1998

Jenny Grant, Jakarta – Almost 1,500 employees of Indonesia's top timber tycoon have taken voluntary retrenchment from six of his plywood companies in east Kalimantan.

About 1,400 staff have taken voluntary redundancy as part of a rationalisation in Mohammad "Bob" Hasan's Kalimanis Group, the Republika daily reported.

General director of the Kalimanis Group, Mohammad Halid, said the company was cutting its workforce because of financial difficulties.

"I think all those who are willing to be laid off are heroes because they have the big heart to save their company," Mr Halid said.

Mr Hasan is a close associate and golfing partner of President Suharto and chairman of the Association of Indonesian Wood Panel Producers.

An ethnic Chinese, he controls two million hectares of forestry concession in Indonesia.

Mr Halid said the six companies had restructured machinery, capital and debts but needed to cut staff to complete its programme.

The companies include Kalimanis Plywood Industries, Santi Murni and Kiani Lestari.

The government last year gave a controversial US$105 million loan from its reforestation funds to Kiani Lestari for a new pulp plant.

Indonesian log prices dropped to $70 a cubic metre in the second half of last year from $92 in the first half. Exports of wood products are expected to fall 25 per cent this year to $6.25 billion.

The declines are blamed on falling demand in the property sectors of Japan, China and Korea due to the Asian financial crisis.

The government has provided 33 billion rupiah (about HK$29.04 million) and launched a series of labour-intensive programmes to soak up the thousands of unskilled workers who have lost their jobs since the crisis clean-up projects are targeted at 30 cities across Java, with employees earning a meagre 7,500 rupiah a day.

In the west Java city of Bandung, 5,076 sacked workers will be re-employed in the labour-intensive schemes, according to Oeron, the head of the district level planning agency. Indonesia's unemployment rate is forecast to swell to 6.7 million people this year from an overall workforce of 90 million.

The government has announced that low-income people and sacked workers will receive a 70 per cent discount on train fares for Indonesians wanting to travel home for the Muslim new year celebrations.

The festival marks the end of the fasting month of Ramadan, which falls around January 30.

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